THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 


SCHOOL  OF  LAW 


A  TREATISE 


ON   THE 


LAW  OF  DAMAGES 


EMBEACINQ 


AN  ELEMENTARY  EXPOSITION  OF  THE  LAW 


AND  ALSO 


ITS  APPLICATION  TO  PARTICULAR  SUBJECTS  OF 
CONTRACT  AND  TORT 


BY 

J.  G.  SUTHEELAE"D 

Author  op  a  Treatisb  on  "Statutes  and  Statutory  CoNSTBtronoH" 


THIRD  EDITION 

BY 

JOHN  E.  BERRYMAN 

Editor  of  the  Second  Edition  op  this  Work;  Author  of  A 

"Digest  op  the  Law  of  Insurance;"  One  of  thb 

Kbvisers  and  Editors  of  the  "Wisconsin 

Statutes  of  1898,"  etc.,  etc. 


YOL.    I 


CHICAGO 

CALLAGE  AN  AND  COMPANY 

1903 


r 


Copyright,  1903, 

BY 

CALLAGHAN  AND  COMPANY. 


STATE  JOURNAL  PRINTING  COMPANY, 

Printers  and  Stereotypers, 

madison,  wis. 


5 


PREFACE  TO  FIRST  EDITION. 


The  law  of  damages  is  now,  and  for  many  years  has  been, 
in  the  course  of  rapid  and  expansive  growth;  its  former  ap- 
plications have  been  subjected  to  frequent  forensic  and  judi- 
cial review,  with  the  advantage  of  the  experience  and  learning 
of  the  past,  and  the  stimulus  as  well  as  the  suggestive  aid  of 
new  and  diversified  interests  demanding  protection,  and  new 
forms  of  injury  invoking  redress. 

It  is  therefore  desirable  that  the  law  be  often  rewritten  to 
incorporate  in  its  structure  the  results  of  the  latest  adjudica- 
tions, not  only  for  the  light  they  reflect  upon  the  earlier  cases, 
but  to  derive  the  full  benefit  of  these  accretions,  which  embody 
the  contribution  of  contemporary  jurists  and  master  minds  of 
the  profession. 

The  administration  of  justice  is  committed  to  so  many  inde- 
pendent tribunals,  that  it  is  not  surprising  their  determinations, 
especially  of  questions  of  first  impression,  have  not  proceeded 
in  a  very  harmonious  current.  Differences  of  judicial  opinion, 
more  or  less  radical,  under  such  circumstances,  are  unavoid- 
able. These  are  liable  to  result  in  permanent  divergencies ; 
and  to  beget  local  exceptions  and  peculiarities  so  numerous 
as  to  greatly  mar  the  symmetry  and  impair  the  authority  of 
our  general  jurisprudence. 

Frequent  elementary  expositions  of  the  law,  embracing  a 
discussion  of  the  discordant  cases  with  reference  to  the  general 
principles  which  ,all  acknowledge,  are  of  great  importance ; 
for,  to  the  extent  that  they  are  influential,  they  wfll  counter- 
act this  centrifugal  tendency. 

It  is  believed  that  the  work  now  offered  will  be  found  use- 
ful in  these  respects,  notwithstanding  that  excellent  works  on 
the  same  subject  are  now  in  general  use.  It  has  extended  to 
three  volumes  by  being  made  to  embrace  a  wide  range  of 


^doa20 


JV  PREFACE    TO   FIRST   EDITION. 

lopics  germane  to  the  general  subject,  and  by  an  elementary 
and  a  minutely  practical  treatment  of  them. 

The  First  Part  is  elementary,  and  designed  to  aid  the  in- 
quiries of  the  student,  and  to  facilitate  the  investigations  of 
the  practitioner.  In  it  are  stated  and  illustrated  the  general 
principles  upon  which  damages,  recognized  under  various 
names,  are  allowed  by  law ;  their  scope  relatively  to  the  in- 
jury to  be  redressed;  the  principles  by  which  the  elements  of 
damage  may  be  tested,  and  the  amount  to  be  allowed  there- 
for determined;  by  which  facts  may  be  legitimately  weighed 
to  enhance  or  mitigate  damages ;  how  they  may  be  juridically 
or  conventionally  liquidated  and  satisfied;  and  the  pleadings^ 
evidence  and  procedure  suitable  and  necessary  for  their  re- 
covery. 

The  Second  Part  contains  a  particular  discussion  of  these 
principles  in  their  practical  application  to  the  subjects  of  con- 
tract and  tort,  which  give  rise  to  actual  demands  for  damages. 

The  whole  is  copiously  elucidated  by  decided  cases  and 
apposite  quotations ;  and  the  supporting  authorities  will,  it  is 
believed,  be  found  to  embrace  all  the  decisions  of  any  impor- 
tance on  the  subject. 

The  author  submits  his  work  with  its  faults  —  for  he  dare 
not  hope  it  wiU  be  found  faultless  —  to  the  indulgent  judg- 
ment and  fair  criticism  of  the  profession. 

J.  G.  S. 

Salt  Laxe  City,  September,  1882. 


PREFACE  TO  SECOND  EDITION. 


A  new  edition  of  this  work  has  been  deemed  necessary  to 
incorporate  into  it  the  results  of  the  numerous  adjudications 
during  the  ten  years  which  have  elapsed  since  the  publication 
of  the  first  edition.  A  thorough  revision  has  been  made,  and 
about  four  hundred  pages  of  new  matter  added  as  the  fruit  of 
nearly  seven  thousand  later  decisions.  By  a  judicious  con- 
densation of  the  old  matter  and  the  exclusion  of  some  redun- 
dancies, the  additions  have  not  so  materially  increased  the 
size  of  the  volumes  as  to  make  them  inconveniently  large. 
The  text  has  been  divided  into  sections  for  easier  reference ; 
but  the  side-paging  will  serve  to  direct  the  reader  to  the  mat- 
ter indicated  in  the  frequent  references  in  judicial  opinions 
and  by  text-writers  and  practitioners  to  the  first  edition. 

The  editors  submit  their  work  to  the  profession  with  the 
assurance  that  they  have  spared  no  pains  to  make  it  compre- 
hensive and  accurate. 

J.  G.  S. 
J.  B.  B. 

NoVEMBEE,  1892. 


PREFACE  TO  THIRD  EDITION. 


This  edition  of  Judge  Sutherland's  treatise  on  the  Law  of 
Damages  has  been  prepared  with  the  view  of  making  it  ex- 
pressive of  the  law  of  that  subject  as  it  is  at  the  present  time. 
This  has  not  been  done  at  the  expense  of  the  excellent  per- 
spective that  distinguished  writer  gave  of  the  subject  in  the 
first  edition.  That  part  of  the  work  remains  undisturbed. 
The  editor  has  sought  to  do  for  this  edition  what  he  endeav- 
ored to  do,  under  the  direction  of  the  author,  in  preparing  the 
second  edition :  incorporate  into  it  the  results  of  the  numerous 
adjudications  on  the  various  branches  of  the  law  of  damages 
made  during  the  eleven  years  which  have  elapsed  since  the 
publication  of  that  edition.  That  endeavor  met  the  approval 
of  the  author,  who  desired  that  this  edition  should  be  pre- 
pared by  the  editor  of  the  second  edition.  The  ver}'  numer- 
ous references  in  the  reported  cases  and  treatises  on  various 
branches  of  the  law  to  that  edition  tend  to  show  that  it  has 
been  found  useful  to  the  bench  and  bar.  The  controlling  aim 
in  the  preparation  of  this  edition  has  been  to  make  it  as  ad- 
vantageous as  possible  in  presenting  the  American  and  Eng- 
lish law  of  damages  as  it  has  been  declared  by  the  courts. 

The  American  cases  which  have  been  reported  in  unofficial 
series  of  reports  are  referred  to  therein.  These  references  and 
the  new  matter  added  to  the  text  and  notes  represent  about 
eight  hundred  pages.  To  make  room  for  so  much  additional 
matter,  it  has  been  found  necessary  to  condense  somewhat  a 
portion  of  the  matter  which  appeared  in  the  former  edition. 
It  is  hoped  that  this  has  been  done  without  serious  detriment 
to  the  value  of  the  work. 

Madison,  Wis.,  August,  1903.  John  K.  Bereyman. 


TABLE  OF  CONTENTS 


VOL.  1. 

PART  L— AN  ELEMENTARY  EXPOSITION  OF  THE 
LAW  OF  DAMAGES. 


CHAPTER  L— A  GENERAL  STATEMENT  OF  THE  RIGHT  TO  DAM- 
AGES, THEIR  LEGAL  QUALITY  AND  KINDS. 

References  are  to  sections. 

General  observations.  1 

The  right  to  damages;  how  amount  ascertained 2 

Damnum  absque  injuria;  injuria  sine  danino 3 

Public  wrongs 4 

Illegal  transactions . 5 

Contractual  exemption  from  liability  for  damages. 6 

Nature  of  the  right  to  damages;  its  survival  ... 7 

Injuries  to  unborn  child 8 

CHAPTER  IL— NOMINAL  DAMAGES. 

Nature  and  purpose  of  nominal  damages 9 

Illustrations  of  the  right  to  nominal  damages 10 

The  right  a  substantial  one;  new  trials 11 

CHAPTER  IIL— COMPENSATION. 

Section  1.— Compensatory  Damages. 

Award  of  compensation  the  object  of  the  law 12 

Limitation  of  liability  to  natural  and  proximate  consequences 13 

Section  2. —  Direct  Damages. 

What  these  include 14 

Section  3. —  Consequential  Damages  fob  Torts. 

Awarded  for  probable  consequences 1.5 

Rule  of  consequential  damages  for  torts 16 

Illustrations  of  the  doctrine  of  the  preceding  section 17-19 

Consequential  damages  under  fence  statutes 20 

Nervous  shock  without  impact:  the  Coultas  case  and  American  cases 

in  harmony  with  it 21 

Same  subject;  ci'iticism  of  the  Coultas  case;  nervous  shock  a  phys- 
ical in  j  ury 23 

Same  subject;  an  earlier  ruling 2.} 

iSarae  subject;  Dulien  v.  White 23a 

Same  subject ;  miscellaneous  cases 24 

Anticipation  of  injury  as  to  persons;  illustrations 2.5 

Consequential  damages  in  highway  cases 26 

Imputed  negligence ...  27 


Vlll  TABLE    OF   CONTENTS. 

References  are  to  sections. 

Particular  injury  need  not  be  foreseen 28 

The  act  complained  of  must  be  the  efficient  cause 29-31 

Breach  of  statutory  duties 32 

Injury  through  third  person 33 

Liability  as  affected  by  extraordinary  circumstances 34 

Illustrations  of  the  doctrine  of  the  preceding  section 35 

Liability  of  carriers  for  consequential  damages;  extraordinary  cir- 
cumstances    36 

Intervening  cause ....    87,  38 

Act  of  injured  party;  fraud  and  exposure  to  peril 39 

Act  of  third  person 40-42 

Wilful  or  malicious  injuries 43,  44 

Section  4.— Consequential  Damages  foe  Breach  of  Contract. 

Recoverable  only  when  contemplated  by  the  parties 45 

Illustrations  of  liability  under  the  rule 46 

Liability  not  affected  by  collateral  ventures 47 

Distinction  between  consequential  liability  in  tort  and  on  contract  48 

Same  subject;  criticism  of  the  Hobbs  case  49 

Liability  under  special  circumstances;  Hadley  v.  Baxendale 50 

Same  subject;  illustrations  and  discussion  of  the  rule  51 

Market  value;  resale;  special  circumstances 53 

Section  5.—  Required  Certainty  op  DAMAOEa 

Damages  must  be  certain  in  their  nature  and  cause 53 

Liability  for  the  principal  loss  extends  to  details  and  incidents 54 

Only  the  items  which  are  certain  are  recoverable 55 

Recovery  on  successive  consequences        56-58 

Required  certainty  of  anticipated  profits ...  59,  60 

Warranty  of  seeds 61 

Prospective  growth  of  orchard  and  of  animals. 62 

Profits  of  special  contracts 63 

Same  subject;  Masterton  v.  Mayor , 64 

Violation  of  contract  to  lease  65 

Profits  of  labor 66 

Profits  from  commercial  ventures 67 

Profits  on  dissolution  of  partnership 68 

Commercial  agencies  69 

Tortious  interference  with  business 70 

Chances  for  prizes  and  promotions 71 

Contingent  advantage 73^^ 

Uncertain  mitigation  of  breach  of  marriage  promise 73 

Failure  to  provide  sinking  fund 74 

Section  6. —  The  Constituents  of  Compensation,  or  Elements 
of  Damage. 

Elementary  limitation  of  damages 75 

Damages  for  non-payment  of  money 76 

Greater  damages  than  interest  for  failure  to  pay  money 77 

Liability  for  gains  and  losses 78 

What  lo-sses  elements  of  damage  79 

Same  subject;  labor  and  expenditures 80 

Same  subject:  damages  for  relying  on  performance 81 

Same  subject;  liabilities  to  third  persons;  covenants  of  indemnity. .  82 

Same  subject;  indemnity  to  municipalities;  counsel  fees 83 

Same  subject;  liability  for  losses  and  expenses 84 

Same  subject:  bonds  and  undertakings;  damages  and  costs 85 

Same  subject;  necessity  of  notice  to  indemnitor  to  fix  liability 86,  87 

Expen.'^es  incurred  to  prevent  or  lessen  damages 88 

Same  subject;  between  vendor  and  vendee 89 

Same  subject;  extent  of  the  duty 90 


TABLE    OF    CONTENTS.  IX 

References  are  to  sections. 

Same  subject;  employer  may  finish  work  at  contractor's  expense. ...  91 
May  damages  for  breach  of  contract  include  other  than  pecuniary 

elements?  92 

Elements  of  damage  for  personal  torts 93 

Character  as  affecting  damages  for  personal  injuries 94 

Jlental  suffering 95,  96 

Same  subject;  liability  of  telegrapii  companies 97 

Right  to  compensation  not  affected  by  motive 98 

Distinction  made  for  bad  motive;  contracts 99 

Motive  in  tort  actions 100 

How  motive  affects  consequences  of  confusion  of  goods 101 

Where  property  sued  for  improved  by  wrong-doer 103,  10;> 

Distinctions  in  the  matter  of  proof 104 

Value  of  property 105 

CHAPTER  IV.— ENTIRETY  OF  CAUSES  OF  ACTION  AND  DAMAGES. 

Section  1. —  General  Principle& 

Cause  of  action   not  divisible 106 

Present  and  future  damages 107 

What  is  an  entire  demand  ? 108 

Entire  demand  may  be  severed 109 

Contracts  to  do  several  things  successively  or  one  thing  continuously  110 

Items  of  account Ill 

Continuing  obligations 112 

Damages  accruing  subsequent  to  the  action 1V6 

Damage  to  real  property 114-116 

Contracts  of  indemnity 117 

Damage  to  property  and  injury  to  person  by  same  act 118 

What  is  not  a  double  remedy 119 

Prospective  damages 120 

Certainty  of  proof  of  future  damages  121 

Action  for  enticing  away  apprentice,  servant  or  son 122 

Future  damages  for  personal  injuries 123 

Only  present  worth  of  future  damages  given 124 

Continuous  breach  of  contract  or  infraction  of  rights  not  an  entirety  125 

Continuance  of  wrong  not  presumed 126 

Necessity  of  successive  actions 127 

Section  2. —  Parties  to  Sue  and  be  Sued. 

Damages  to  parties  jointly  injured  entire 128 

Actions  under  statutes ...   121) 

Must  be  recovered  by  person  in  whom  legal  interest  vested 180 

Not  joint  when  contract  apportions  legal  interest 131 

Implied  assumpsit  follows  the  ■  consideration 132 

Effect  of  release  by  or  death  of  one  of  several  entitled  to  entire  dam- 
ages    133 

Misjoinder  of  plaintiffs,  when  a  fatal  objection 134 

Joinder  of  defendants;  effect  of  non-joinder  and  misjoinder 135 

How  joint  liability  extinguished  or  severed 136 

Principles  on  which  joint  right  or  liability  for  tort  determined 137 

Tortious  act  not  an  entirety  as  to  parties  injured 138 

General  and  special  owners   139 

Joint  and  several  liability  for  torts 140-142 

CHAPTER  v.— LEGAL  LIQUIDATIONS  AND  REDUCTIONS. 

Section  1. —  Circuity  op  Action. 

Defense  of 143 

Agreement  not  to  sue 144 

Principal  operates  in  favor  of  plaintiff 145 

Damages  must  be  equal 146 

Reciprocal  obligations 147 


X  TABLE   OF   CONTENTS. 

References  are  to  sections. 

Section  8. —  Mutual  Credit. 

Compensation  by  mutual  demands 148 

Section  3. —  Mitigation  op  DAMAOEa 

Equitable  doctrine  of 149 

Absence  of  malice 150 

Words  as  provocation  for  assault;  agreements  to  fight 151 

Provocation  in  libel  and  slander 152,  153 

Mitigating  circumstances  in  trespass  and  other  actions 154 

Plaintiff's  acts  and  negligence •  •  155 

Measures  of  prevention:  return  of  property;  discharge  of  plaintiff's 

debt   156,  157 

No  mitigation  when  benefit  not  derived  from  defendant 158 

Fuller  proof  of  the  res  gestae  in  trespass,  negligence,  etc 159 

Official  neglect  160 

Same  subject;  modification  of  the  old  rule 161 

Plaintiff's  consent 162 

Injuries  to  character  and  feelings 163 

Reduction  of  loss  or  benefit 164 

Pleading  in  mitigation 165,  166 

Payments 167 

Section  4.— Recoupment  and  Counter-claim. 

Definition  and  history  of  recoupment 168,  169 

Nature  of  defense 170,  171 

Constituent  features  of  recoupment. ...  172 

Remedy  by  counter-claim 173 

Validity  of  claim  essential 174 

Parties 175,  176 

Maturity  of  claim  or  demand;  statute  of  limitations  ...   177 

Cross-claim  must  rest  on  contract  or  subject-matter  of  action. 178 

Recoupment  for  fraud,  breach  of  warranty,  negligence,  etc 179,  180 

What  acts  may  be  the  basis  of  recoupment 181 

Cross-claims  between  landlord  and  tenant 182 

Cause  of  action,  connection  between  and  cross-claim 183 

Recoupment  between  vendor  and  purchaser 184 

Liquidated  and  unliqidated  damages  may  be  recouped 185 

Affirmative  relief  not  obtainable 186 

Election  of  defendant  to  file  cross-claim  or  sue  upon  his  demand 187 

Burden  of  proof;  measure  of  damages 188 

A  cross-claim  used  in  defense  cannot  be  sued  upon 189 

Notice  of  cross-claim 190 

Section  5. —  Marshaling  and  Distribution. 

Definition 191 

Sales  of  incumbered  property  in  parcels  to  different  purchasers  . . 192 

Sale  subject  to  incumbrance     193 

Effect  of  creditor  releasing  part 194 

Rights  where  one  creditor  may  resort  to  two  funds  and  another  to 

only  one 195 

Same  where  the  funds  belong  to  two  debtors 196 

Principles  on  which  priority  determined 197 

Section  6.—  Set-off  of  Judgments. 

Power  to  direct  set-off  inherent 198 

AVhen  it  will  or  will  not  be  granted  . 199 

Interest  of  the  real  parties  considered 200 

Set  off  not  granted  before  judgment  201 

Assignee  must  make  an  absolute  purchase 202 

Nature  of  action  immaterial 203 

Liens  of  attorneys 204 


TABLE    OF    CONTENTS.  Xl 

References  are  to  sections. 

CHAPTER  VI.— PECUNIARY  REPRESENTATIVE  OF  VALUK 

Section  1. —  Money. 

Characteristics  of  money 205 

Payment  to  be  made  in  money  of  country  of  performance 206 

Payment  in  currency 207 

Effect  of  changes  in  the  value  of  money 208 

Value  of  money  at  time  of  contracting 200 

The  legal  tender  act 210 

Effect  of  fluctuations  in  currency 211 

Section  2.— Par  and  Rate  of  Exchanoe. 

Par  of  exchange 212 

Rate  of  exchange 213 

CHAPTER  VII.—  CONVENTIONAL  LIQUIDATIONS  AND 
DISCHARGES. 

Section  1. —  Payment. 

What  is;  modes  of  making 214-216 

What  is  not  payment 217 

Effect  of  payment 218 

Payment  before  debt  due 219 

Payment  by  devise  or  legacy 2''0 

Payment  by  gift  inter  vivos 221 

Payment  by  retainer 222 

Payment  in  counterfeit   money,  bills  of    broken    banks  or    forged 

notes 223,  224 

Payment  by  note,  bill  or  check 225-227 

Collaterals  collected  or  lost  by  negligence  of  creditor  are  payments  228,  229 

Who  may  make  payment 230 

To  whom  payment  may  be  made 231 

Pleading  payment  232 

Evidence  of  payment 233 

Section  2.—  Application  op  Payments. 

General  rule 234 

By  debtor 235,  236 

Same  subject;  evidence 237 

By  creditor 238-240 

Appropriation  by  the  court 241 

When  payments  applied  pro  rata 242 

General  payment  applied  to  oldest  debt 243 

General  payment  applied  to  a  debt  bearing  interest,  and  first  to  in- 
terest    244 

General  payment  applied  to  the  debt  least  secured;  comments  on  con- 
flicting views  of  the  general  subject 245 

Section  3.— Accord  and  Satisfaction. 

Definition 246 

Consideration , 247 

Payment  of  part  of  a  debt  will  not  support  an  agreement   to   dis- 
charge the  whole 248 

Same  subject 248a 

Any  other  act  or  promise  which  is  a  new  consideration  will  suffice. .  249 

Composition  with  creditors 250 

Compromise  of  disputed  claim 251 

Agreement  must  be  executed 252 


Jtll  •  TABLE    OF    CONTENTS. 


■References  are  to  sections. 


Section  4. —  RELEAsa 

Definition 253 

Differs  from  accord  and  satisfaction 254 

Extrinsic  evidence  and  construction 255 

Who  may  execute 256 

Effect  when  executed  by  or  to  one  of  several  claiming  or  liable 257 

What  will  operate  as  a  release 258 

Covenant  not  to  sue 259 

Section  5. —  Tender 

Right  to  make 260 

On  what  demands  it  may  be  made 261 

When  it  may  be  made 262 

In  what  money 263 

Bywhom 264 

To  whom 265 

It  must  be  sufficient  in  amount 266,  267 

How  made 268 

W  here  to  be  made 269 

Must  be  unconditional 270 

Effect  of  accepting 271 

Must  be  kept  good 272 

Waiver  and  omission  of  tender  on  sufficient  excuse 273 

Tender  must  be  pleaded  and  money  paid  into  court. 274 

Effect  of  plea  of  tender 275 

Effect  of  tender  when  money  paid  into  court 276 

Effect  of  tender  on  collateral  securities 277 

Paying  money  into  court 278 

Section  6. — Stipulated  Damages. 

Contracts  to  liquidate  damages  valid 279 

Damages  can  be  liquidated  only  by  a  valid  contract 280 

Modes  of  liquidating  damages;  computation  of  time 281 

Alternative  contracts 283 

Liquidated  damages  contradistinguished  from  penalty 283 

The  evidence  and  effect  of  intention  to  liquidate 284 

Stipulated  sum  when  damages  otherwise  certain  or  uncertain 285 

Contracts  for  the  payment  of  money 286,  287 

Large  sum  to  secure  payment  of  a  smaller 288 

Stipulation  where  damages  certain  and  easily  proved 289 

Stipulation  when  damages  uncertain 290,  292 

Same  subject;  illustrations 293 

Stipulation  for  payment  of  a  fixed  sum  for  partial  or  total  breach.  294,  295 

Effect  of  part  performance  accepted  where  damages  liquidated 296 

Liquidated  damages  are  in  lieu  of  performance 297 

Effect  of  stipulation  upon  right  of  action 298 

Waiver  of  right  to  stipulated  damages 299 


VOL.  2. 


PAKT  I.— CONTINUED. 


CHAPTER  VIIL—  INTEREST. 

Definitions  and  general  view 300 

Interest  by  the  early  common  law 301 

Interest  in  England  legalized  by  statute 302 

Interest  at  common  law  in  America 303 

Agreements  for  interest 304 


TABLE    OF    CONTENTS.  XIU 

References  are  to  sections. 

Section  1.— General  Promise  to  Pay  Money  "With  Interest." 

Rule  of  construction 305 

Law  or  custom  fixes  the  rate 306 

Legal  or  stipulated  rate  applies  from  date 307 

Whether  same  rate  will  apply  after  debt  due 308,  309 

Section  2. — Agreements  for  Interest  "Until  Paid." 

Agreements  for  interest  from  date  until  debt  paid 310 

Agreements  for  a  different  rate  after  debt  due 311,  312 

Section  3.— Agreements  for  More  than  Legal  Rate  Before  Maturity. 

Fflfect  of  usury  found 313 

Who  may  take  advantage  of  usury 314 

When  contracts  not  void  for  usury 315 

Recoveries  under  usury  statutes 316,  317 

Section  4.—  Agreements  for  More  than  Legal  Rate  After  Maturity. 

Not  usury,  but  penalty 318 

Same  subject;  when  debtor  relieved  in  Illinois 319 

Section  5.— Interest  as  Compensation. 

Scope  of  section 320 

Right  not  absolute 321 

Tacit  agreements  to  pay  interest  on  accounts 322 

Interest  where  payment  unreasonably  and  vexatiously  delayed 323 

Quantum  meruit  claim  to  interest 324 

Allowed  on  money  loaned 325 

Allowed  on  money  paid 326,  327 

Quantum  meruit  claim  to  interest  between  vendor  and  purchaser. . . .  328 

Interest  allowed  from  time  when  money  ought  to  be  paid 329 

No  interest  on  penalties  or  statutory  liability  for  riots. ., 330 

When  allowed  on  penalty  of  bonds 331 

Interest  against  govern  ment 332 

Judgments  bear  interest        .^ 333,  334 

Not  allowed  on  revival  of  judgment  by  scire  facias 335 

Interest  in  condemnation  proceedings 336 

Interest  on  taxes  and  license  fees 337 

Infants  liable  for 338 

Allowed  on  sums  due  for  rent 339 

Interest  on  damages  for  infringing  patents _.    340 

Right  to  interest  as  affected  by  the  marital  relation 341 

Interest  as  between  partners 342 

Interest  on  stociiholders'  statutory  liability 343 

Allowed  on  annuities  and  legacies 344 

Interest  on  advancements  345 

On  money  due  on  policy  of  insurance 346 

Not  allowed  on  unliquidated  demands 347,348 

Interest  on  accounts 349,  350 

When  demand  necessary 351 

When  allowed  on  money  had  and  received 352 

When  allowed  against  agents,  trustees  and  ofiBcers 353 

On  money  obtained  by  extortion  or  fraud 354 

Interest  in  actions  for  torts 355 

Section  6.— The  Law  of  What  Place  and  Time  Governs. 

Importance  of  subject • 356 

General  rule  as  to  contracts 357 

Rule  as  to  notes  and  bills  358 

Bonds  to  the  United  States 359 


Xiv  TABLE    OF    CONTENTS. 

References  are  to  sections. 

Between  parties  in  different  states 360,  361 

"Where  usury  is  involved 362-365 

The  law  v^f  what  place  governs  the  rate  as  damages 366 

Allegation  and  proof  of  foreign  law 367 

Effect  of  change  in  law  of  place  of  contract 368-370 

Section  7.— Interest  as  an  Incident  to  the  Principal. 

Interest  due  by  agreement  a  debt 371 

Interest  as  damages  accessory  to  principal 373 

Section  8.— Interest  upon  Interest. 

Compound  interest 373 

Instances  of  interest  on  interest 374 

Interest  on  instalments  of  interest  375 

Separate  agreements  for  interest 376 

Periodical  interest  after  maturity  of  debt 377 

Computation,  application  and  effect  of  partial  payments 378,  379 

Section  9.— Suspension  op  Interest. 

Miscellaneous  cases 380 

Where  payments  prevented  by  legal  process  ...     381 

Where  war  prevents  payment 383 

Tender  stops  interest 383 

Tender  not  allowed  for  unliquidated  demands 384 

When  tender  may  be  made 385, 386 

Section  10.— Pleading. 
How  interest  claimed  in  pleading 387 

Section  11.— Interest  During  Proceedings  to  Collect  a  Debt. 

Interest  on  verdict  before  judgment 388 

On  judgments  pending  review 389 

CHAPTER  IX.— EXEMPLARY  DAMAGES. 

Compensation  for  wrongs  done  with  bad  motive  390 

Exemplary  damages;  difference  of  views;  when  allowed 391-393 

Malice  in  law  and  malice  in  fact 394 

Restriction  and  denial  of  exemplary  damages 395 

Same  subject ;  New  Hampshire  rule 396 

Same  subject;  Massachusetts  rule  397 

Same  subject ;  Nebraska  rule 398 

Same  subject;  Michigan  rule  399 

Same  subject;  the  rule  in  Colorado,  West  Virginia,  Washington  and 

Connecticut 400 

Exemplary  damages  as  compensation  and  punishment 401 

Exemplary  damages  for  penal  offenses 403 

Exemplary  damages  as  matter  of  right 403 

Enhancement  and  mitigation  of  exemplary  damages 404,  405 

Exemplary  damages  based  on  actual  damages 406 

Motive  of  one  wrong-doer  not  imputable  to  others 407 

Parties  liable :  master  for  servant 408-411 

Liability  of  officers,  municipalities  and  estates 413 

CHAPTER  X.— PLEADING  AND  PROCEDURR 

Section  1. —  Pleading. 

Plaintiff  must  state  a  case  which  entitles  him  to  damages 413 

The  ad  damnum 414 

Demand  of  damages  in  code  complaint 415 

Effect  of  not  answering  allegation  of  damages 416 


TABLE    OF   CONTENTS.  XV 

References  are  to  sections. 

^d  damnum  limits  recovery;  erroneous  claim  of  damages 417 

What  provable  under  general  allegation  of  damage 418 

Special  damages  must  be  alleged 419 

Same  subject;  illustrations 420,  421 

Not  necessary  to  allege  matter  of  aggravation 422 

Matter  of  aggravation  not  traversable 423 

Not  necessary  to  itemize  damages  42^ 

Statutory  damages  must  be  specially  claimed 425 

Pleading  in  actions  to  recover  for  death 426 

Section  2. —  Assessment  of  Damages. 

Writ  of  inquiry 427 

When  assessed  without  a  jury 428 

What  a  default  or  demurrer  admits 42!) 

Defendant  may  offer  evidence  in  reduction  of  damages 480 

Not  allowed  to  disprove  cause  of  action 431 

Jury  tarn  quam 433 

When  new  jury  may  be  called 433 

Correction  of  error  in  assessment 434 

Section  3.— Paying  Money  Into  Court, 

Admits  cause  of  action  to  amount  paid 435 

Payments  to  plaintiff  after  suit  430 

Section  4. —  Evidence. 

Must  be  adapted  to  damages  claimed 437 

Burden  of  proof     438 

Intendments  against  defendant  for  holding  back  evidence 4-^9 

Same  as  to  plaintiff 440 

Plaintiff  must  prove  pecuniary  items;  opinions 441 

Opinions  upon  subjects  of  common  experience  and  observation 442 

Instances  of  rejection  and  admission  of  opinions 44:> 

Opinions  as  to  amount  of  damages 444 

Proof  of  value 445 

Same  subject;  opinions  446 

Same  subject;  actual  sales 447 

Same  subject ;  elements  of  value 448 

Proof  of  the  value  of  dogs  449 

Witnesses  to  value  may  be  asked  grounds  of  opinions 450 

Physical  examination  of  plaintiff 451 

Exhibition  of  injured  parts,  and  means  of  injury 452 

Expressions  of  sufferer 453 

Photographs 454 

Life  and  annuity  tables 455 

Section  5. — Verdict  and  Judgment. 

Deliberations  of  the  jury;  quotient  verdicts 456 

Rendering  and  amending  verdicts 457,  458 

Excessive  or  insufficient  verdicts 459,  460 

Verdicts  must  be  certain 461 

General  verdicts  on  several  counts 463 

Where  there  are  several  plaintiffs 46;J 

Double  and  treble  damages 464 

Judgment . . 465 

Judgment  must  follow  verdict 466 

Judgments  must  be  certain 467 

Section  6. —  Restitution  After  Reversal  of  Judgment. 

How  made 468 

Liability  of  third  parties;  restitution  of  property  and  compensation 

for  loss  of  its  use 469 

b 


XVI  TABLE    OF    CONTENTS. 

References  are  to  sections. 

PAKT  II.— APPLICATION   OF  THE   LAW  OF  DAM- 
AGES TO  YAKIOUS  CONTRACTS  AND  WRONGS. 


CHAPTER  XL— BONDS  AND  PENAL  OBLIGATIONS. 
Section  1.— Penalties. 

Bonds  and  penalties 470 

Penalties  in  affirmative  agreements 471 

Statute  of  8  and  9  William  III 472 

Statute  of  4  and  5  Anne 473 

American  statutes  and  practice 474 

Statutory  bonds 475 

Impossible  condition 476 

Penalty  limit  of  recovery  except  as  to  interest 477,  478 

Section  2. —  Bonds  of  Official  Depositaries  of  Money. 

Liability  absolute  for  money  received 479 

Adjustment  of  liability  betvp^een  sets  of  sureties 480,  481 

Neglect  of  duty  by  other  officers 482 

Section  3.— Other  Official  Bonds. 

Scope  of  section  483 

Right  of  action  against  officers 484 

Construction  of  bonds 485 

Mode  of  redress  for  official  dereliction 486 

What  private  injuries  covered  by  official  bonds 487 

]\Ieasure  of  damages  against  sureties 488 

Measure  of  damages  against  officers  for  neglect  of  duty 489-492 

Section  4. —  Probate  Bonds. 

Bonds  for  administration  of  decedents'  estates 493 

How  such  bonds  made;  what  recoveries  may  be  had. 494 

Actions  on  bonds  as  to  sureties;  liability  for  executor's  debt  to  estate  495 

Guardian's  bond;  sureties'  liabilities 496 

Mitigation  of  damages 497 

Liability  as  between  sets  of  sureties 498 

Section  5. —  Replevin  Bonds. 

Their  original  conditions 499 

The  condition  for  return  of  property 500 

The  condition  required  by  modern  statutes 501 

Assessment  of  damages  in  suit  on  bond 503 

When  sureties  not  liable  for  judgment  in  replevin  suit 503 

Evidence  of  the  value 504 

Damages  recoverable : 505 

Effect  of  the  judgment  in  replevin  suit 506 

What  may  be  shown  in  defense 507 

When  plaintiff  recovers  as  special  owner;  effect  of  change  in  statute  508 

Bond  by  defendant  to  retain  the  property 509 

Section  6. — Attachment  and  Forthcoming  BoNDi 

Attachment  bonds;  when  cause  of  action  accrues 510 

Who  may  sue 511 

Damages  recoverable 513,  513 

Exemplai-y  damages 514 


TABLE    OF    CONTENTS.  XVlw 

References  are  to  sections. 

What  may  be  shown  in  defense SIS 

Costs  and  expenses;  attorneys' fees;  lossoftime 51G 

Forthcoming  bonds 517 

Same  subject;  measure  of  damages 518 

Conditions  to  pay  the  judgment 519 

Section  7.— Injunction  Bonds. 

Scope  of  obligation    . .    520 

Power  of  a  court  of  equity 521 

Right  of  action,  when  it  arises;  who  may  sue 522 

Mode  of  assessing  damages .     523 

Costs  and  expenses;  attorneys'  fees 524,  525 

Damages  from  restraint  of  injunction 526-528 

What  facts  no  defense 529 

What  facts  may  be  shown  in  defense 530 

Section  8. —  Appeal  and  Supersedeas  Bonds. 

Their  conditions;  liability  of  sureties 581 

Supersedeas  bonds  in  federal  supreme  court 533 

Same  subject;  liability  if  judgment  is  in  part  for  money  or  in  rem. . .     533 
Liability  in  state  courts  if  judgment  is  in  part  for  money  or  in  rem.  534,  535 

Instances  of  liability  on  more  specific  conditions 536,  537 

Interest  and  damages  awarded  on  appeal 538,  539 

CHAPTER  XII.— NOTES  AND  BILLS. 

Promissory  notes  and  bills  of  exchange 540 

Principal  sum 541 

Want  or  failure  of  consideration 542 

Partial  want  of  consideration 543 

Partial  failure  of  consideration 544-548 

Consideration  fraudulent  or  illegal  in  part 549,  550 

Defect  of  considei-ation  sliown  by  parol  evidence 551-554 

Liability  of  drawer  and  indorser  for  principal  sum 555 

Interest  on  notes  and  bills  . .    556 

Interest  as  damages  to  be  paid  by  maker  or  acceptor 557 

Liability  of  drawer  or  indorser  for  interest  as  damages 558 

Notes  and  bills  are  by  definition  payable  only  in  money 559 

Re-exchange  and  damages  on  bills  dishonored 560,  561 

When  re-exchange  on  damages  not  recoverable 562 

By  what  law  liabilities  governed 563 

Stipulations  for  attorney  fees  and  costs 564 

Value  of  notes  and  bills 565 

CHAPTER  XIIL— VENDOR  AND  PURCHASER. 

Damages  for  breach  of  contracts  for  sale  of  realty 566 

Section  1.— Vendor  against  Purchaser. 

Seller  entitled  to  purchase  price  and  interest;  abatement  of  price. . .  567 

The  legal  remedy 568 

Measure  of  damages 569,  570 

Same  subject;  where  notes  are  given  for  the  price 571 

Seller  must  convey  perfect  title;  effect  of  condemnation  proceedings  572 

Recoupment  for  defect  of  title 573 

Purchaser  cannot  assail  validity  of  contract 574 

Recovery  when  contract  does  not  fix  price 575 

Conveyance  in  consideration  of  non-pecuniary  covenants 576 

Interest  on  purchase-money  577 


Xviii  TABLE   OF    CONTENTS. 

References  are  to  sectiona. 

Section  2.— Purchaser  against  Vendor. 

Measure  of  damages  in  England 578 

Conflict  of  American  decisions  on  measure  of  damages 579,  580 

English  rule,  when  not  applied 581 

Elements  of  damages  under  the  milder  rule 582 

Recovery  on  parol  contract 583 

Elements  of  damage  where  Fiureau  v.  Thornhill  does  not  apply 584 

Defaulting  vendee's  rights 585 

Same  subject;  conflict  of  the  cases  in  this  country 586 

Adjustment  of  counter  demands  on  rescission 587 

Adjustment  of  counter  equities  in  specific  performance 588,  589 

Damages  m  suits  for  specific  performance 590 

Section  3.— Covenants  for  Title— Of  Seizin  and  Good  Right  to 

Convey. 

Their  purport;  when  broken 591,  592 

Damages  for  breach  of  these  covenants 598 

Same  subject;  actual  consideration  may  be  proved. 594 

Same  subject;  when  not  measured  by  the  consideration 595 

Same  subject;  etfect  of  recovery  on  a  total  breach 596 

Same  subject;    only  a  nominal  sum   recovered  if  actual  loss  not 

shown 597-599 

Same  subject;  when  covenant  runs  with  land 600 

How  damages  may  be  prevented  or  mitigated 601,  602 

Section  4.— Covenants  of  Warranty  and  for  Quiet  Enjoyment. 

Their  scope,  and  the  remedy  for  a  breach 603 

What  is  a  breach 604 

The  rule  of  damages;  remote  losses 60a 

Same  subject;  where  property  is  the  consideration 606 

Same  subject;  in  England  and  Canada 607 

Same  subject;  rule  in  some  of  the  older  states 608 

Same  subject;  in  case  of  partial  breach,  and  where  lien  is  satisfied. .  609 

Same  subject;  where  covenantee  has  extinguished  adverse  title 610 

Mitigation  of  damages 611 

Where  defect  is  a  dower  right 612 

By  and  against  whom  recovery  may  be  had 613 

Where  covenantee  sues  remote  covenantor 614 

Notice  of  suit  to  covenantor 615 

Interest  as  an  item  of  damages 616 

Expenses,  costs  and  counsel  fees  as  damages 617-619 

Section  5.— Covenants  against  Incumbrances. 

What  are  incumbrances •  •  •  •     620 

A  covenant  in  x>resenti;  effect  of  incumbrance  on  executory  contract    621 

The  rule  of  damages    622,  623 

The  Canadian  and  English  rule  of  damages 624 

In  some  states  covenant  runs  with  land 625 

Criticism  of  the  rule  of  damages         626 

Damages  where  incumbrance  permanent 627,  628 

Liability  of  remote  covenantor 629 

Where  covenant  is  connected  with  that  for  quiet  enjoyment 630 

Covenant  to  pay  incumbrances 631 

Section  6.— Defenses  and  Cross-claims  against  Purchase-money. 

Diversity  of  decisions    632 

The  New  York  rule •  •  •  633 

Alabama  rule 634 

Mississi ppi  rule 63) 

Rule  in  various  other  states 636 


TABLE    OF   CONTENTS.  XIX 

References  are  to  sections. 

South  Carolina  and  Virginia  rule 637 

Texas  and  Kentucky  rule 638 

Pennsylvania  rule 639 

Defenses  under  the  code 640 

Defenses  in  equity 641 


VOL.  3. 


CHAPTER  XIV.— VENDOR  AND  VENDEE  —  PERSONAL  PROPERTY. 

Section  1. — Vendor  against  Vendee. 

Recovery  on  executed  sales 642-644 

Recovery  for  part  of  stipulated  quantity 645,  646 

Liability  for  not  accepting  goods 647 

Effect  of  notice  by  vendee  of  refusal  to  accept    648 

Rule  of  damages  where  articles  made  to  order    649 

Vendee's  right  to  return  property    650 

Section  2.— Vendee  against  Vendor. 

Recovery  for  non-delivery  of  property  contracted  for 651-653 

Proof  of  value 654 

Rule  in  favor  of  vendor  when  delivery  impossible 655 

Damages  if  purchase  price  paid 656 

Contracts  for  delivery  of  stocks 657 

Sale  of  good-will 658 

Contracts  to  pay  in  or  deliver  specific  articles 659,  660 

Same  subject;  author's  view 661 

Consequential  damages  on  contracts  of  sale 663 

Same  subject;  illustrations.         663 

Damages  for  delay  in  delivering  property 664-666 

Warranties  of  quality  and  title 667,  668 

Damages  on  breach  of  warranty  of  title 669 

Damages  for  breach  of  warranty  as  to  quantity  or  quality 670-675 

Defense  to  action  for  purchase-money 676 

CHAPTER  XV.— CONTRACTS  FOR  SERVICES. 

Scope  of  chapter 677 

Recovery  where  wages  fixed  and  under  statute 678 

Recovery  on  quantum  meruit 679 

Proof  of  the  value  of  services 680 

A  statutory  day's  work 681 

Recovery  for  attorney's  services 683 

Recovery  for  broker's  services 683 

Various  modes  of  compensating  for  services 684 

Continuation  of  original  contract.    . 685 

Necessity  of  full  performance  of  entire  contract 686 

Same  subject;  dispensation  in  case  of  inability 687-690 

Entire  and  apportionable  contracts 691 

Liabilit}^  for  wrongful  dismissal  of  employee 692-694 

Liability  of  employee  for  violation  of  contract;  recoupment  of  dam- 
ages   '. 695 

CHAPTER  XVL—  CONTRACTS  FOR  PARTICULAR  WORKS. 

Section  1. —  Employer  against  Contractor. 

Nature  of  the  contract fi96 

General  rule  as  to  contractor's  liability 697,  698 

Defects  in  work  must  be  remedied 699 

Liability  if  accident  prevents  performance 700 


XX  TABLE    OF    CONTENTS. 

References  are  to  sections. 

Contractor  not  answerable  for  defects  in  plans 701 

Liability  for  non-performance  if  works  contracted  for  a  particular 

purpose ~02 

Damages  for  delay 703,  704 

Consequential  damages  for  defective  work 705 

Section  2,—  Contractor  against  Employer. 

Contract  price ;  rights  in  insurance  money 706 

Demands  for  extra  work 707 

Recovery  on  part  performance  of  severable  contract 709-711 

Certificate  of  architect,  engineer,  etc 712 

Liability  of  employer  for  stopping  work 713,  714 

Section  3.— Salvage. 

Requisites  of  salvage  service 715 

A  specific  amount  may  be  fixed  by  agreement 716 

Nature  of  peril  and  duty  of  claimant 717 

Property  must  be  saved 718 

Amount  recoverable 719 

Derelict  property . . 720- 

Forfeiture  of  right  to  compensation 721 

CHAPTER  XVIL—  SURETYSHIP. 

Section  1.— Creditor  against  Surety. 

The  contract  of  suretyship,  questions  arising  out  of 722 

Measure  of  surety's  liability 723 

Interpretation  of  surety's  contract 724 

Contract  not  to  be  extended  by  construction 725 

Illustrations  of  the  rule 726,  727 

Guaranties,  distinguishing  characteristics  of 728 

Measure  of  guarantor's  liability 729 

Effect  of  indorsing  negotiable  paper 730 

Methods  which  suretyship  assumed  for  negotiable  paper 731 

Measure  of  liability  of  guarantor  of  payment 732 

Guaranty  of  collectibility;  liability  for  costs;  diligence 733 

Guarantor's  liability  where  collateral  is  given 734 

Discharge  or  reduction  of  surety's  responsibility  by  act  of  creditor. .  735 

Right  of  subrogation 736 

Effect  of  creditor's  failure  to  realize  on  securities 737 

Same  subject:  release  limited  to  injury  sustained  by  surety 738 

Creditor's  duty  to  acquire  liens 739 

Value  of  re  leased  securities . .    ...       740 

Surety's  right  to  put  creditor  in  motion 741 

Effect  of  releasing  one  or  more  of  several  parties 742 

Surety's  right  to  defend  between  principals 743' 

Surety  may  set  up  right  of  recoupment 744 

Section  2. —  Surety's  Remedies  for  Indemnity. 

Action  against  principal  for  money  paid 745 

Who  is  the  principal 746 

When  right  of  action  accrues 747 

Measure  of  recovery 748 

Surety  may  compel  debtor  to  pay 749 

Payment  giving  right  to  reimbursement 750,  751 

Liability  of  principal  for  surety's  costs 752 

Principal  not  liable  for  consequential  damages 1 753 

Contribution  between  co-sureties 754 

W^ho  are  co-sureties 755 

Basis  of  contribution 756 


TABLE    OF    CONTENTS.  XXI 

References  are  to  sections. 

Insolvency  of  co-surety 757 

Indemnification  of  surety  by  principal 758 

Accrual  of  right  of  action;  voluntary  payments 759 

Conclusiveness  of  judgment 760 

Section  3. —  Express  Indemnities.' 

Damage  the  gist  of  the  action 761 

What  may  be  recovered 762,  76.'i 

Contribution  or  indemnity  betvpeen  wrong-doers 761 

Contracts  varying  from  indemnity,  but  intended  as  such 765,  766 

Etfect  of  judgment 767 

CHAPTER  XVIIL— AGENCY. 

Section  1.— Principal  against  Agent. 

The  reciprocal  obligations  of  principal  and  agent 768,  769 

Agent's  particular  duties  and  liabilities 770,  771 

Neglect  of  duty  or  agreement  concerning  insurance 772 

Disregard  of  orders  for  the  purchase  and  shipment  of  goods 773 

Miscellaneous  illustrations  of  agent's  liability 774 

Defaults  in  regard  to  commercial  paper 775,  776 

Same  principles  applied  to  factors 777 

Sales  at  unauthorized  price 778,  779 

Duty  to  sell  at  certain  times 780,  781 

Terms  of  sale 782 

Guaranty  commission 783 

Rendering  accounts 784 

Remitting   funds 785 

Liability  of  brokers 786 

Damages  for  acting  as  agent  without  or  in  excess  of  authority 787 

Section  2.— Agent  against  Principal. 

Agent's  rights 788 

Reimbursement  of  expenditures 789 

Factor's  right  to  reimburse  himself  by  sales 790 

Agent  may  charge  for  exchange 791 

How  right  of  reimbursement  affected  by  mode  of  doing  business 792 

Agent's  right  to  indemnity 793 

No  indemnity  for  unlawful  act 794 

Measure  of  recovery 795 

Section  3.— Third  Persons  against  Agent. 

When  agent  liable  to  third  persons 796 

Agent  liable  on  implied  warranty  of  authority 797 

The  measure  of  damages 798 

Recovery  of  money  from  agent 799 

Agent  liable  for  his  torts 800 

CHAPTER  XIX.—  INSURANCE 

Growth  and  importance  of  insurance  contracts  801 

Kinds  of  insurance 802 

Section  1.— Marine  Insurance. 

Cause  of  damage  must  be  proximate 803 

Extent  of  injury;  manner  of  ascertainment 804 

Interpretation  of  contract 8U5 

Valued  policies 806 

What  constitutes  a  total  loss;  "wholly  destroyed"  in  the  law  of  fire 

insurance 807 


XXll  TABLE    OF    CONTENTS. 

References  are  to  sectlona 

Contract  methods  for  ascertainment  of  damages 808 

When  proofs  of  loss  a  condition  precedent 809 

Manner  and  time  of  making  proofs 810 

Preliminary  proofs  for  information  only 811 

Pleadings 813 

Rule  of  damages  on  open  policies 813,  814 

Loss  in  excess  of  sum  fixed  in  policy 815 

Damages  in  case  of  partial  loss 816 

Losses  adjusted  on  the  principle  of  indemnity 817 

General  average 818,  819 

Section  2.— Fire  Insurance. 

Nature  of  contract;  how  made 820 

General  rule  of  damages  831 

Contribution  if  more  than  one  policy 822 

Mitigation  of  liability 823 

What  jurj"-  may  consider 824 

Proof  of  damages 835 

General  average  in  fire  insurance 826 

Recoveries  in  special  cases  827 

Insurance  on  commission  goods 828 

Insurance  by  mortgagee 829 

Contracts  to  replace  or  rebuild 880 

Section  3. —  Life  and  Accident  Insurance. 

Definition  of  life  insurance 831 

Character  of  the  contract 833,  833 

When  life  insurance  a  collateral  security 834 

Accident  policies 835 

Difference  between  English  and  American  decisions  as  to  scope  of 

recovery 836 

Restatement  of  the  measure  and  elements  of  damages  837 

Insurers  liability  for  terminating  the  contract 838 

Refusal  to  issue  paid-up  policy 839 

Liability  of  reinsurer  840 

CHAPTER  XX,— LANDLORD  AND  TENANT. 

Section  1.— Landlord  against  Tenant. 

Action  for  use  and  occupation 841 

Same  subject;  measure  of  recovery 842,  843 

Actions  for  rent;  abandonment  of  lease 844 

Same  subject;  amount  as  affected  by  subsequent  facts 845 

Recovery  of  rent  payable  in  specific  articles  or  as  taxes 846 

Termination  of  lease  by  lessor 847 

Recovery  of  rent  barred  by  eviction  of  lessee 848 

Apportionment  of  rent 849,  850 

Effect  of  partial  destruction  of  demised  property 851 

Effect  of  entire  destruction  of  demised  property 853* 

Effect  of  taking  demised  premises  for  public  use 853 

Lessee's  liability  for  interest 854 

Covenants  for  repairs 855 

Measure  of  liability  for  not  making  repairs 856-858 

Liability  of  assignee  of  lease  for  repairs 859 

Damages  for  repairs  and  non-repairs  in  special  cases 860 

Covenants  not  to  sublet  or  assign;   liability  for  breach;  proximate 

cause  of  loss 861 

Covenants  to  insure  863 


TABLE   OF   CONTENTS.  XX]  11 

References  are  to  sections. 
Section  2. —  Tenant  against  Landlorix 

Lessor's  covenant  for  quiet  enjoyment 863 

Same  subject;  the  general  rule  of  damages 864 

Same  subject;  special,  consequential  and  exemplary  damages 865,  866 

Same  subject:  recovery  for  damages  to  business 867-870 

Mitigation  of  damages  by  lessee 871 

Lessor's  covenant  to  repair,  etc 873 

Lessee's  duty  concerning  repairs 873 

Same  subject;  liability  for  special  and  consequential  damages 874 

Removal  of  fixtures 875 

Recoupment 876 

CHAPTER  XXL— CARRIERS. 

Section  1.— Actions  by  Carriers. 

Breach  of  contract  to  furnish  goods  for  shipment 877 

Measure  of  damages  on  charter-parties 878 

Recovery  for  partial  breach 879 

Carrier  must  mitigate  his  loss 880 

Shipper's  rights  in  profits  made  by  carrier 881 

Burden  of  proof 883 

Damages  for  breach  of  charter  to  load  with  enumerated  articles 883 

Carrier's  action  for  freight  charges 884 

Freight  charges  as  affected  by  value  of  property 885 

Discriminations  unlawful  when  conditions  are  similar 886 

When  freight  due  and  earned 887,  888 

When  shipper  not  liable  for  freight 889 

When  pro  rata  freight  due 890 

Same  subject;  transshipment  of  freight 891 

Right  to  freight  when  cargo  insured 892 

Rule  for  adjusting  pro  rata  freight 893 

Charges  and  expenses  if  delivery  hindered  or  prevented 894 

Freight  under  charter  to  load  with  enumerated  articles 895 

Recoupment  against  freight 896 

Demurrage 897 

Section  2. — Actions  against  Carriers. 

General  statement  of  carrier's  liability 89S 

When  damages  for  refusal  to  carry  measured  by  cost  of  transportation  899 

Liability  for  loss  of  shipper's  profits 900 

Increased  expenditures:  loss  of  customers 901 

Not  liable  for  remote  consequences 903 

Must  respond  for  negligent  delay;  proximate  cause 903 

Limitation  of  liability  by  contract 904 

Illustrations  of  liability  for  delay:  unmarketable  property 905 

Liability  for  loss  of  market  value,  quantity  or  quality 906 

Vmdication  of  the  rule  stated 907.  908 

Application  of  the  rule  to  ocean  carriage 909 

Delay  after  notice  of  arrival 910 

Increased  cost  of  obtaining  property 911 

Expense  of  further  ti-ansportation 913 

Liability  for  delay  where  facts  are  known 913,  914 

Physical  and  mental  suffering  as  elements  of  damage 915 

Carrier's  responsibility  in  caring  for  property 916 

Burden  of  proof  as  to  injury  or  loss 917 

Damages  if  goods  have  a  market  value;  recovery  by  bailee 918 

Damages  for  injury  or  loss  of  non-marketable  property 919 

Interest  on  damages 920 

Shipper's  efforts  to  lessen  loss 921 

When  damages  less  than  value  of  goods  at  destination 922 

Same  subject;  criticism  of  the  rule  stated 923 


XXIV  TABLE    OF    CONTENTS. 

References  are  to  sections. 

Same  subject;  loss  at  place  of  shipment 934 

Same  subject;  shipper's  conduct  may  affect  damages 925 

Qualification  of  carrier's  liability  by  notice 9'2G 

Liability  for  partial  loss  when  value  limited 927 

Apportionment  of  damage  in  case  of  mutual  fault 928 

Liability  not  mitigated  by  insurance 929 

Exemplary  damages 980 

For  what  losses  carrier  responsible 931 

Damages  where  there  are  successive  carriers 932 

Proof  of  value 933 

Section  8.— Caeriees  of  Passenqees. 

Nature  of  their  obligations 934 

Damages  for  refusing  to  carry 935^ 

Same  subject;  loss  of  time,  expense,  exposure,  humiliation 936 

Same  subject;  exemplary  damages 937 

Removal  of  passenger  at  wrong  place 9o8 

Same  subject;  consequential  damages 939 

Passenger's  indiscreet  acts  not  ground  of  damage 940 

Protection  of  passengers 941 

Damages  for  physical  and  mental  suffering 942 

Mental  suffering  independently  of  other  wrong 943 

Past  and  prospective  damages 944 

Proof  of  damage 945,  940 

Recovery  for  special  loss 947 

Wrongfully  placing  passenger  in  second-class  coach. 948 

Mitigation  of  damages 949 

Exemplary  damages  950 

Same  subject;  rule  different  in  some  states 951 

Injury  to  wife,  child  or  servant 953 

Excessive  verdicts 953- 

Loss  of  or  injury  to  baggage 954 

Same  subject :  measure  of  damages 955 

Liability  of  sleeping-car  companies 956 

CHAPTER  XXIL— TELEGRAPH  COMPANIES. 

Nature  of  their  duty  957 

Limitation  of  liability 958 

Liability  for  neglect  where  message  in  cipher 959 

Same  subject;  opposing  view. . . 960 

Liability  when  object  of  sender  known 961 

Same  subject;  illustrations 962-964 

Same  subject;  loss  of  claim;  physical  pain;  injury  to  credit 965 

Same  subject;  liability  for  expenses 966 

Same  subject;  loss  of  employment  and  profits  of  business 967 

When  company  charged  with  knowledge  of  sender's  purpose   968 

Same  subject;  details  need  not  be  disclosed 969 

Same  subject ;  result  of  the  decisions 970 

Same  subject;  opposing  view 971 

Form  of  action ;  who  may  sue  972 

Mitigation  of  damages  by  injured  party 973 

Exemplary  damages ....  974 

Damages  for  mental  suffering 975 

Same  subject;  reasons  upon  which  liability  rested 976 

Same  subject;  opposmg  authorities    977 

Same  subject;  grounds  upon  which  liability  denied 978 

Same  subject;  summary  of  the  authorities 979 

Same  subject;  conclusions  of  author 980 

Same  subject;  notice  to  the  company  . .    981 

Same  subject ;  measure  of  damages 982 


TABLE    OF    CONTENTS.  XXV 

References  are  to  sections. 

CHAPTER  XXIIL—  BREACH  OF  MARRIAGE  PROMISE. 

Nature  of  the  action ;  wlio  may  sue 983 

Seduction  as  an  aggravation , 984 

Consequences  of  seduction 985 

Injury  to  feelings  and  other  elements  of  damage 986 

Same  subject;  exemplary  damages 987 

Damages  for  loss  of  marriage 988 

What  will  excuse  a  breach  of  the  contract 989 

What  may  be  proved  in  mitigation 990 

CHAPTER  XXIV.—  EJECTMENT. 

Proceedings  regulated  by  statute 991 

Section  1. —  Mesne  Profits. 

The  remedy  for 992 

What  may  be  allowed  as  damages 993 

Recovery  limited  to  compensation 994 

Proof  of  rental  value 995 

What  property  withheld 996 

Interest 997 

Compensation  on  recovery  of  a  term 998 

Claims  for  improvements,  taxes,  etc. 999 

Remedy  under  the  code 1000 

Section  2.— Dower. 

The  right  of 1001 

It  is  assignable  on  a  valuation 1002 

Damages  for  detention  of  dower 1003 

Extinguishment  of  dower  right 1004 

Reprisals 1005 

Dower  limited  to  husband's  equitable  interest 1008 

Dower  right  subject  to  incumbrance 1007 


VOL.  4. 


CHAPTER  XXV.—  INJURIES  TO  REAL  PROPERTY. 

Scope  of  chapter 1008 

Section  1. —  Trespass  to  Real  Property. 

The  gist  of  the  action 1009 

Definition  of  trespass  and  scope  of  the  remedy 1010 

Damages  confined  to  compensation 101 1 

Damages  where  tenant  sues 1012 

Damages  where  suit  by  executor,  etc 1013 

Damages  measured  by  benefit  received . .  1014 

Damages  for  destruction  of  property 1015 

Occupation  of  land  by  railroads 1016. 

Damages  for  permanent  wrong  1017 

Damages  where  injury  remediable 1018 

Liability  for  cutting  trees,  and  mining  ores 1019 

Same  subject;  when  value  computed 1020 

Liability  for  additional  injury  to  land 1021 

Damages  to  unsecured  ice;  diversion  of  water 1022 

Destruction  of  and  injury  to  growing  crops 1023 

Destruction  of  fences  1024 

Injuries  to  party-walls 102'> 


XXVI  TABLE   OF    CONTENTS. 

References  are  to  sections. 

Interest  on  the  damages  1028 

Mitigation  of  damages  10^7 

Aggravations  and  special  damages 1028-103C 

Exemplary  damages 1031 

Same  subject;    mitigations  1032 

Section  3. —  Injury  to  Inheritance. 
Injury  to  the  rights  of  parties  not  in  possession 1033, 1034 

Section  3.— Nuisance. 

What  is  a  nuisance 1035 

General  principles  of  the  law  of  nuisance 1036 

Wrong-doer  liable  for  at  least  nominal  damages 1037 

Usually  a  continuing  wrong  requiring  successive  actions 1038 

What  recoverable  in  the  first  action 1039 

Continuing  liability  of  the  person  vrho  causes  it 1040 

Damages  may  include  future  expenditures 1041 

When  nuisance  not  a  continuing  vv^rong  1042-1045 

Same  subject;  result  of  tlie  cases 1046 

Depreciation  in  value  as  damages 1047 

Other  elements  of  damage 1048 

Injuries  to  crops,  trees,  etc . .  1049 

Liability  for  remoter  consequences 1050, 1051 

Exemplary  damages 1052 

Removal  of  lateral  support  to  land  1053 

1  nterf erence  with  business 1054 

Mitigation  of  damages 1055 

Same  subject;  deduction  for  benefits 1056 

Damages  affected  by  interest  in  estate. .   1057 

Private  remedy  for  public  nuisance 1058 

Joint  and  several  liability 1059 

Pleading 1060 

CHAPTER  XXVI.— TAKING  PROPERTY  FOR  PUBLIC  USK 

The  power  of  eminent  domain 1061 

Consequential  injury  to  property  not  taken. 1062 

What  is  just  compensation 1063 

IMeasure  of  compensation 1064 

Injury  to  property  not  taken 1065 

Same  subject;  what  facts  pertinent 1066-1070 

Same  subject;  remote  damages 1071 

Same  subject;  expenditures  to  lessen  loss 1072,  1073 

Basis  for  estimating  value  of  land 1074 

Same  subject;  value  for  special  purpose 1075 

Compensation  for  wrong-doer's  improvements 1076 

Compensation  affected  by  title  and  nature  of  interest  condemned; 

taking  railroad  property  for  street  and  telegraph  uses 1077 

Same  subject:  condemnation  of  railroad  property  for  railroad  uses. . .  1078 

Same  subject;  injury  to  franchise 1079 

Same  subject;  elevated  railroad  cases 1080 

Same  subject:  injuries  to  various  interests 1081, 1082 

Assessment  of  damages,  time  of 1083 

Deductions  for  benefits 1084-1087 

What  lands  considered  in  assessing  benefits  and  damages 1088 

Proof  of  value  and  damages 1089 

Effect  of  judgment  for  compensation  —  Abandonment  of  proceedings  1000 
Interest 1001 


TABLE    OF    CONTEXTS.  XXVll 

References  are  to  sections. 

CHAPTER  XXVIL— TRESPASS  TO  PERSONAL  PROPERTY. 

"When  damages  may  exceed  compensation 1092 

Certainty  of  damages 109;J 

Remedy  more  comprehensive  than  trover 1094 

Aggravations  increase  damages 1005 

Measure  of  damages  for  taking  or  destroying  property 109(5 

Same  subject ;  quantity  of  interest 1 097 

Same  subject;  market  value 1008 

Same  subject;  non-marketable  property 1000 

Special  and  consequential  damages 1100-1103 

Expenses  to  recover,  restore  and  protect  property 1103 

Mitigation  of  damages. . . .  • 1104 

Same  subject:  application  of  property  to  owner's  benefit HO") 

Damages  against  trespasser  from  the  beginning 1106, 1107 


CHAPTER  XXVIIL— CONVERSION. 

The  action  of  trover 1108 

The  general  rule  of  damages 1109,  1110 

Other  rules  of  damages  1111 

Time  of  conversion Ill "3 

Proof  of  value 1113 

Same  subject;  fixtures 1114 

Intei-est lUo 

Recovery  for  property  subject  to  sale 1116 

Damages  if  property  without  market  value 1117 

Damages  if  property  of  fluctuatmg  value 1118 

Same  subject;  criticism  and  modification  of  the  rule 1119 

Same  subject;  conflict  in  New  York  cases 1130 

Same  subject;  Pennsylvania  rule 1121 

Same  subject;  Massachusetts  rule 1122 

Same  subject;  English  and  Australian  cases 1128 

Same  subject;  rule  in  North  Carolina 1124 

Departure  from  the  general  rule  sometimes  justifiable 1125 

Recovery  where  value  of  property  enhanced  by  defendant 1126-1128 

Special  or  consequential  damages  1129 

Attorney's  fees 1130 

Exemplary  damages 1131 

Conversion  of  money  securities 1132 

Conversion  of  insurance  policies 1138 

Conversion  of  deeds,  etc 1 134 

Conversion  of  shares  of  stock 1 135 

Recovery  limited  to  plaintiff's  interest 1136,  1137 

Mitigation  of  damages 1138-1141 

Plaintiff's  duty  to  mitigate  damages 1142 


CHAPTER  XXIX— REPLEVIN. 

Section  1.— Plaintiff's  Case. 

Definitions;  who  may  sue 1143 

Measure  of  damages 1 144 

Exemplary  damages 1145 

Special  and  consequential  damages 1146 

Recovery  if  property  not  returned 1147,  1148 

Damages  affected  by  the  object  of  the  action 1149 

Recovery  for  use  and  increase  in  value 1150 

Intermediate  injury  and  depreciation 1151-1153 

Increase  in  value  by  defendant 1154 


XXVIU  TABLE    OF    CONTENTS. 

References  are  to  sections. 
Section  2. —  Defendant's  Case. 

•Successful  defendant's  rights 1155 

A  plaintiff  obtaining  possession  and  failing  in  his  suit  a  wrong-doer  1156 

Measure  of  daraages 1157 

Special  and  consequential  damages 1158 

Mitigation  of  damages 1159 

Recovery  affected  by  interest  in  property 1 160 

Recoupment 1161 

Part  of  property  found  for  each  party 1 162 

CHAPTER  XXX.—  FRAUD. 

Scope  of  the  natural  and  proximate  consequences 1163-1165 

False  representations 1 166 

Same  subject ;  materiality 1 167 

Same  subject;  reliance  upon  representations 1168 

Same  subject;  defendant's  belief  in  representations 1169 

Same  subject;  representations  need  not  be  made  to  plaintiff 1170 

The  measure  of  damages;  general  rule 1171 

Same  subject;  another  rule 1172 

Same  subject;  other  elements  of  damage 1173,  1174 

Remote  and  contingent  damages 1175,  1176 

Expenses  of  litigation 1177 

Exemplary  damages 1178 

Parties 1179 

Pleading 1180 

CHAPTER  XXXI.— INFRINGEMENT  OF  PATENT  RIGHTS. 

Statutory  remedies 1181 

Same  subject;  judicial  summary 1182 

Damages  recoverable  at  law 1183,  1184 

Same  subject;  profits  as  damages 1185 

Same  subject;  other  measures  of  damages 1186 

Interest  on  damages 1187 

Exemplary   damages 1188 

Compensation  in  equity 1189 

Same  subject;  computation  of  profits 1190,  1191 

Computation  to  what  time  made 1193 

Rule  when  whole  article  not  patented 1193,  1194 

Same  subject;  ascertainment  of  profits 1195 

Profits  recoverable  though  no  license  fee  established 1196 

Interest 1197 

CHAPTER  XXXII— INFRINGEMENT  OF  COPYRIGHT. 

Copyright  is  statutory 1198 

Compensatory  and  penal  recoveries 1199 

CHAPTER  XXXIIL— INFRINGEMENT  OF  TRADE-MARKS. 

Nature  of  the  right  to  a  trade-mark  and  of  the  wrong  of  infringement  1200 
The  measure  of  damages 1201,  1203 

XXXIV.— SLANDER  AND  LIBEL. 

Section  1.— Plaintiff's  Case. 

Nature  of  the  wrong 1203 

Accusations  actionable  per  se 1204 

Malice  the  gist  of  the  action 1205 

General  damages,  how  proven 1206,  1207 


TARLE    OF    CONTENTS.  XXIX 

References  are  to  sections. 

■Same  subject;  aggravation  of  damages 1208,  1209 

Same  subject;  wealth  aud  rank  of  the  parties 1210,  1211 

Evidence  of  reputation 1212 

Injuries  to  business 1213 

Mental  sulfering 12U 

Special  damages 121  •'J 

Examplary  damages I'-'l^ 

Damages  in  discretion  of  jury   1217 

Special  damages  when  words  not  actionable  per  se 1218,  1219 

Same  subject;  injury  to  feelings 1220 

Same  subject:  natural  consequences 1221 

Criticism  of  the  doctrine  last  stated 1222 

Slander  of  title 1223 

Section  2.— The  Defense. 

Failure  of  plea  of  justification 1224 

Same  subject ;  effect  of  statutes ; . .  1225 

Evidence  in  mitigation;  plaintiff's  bad  character. 1226 

Same  subject;  evidence  of  common  reports  as  to  plaintiff's  guilt 1227 

Same  subject;  proof  of  truth  of  words 1228,  1229 

Same  subject:  effect  of  statutes 1230 

Evidence  in  mitigation  generally 1231-1233 

CHAPTER  XXXV.—  MALICIOUS  PROSECUTION. 

Nature  of  the  wrong 1234,  1235 

Unauthorized  suit  or  appeal 1236 

Elements  of  damage 1237,  1238 

Evidence  in  mitigation 1239,  1240 

CHAPTER  XXXVL— PERSONAL  INJURY. 

Elements  of  damage 1241 

Physical  and  mental  pain 1242-1245 

Loss  of  time,  injury  to  business,  diminished  capacity 1246 

Same  subject;  pleading 1247 

Same  subject;  evidence 1248 

Same  subject ;  measure  of  recovery  1249 

Expenses  for  surgical  and  medical  aid,  etc 1250 

But  one  action  maintainable;  prospective  damages 1251 

Husband's  and  parents'  action 1252 

Exemplary  damages  ...    1253 

Pecuniary  and  other  circumstances  of  the  parties 1254 

Evidence  in  mitigation 1255 

Province  of  the  jury,  and  instructions  thereto 1256 

False  imprisonment 1257-1258 

CHAPTER  XXXVIL—  DAMAGES  RESULTING  FROM  DEATH. 

No  action  for  at  common  law 1259 

Nature  of  the  statutory  action 1260 

Diversities  as  to  beneticiaries 1261 

Only  pecuniary  losses  compensated  in  England  and  Canada 1262 

Same  subject:  rule  in  United  States 1263 

At  least  nominal  damages  recoverable 1264 

Recovery  by  widow 1265 

Recovery  by  husband 1266 

Children's  loss  from  death  of  parent . .     1267 

Facts  and  circumstances  to  be  considered  in  estimate  of  damages  1268-1271 
Recovery  for  death  of  child 1272-1275 


XXX  TABLE    OF    CONTENTS. 

References  are  to  sections. 

Damages  recoverable  by  collateral  kindred 1276 

Damages  to  the  deceased's  estate — 1277 

Special  damages -  _ 1278 

Contracts  exempting  from  liability 1279 

Where  the  injury  is  done  in  another  state 1280 

CHAPTER  XXXVIIL— SEDUCTION. 

The  technical  not  the  real  gist  of  the  action 1281 

Who  may  maintain  the  action 1282 

Evidence  for  plaintiff  and  damages  recoverable 1283 

Evidence  for  defendant  in  mitigation 1284 

Criminal  conversation  and  alienation  of  affections 1285 

CHAPTER  XXXIX.— DAMAGES  FOR  TORTS  IN  ADMIRALTY. 

Fundamental  difference  between  liability  in  admiralty  and  at  com- 
mon law 1286 

Division  of  loss  in  collision  cases 1287 

Rule  applicable  to  other  torts 1288 

Liability  confined  to  proximate  loss 1289 

Total  loss;  elements  of  damage 1290 

Total  loss,  what  is 1291 

Partial  loss;  elements  of  damage 1292,  1293 

Interest 1294 

Mitigation  of  liability 1295 

Recovery  by  owner  of  cargo 1296 


THE  LAW  OF  DAMAGES. 


PART  I. 


AN  ELEMENTARY  EXPOSITION  OE  THE  SUBJECT. 


CHAPTER  I. 

A  GENERAL   STATEMENT  OF  THE   RIGHT  TO  DAMAGES,  THEIR 
LEGAL  QUALITY  AND  KINDS. 

§  1.  General  observations. 

2.  The  right  to  damages;  how  amount  ascertained. 

3.  Damnum  absque  injuria;  injuria  sine  damno. 

4.  Public  wrongs. 

5.  Illegal  transactions. 

6.  Contractual  exemption  from  liability  for  damages. 

7.  Nature  of  the  right  to  damages;  its  survival, 

8.  Injuries  to  unborn  child. 

§  1.  General  observations.  The  chief  practical  value  of 
any  system  of  law  is  in  its  adaptability  and  efficiency  to  se- 
cure the  individual  in  the  full  enjoyment  of  his  rights,  and  in 
giving  him  adequate  relief  when  they  are  violated.  The  com- 
mon law  defines  these  rights,  and  professes  to  afford  a  remedy 
for  their  every  infraction.  In  the  nature  of  things,  this  rem- 
edy cannot  consist  in  so  annulling,  by  adjudication,  an  act 
which  violates  a  right  that  the  injured  party  will  be  restored 
to  its  enjoyment  as  though  there  had  been  no  interruption. 

The  consequences  of  an  act  which  is  an  invasion  of  an- 
other's right  may  be  arrested ;  in  some  cases  partial  restora- 
tion is  practicable.  But  unless  compensation  can  be  made  as 
a  substitute  for  that  to  which  a  party  is  entitled,  and  of  which 
he  has  been  more  or  less  deprived,  there  will  be  an  irreparable 
Vol.  I— 1 


2 


RIGHT   TO    DAMAGES. 


[§2. 


injury,  and  a  corresponding  failure  of  justice.  This  compensa- 
tion the  law  provides  for;  and  it  is  the  principal  object  of 
legal  actions  to  ascertain  what  it  should  be,  fix  the  amount, 
and  enforce  its  payment.  In  some  actions  the  paramount  pur- 
pose is  to  compel  the  defendant  to  yield  up  possession  of 
specific  property  which  the  plaintiff  claims  to  own,  and  inci- 
dentally to  obtain  compensation  for  its  detention,  as  in  eject- 
ment and  replevin.  So  in  actions  on  contracts  for  the  direct 
payment  of  money,  the  effect  of  recovery  is  apparently  to 
compel  the  defendant  to  do  the  very  thing  he  agreed  to  do; 
[2]  compensation  for  the  delay  in  the  form  of  interest  is  a 
subordinate  matter.' 

§  2.  The  right  to  damages;  how  amount  ascertained.  In 
contemplation  of  law,  every  infraction  of  a  legal  right  causes 
injury;  this  is  practically  and  legally  an  incontrovertible  prop- 
osition. If  the  infraction  is  established,  the  conclusion  of 
damage  inevitably  follows.^  This  deduction  is  made  though 
it  actually  appears  and  is  recognized   in  the  case  that  there 


1  Radloff  V.  Haase,  196  111.  365,  63 
N.  E.  Rep.  729,  citing  this  section. 

2  Radloff  V.  Haase,  196  111.  365,  63 
N.  E.  Rep.  739;  Hahn  v.  Cotton,  186 
Mo.  216.  37  S.  W.  Rep.  919;  Watson  v. 
New  Milford  Water  Co.,  71  Conn. 
442,  42  Atl.  Rep.  265;  Board  of  Water 
•Commissioners  v.  Perry,  69  Conn. 
461,37'AtL  Rep.  1059;  Quillen  v.  Betts, 
1  Pennewili,  53,  39  Atl.  Rep.  595: 
Ross  V.  Louisville,  etc.  Co.,  70  Miss. 
725,  12  So.  Rep.  825;  New  York  Rub- 
ber Co.  V.  Rothery,  132  N.  Y.  293, 30  N. 
E.  Rep.  84,  28  Am.  St.  575;  Green  Bay 
&  M.  Canal  Co.  v.  Kaukauna  Water 
Power  Co.,  112  Wis.  323,  87  N.  W.  Rep. 
864.    See  §§  9,  10. 

It  is  not  a  sufficient  objection  to 
the  recovery  of  damages  that  the 
action  brought  for  that  purpose  is 
witliout  precedent.  It  was  long  since 
determined  that  a  special  action  on 
the  case  was  introduced  because  the 
law  will  not  suffer  an  injury  and 
damage  without  affording  a  remedy. 
Winsmore  v.  Greenbank,  Willes,  577, 
580. 


One  who  is  induced  by  falsehood 
and  fraud  to  marry  a  woman  who  is 
pregnant  by  the  man  who  is  guilty 
thereof  may  recover  from  him  the 
damage  sustained.  Kujek  v.  Gold- 
man, 150  N.  Y.  176,  44  N.  E.  Rep.  773, 
55  Am.  St.  670,  34  L.  R.  A.  156. 

One  who,  notwithstanding  the  hus- 
band's protests,  persists  in  selling  a 
wife  drugs  knowing  that  she  uses 
them  constantly  and  that  their  use 
is  destructive  to  her  mental  and 
physical  faculties,  and  causes  her 
husband  the  loss  of  her  companion- 
ship and  services,  is  liable  to  him. 
Holleman  v.  Harward,  119  N.  C.  150, 
25  S.  K  Rep.  972,  56  Am.  St.  672,  34 
L.  R.  A.  803.  See  as  to  the  right  of 
action  in  favor  of  a  widow  for  the 
mutilation  of  the  body  of  her  de- 
ceased husband,  Foley  v.  Phelps,  1 
App.  Div.  551,  37  N.  Y.  Supp.  471; 
Larson  v.  Chase,  47  Minn.  307,  50  N. 
W.  Rep.  238,  28  Am.  St.  370, 14  L.  R.  A. 
85. 


§  2.]  EIGHT   TO    DAMAGES.  3 

was  in  fact  no  injury,  but  a  benefit  conferred.^  This  legal 
conclusion  of  damage  is  generally  indeterminate  as  to  amount; 
it  is  thnt  so?ne  damage  resulted;  if  no  proof  is  made  of  the 
actual  damage,  judgment  can  be  given  only  for  a  minimum 
■sum  —  nominal  damages.  In  cases  of  contract  it  may  occur 
that  for  any  breach  a  large  and  determinate  sum  will  become 
due,  for  which  judgment  without  proof  may  be  rendered.  But 
generally,  within  certain  limits,  the  actual  injury  is  to  be  es- 
tablished by  proof  as  matter  of  fact.  In  many  cases  of  tort, 
however,  the  injury  complained  of  is  of  such  a  nature  that 
compensation  cannot  be  awarded  by  any  precise  pecuniary 
standard,  and  there  is  no  legal  measure  of  damages,  because 
the  injury  does  not  consist  of  pecuniary  elements,  or  elements 
of  which  the  value  can  be  measured  or  expressed  in  money. 
The  compensation  which  shall  be  allowed  for  an  injury  of  this 
character  is  by  the  common  law  referred  to  the  sound  discre- 
tion and  dispassionate  judgment  of  a  jury.  Where  there  is  a 
legal  measure  of  damages  the  jury  must  determine  the  amount 
as  a  fact  according  to  that  measure,  otherwise  the  law  which 
measures  the  compensation  would  be  of  no  avail;  and  whether 
they  have  done  so  or  not  in  a  given  case  may  be  proximately 
seen  by  a  comparison  of  the  verdict  with  the  evidence.'-  Courts 
of  general  jurisdiction  have  power  over  verdicts,  and  may  set 
them  aside  when  the  jury  have  been  influenced  by  passion  or 
corruption,  or  have  disregarded  the  legal  measure  of  compensa- 

1  Murphy  V.  Fond  du  Lac,  23  Wis.  Rep.  797;  Cummings  v.  Riley.  52  N. 
365,  99  Am.  Dec.  181;  Roberts  v.  H.  368;  Chickering  v.  Lord.67  id.  555, 
Glass,  113  Ga.  456,  37  S.  E.  Rep.  704;  32  Atl.  Rep.  773;  Fitzgerald  v.  Dob- 
Excelsior  Needle  Co.  v.  Smith,  61  son,  78  Me.  559,  7  Atl.  Rep.  704:  Bar- 
Conn.  56,  23  Atl.  Rep.  693.  Compare  rett  v.  Maiden  &  M.  R.  Co.,  3  Allen, 
Bossu  V.  New  Orleans,  etc.  R.  Co.,  49  101;  Hoole  v.  Dorroh,  75  Miss.  257,  22 
La.  Ann.  1593,  22  So.  Rep.  809.  So.  Rep.  829;  Kingsbury  v.  Missouri, 

2  Parke  v.  Frank,  75  Cal.  364,  17  etc.  R.  Co.,  156  Mo.  379,  57  S.  W.  Rep. 
Pac.  Rep.  427,  citing  the  text.  547;  Carter  v.  Current  River  R.  Co., 

In  the  exercise  of  its  police  power  156  Mo.  635,  57  S.  W.  Rep.  738.   Corir 

the  state  may  fix  a  minimum  sum  as  tra,  Atchison  &  N.  R.  Co.  v.  Baty,  6 

compensatory  and  exemplary  dam-  Neb.  37;  Grand  Island,  etc.  R.   Co.  v. 

ages  for  the  violation  of  a  statute.  Swinbank.  51  Neb.  521,  71  N.  W.  Rep. 

Cramer  v.  Danielson,  99  Mich.  531,  58  48,   the  court   being  influenced,   to 

N.  W.  Rep.  476.    And  may  provide  some    extent,     because    exemplary 

that  the  damages  found  by  a  jury  damages  are  not  recoverable  under 

shall  be  doubled  by  the  court.     Fye  the  local  law. 
V.  Chapin,  121  Mich.  675,  80  N.   W. 


4  EIGHT    TO    DAMAGES.  [§  3. 

tion.  B}'  the  course  of  the  current  of  modern  decisions,  whether 
compensation  for  the  actual  injury  in  actions  for  torts  is  subject 
to  legal  measure  or  not,  if  the  injury  was  done  maliciously, 
fraudulently,  oppressively  or  with  wanton  violence,  such  meas- 
ure, if  an}^,  while  not  entirely  ignored,  ceases  to  be  the  limit 
of  recovery.  The  jury  are  at  liberty,  in  the  exercise  of  their 
[8]  judgment,  on  finding  such  malice  or  other  aggravation,  to 
give  additional  damages  as  a  solatium  to  the  party  so  wronged, 
and  as  a  punishment  to  the  wrong-doer.  The  sums  so  allowed 
by  law  and  found  by  a  jury  for  tortious  injuries,  or  losses 
from  breach  of  contract,  are  damages  —  the  pecuniary  redress 
which  a  successful  plaintiff  obtains  by  legal  action.  They  are 
for  the  most  part  compensation  for  civil  injury  —  exemplary 
damages  being  an  exception;  therefore,  the  law  relating  to 
the  subject  of  damages  is  principally  directed  to  defining  and 
measuring  compensation.^  The  civil  injur}'-  for  which  dam- 
ages may  be  recovered  must  be  one  which  is  recognized  as 
such  by  the  law;  it  must  result  from  the  violation  in  some 
form  of  a  legal  right.  No  damages  can  be  recovered  for  fail- 
ure  to  fulfill  a  merely  moral  obligation,  nor  for  any  wrong  or 
injury  which  consists  in  a  neglect  of  social  amenities. 

§  3.  Damnum  absque  injuria;  injuria  sine  damno.  The 
right  to  damages  constituting  a  legal  cause  of  action  requires 
the  concurrence  of  two  things:  that  the  party  claiming  them 
has  suffered  an  injury,  and  that  there  is  some  other  person 
who  is  legally  answerable  for  having  caused  it.  If  one  suf- 
fers an  injury  for  which  no  one  is  liable  it  gives  no  legal  claim 
for  damages:  it  is  damnum  absque  injuria;  so  if  one  does  a 
wrong  from  which  no  legal  injury  ensues,  there  is  no  legal 
cause  of  action :  it  is  injuria  sine  damno}     That  no  act  char- 

1  The  term  "  compensatory  dam-  Acts  clone  with  reasonable  care 
ages "  covers  all  loss  recoverable  as  pursuant  to  valid  statutes  will 
matter  of  right;  it  is  synonymous  not  render  those  who  perform  them 
with  "actual  damages."  Pecuniary  liable  for  damages  resulting.  High- 
loss  is  an  actual  damage;  so  is  bodily  way  Com'rs  v.  Ely,  54  Mich.  173,  19 
pain  and  suffering.  Gatzowv.  Buen-  N.  W.  Rep.  940;  Tate  v.  Greensboro, 
ing,  106  Wis.  1, 19,  81  N.  W.  Rep.  1003,  114  N.  C.  392,  19  S.  E.  Rep.  767,  24  L. 
49  L.  R.  A.  475,  80  Am.  St.  17.  R.  A.   671;  New  Haven   Steam  Saw 

2  McAllister  v.  Clement,  75  Cal.  182,  Mill  Co.  v.  New  Haven,  72  Conn.  276, 
16  Pac.  Rep.  775;  Wittich  v.  First  44  Atl.  Rep.  229,  609;  Transportation 
Nat.  Bank,  20  Fla.  843,  51  Am.  Rep.'  Co.  v.  Chicago,  99  U.  S.  635.  640; 
631.  Rowe  V.  Granite  Bridge  Co.,  21  Pick. 


§  3.]  RIGHT   TO   DAMAGES.  5 

acterized  by  these  negations  is  actionable  is,  in  the  abstract, 
a  truism.  When  we  say  that  a  person  who  suffers  an  injury 
whicli  does  not  arise  from  any  other  person's  fault  has  no  cause 
of  action,  a  self-evident  proposition  is  stated ;  and  equally  so 
when  we  say  that  no  person  has  a  cause  of  action  against  an- 
other for  the  latter's  wrongful  act  unless  he  is  injured  by  it. 
The  former  precludes  any  action  for  lawful  acts  lawfully  done, 
though  some  actual  hurt  or  loss  results  to  some  person  there- 
from.^ Thus,  for  example,  adjoining  land-owners  have  a  mutual 
right  of  lateral  support  to  the  soil  in  its  natural  state,  but  not 
under  the  pressure  of  buildings,  unless  a  prescriptive  right  to 
the  support  thereof  has  been  acquired.^  When  one  has  so 
loaded  down  his  soil  near  the  line,  the  other  still  has  the  right 
to  make  any  use  he  pleases  of  his  premises,  and  may  excavate  to 
the  line,  if  he  does  so  with  due  care,  upon  proper  notice  to  the 
other;  and  if  by  such  excavation  the  stability  of  the  buildings 
[4]  of  the  adjoining  proprietor  is  endangered,  or  they  are  in 
fact  destroyed,  it  is  an  injury  for  which  no  action  lies.^  The 
exercise  of  one's  right  to  dig  in  his  own  land  may  have  the 
effect  of  diverting  an  underground  stream  of  water  which  is 
beneficial  to  another,  or  of  draining  his  well,  but  the  act  of 
digging  which  causes  either  result,  not  being  wrongful  even 
though  done  with  malice,  there  is  no  redress  for  the  injury.''  This 

344;  Darlington    v.  Mayor,  31  N.  Y.  8  Am.  Dec.  369;  Lasala  v.  Holbrook, 

164;  Allegheny  County  v.  Gibson,  90  4  Paige,  169,  25  Am.  Dec.  524;  Mc- 

Pa.  397,  35  Am.  Rep.  670.  Guire  v.  Grant,  25  N.  J.  L.  356;  Hay 

lid.;  De  Baker  v.  Southern  Call-  v.  Cohoes  Co.,  2  N.  Y.  159;  Winn  v. 

fornia  R.  Co.,  106  Cal.  257,   39  Pac.  Abeles,  35  Kan.  91,  10  Pac.  Rep.  443; 

Rep.  610,  46  Am.  St.  237;  Friend  v.  White  v.  Nassau  Trust  Co..  168  N.  Y. 

United  States,  30  Ct.  of  Cls.  94, 107.  149,  61  N.  E.  Rep.  1135. 

2  A'Beckett  v.  Warburton,  14  Vict.  *  Acton  v.  Blundell,  12  M.  &  W.  324; 
L.  R.  308.  Chasemore  v.  Richards,  7  H.  of  L. 

3  Bass  V.  West,  110  Ga.  698,  36  S.  E.  Cas.  349,  2  H.  &  N.  168;  Mosier  v. 
Rep.  244;  Block  v.  Haseltine,  3-Ind.  Caldwell,  7  Nev.  363;  Chase  v.  Sil- 
App.  491,  29  N.  E.  Rep.  937;  Bohrer  verstone,  62  Me.  175;  Greenleaf  v. 
V.  Dienhart  Harness  Co.,  19  Ind.  App.  Francis,  18  Pick.  117;  Trustees,  etc. 
489,  49  N.  E.  Rep.  296;  Ulrick  v.  Da-  v.  Youmans,  50  Barb.  316;  Ellis  v. 
kota  Loan  &  Trust  Co.,  2  S.  D.  285,  Duncan,  11  How.  Pr.  515;  Lybe's 
49  N.  W,  Rep.  1054;  Laycock  v.  Appeal,  106  Pa.  626;  Mayor,  etc.  of 
Parker.  103  Wis.  161,  79  N.  W.  Rep.  Bradford  v.  Pickles,  [189.5]  App.  Cas. 
327;  Wyatt  v.  Harrison,  3  B.  &  Ad.  587.  See,  on  the  question  of  mo- 
875;  Thurston  v.  Hancock,  12  Mass.  tive,  Fisher  v.  Feige,  137  Cal.  39,  59 
220;  Panton  v.  Holland,  17  Johns.  92,  L.  R.  A.  333,  69  Pac.  Rep.  618. 


6  RIGHT   TO    DAMAGES.  [§  3.. 

principle  has  limitations.  Where  a  municipal  corporation  by 
the  operation  of  a  water  system,  consisting  of  wells  and  pumps 
on  its  own  land,  taps  the  subsurface  water  stored  in  the  land 
of  an  adjacent  owner  and  in  all  the  contiguous  territory,  and 
leads  it  to  its  own  land,  and  by  merchandizing  it  prevents 
its  return,  whereby  the  land  of  such  owner  is  impaired  for 
agricultural  purposes,  he  may  recover  for  the  wrong  done.^ 

Where  the  civil  law  is  not  in  force  or  its  analogies  have  not 
been  followed,  surface  water  is  regarded  as  a  common  enemy, 
and  every  landed  proprietor  has  the  right  to  take  all  necessary 
steps  to  protect  his  land  from  its  effects,  though  in  doing  so  the 
water  is  cast  upon  the  land  of  a  coterminous  proprietor  to  his  in- 
jury .^  Mr.  Gould  says  this  rule  prevails  in  England,  Massachu- 
setts, Maine,  Vermont,  JN^ew  York,  New  Hampshire,  Ehode 
Island,  New  Jersey,  Minnesota,  Wisconsin,  Nebraska,  Wash- 
ington, New  Mexico,  and  Texas.*  By  the  civil  law  interference 
with  the  natural  flow  of  surface  water  is  a  nuisance,  for  which 
nominal  damages  may  be  recovered  without  proof  of  actual 
damages.  The  courts  of  Pennsylvania,  Illinois,  North  Caro- 
lina, Alabama,  Kentucky,  Tennessee,  California  and  Louisiana 
have  adopted  this  rule,  and  it  has  been  referred  to  with  approval 
by  the  courts  of  Ohio  and  Missouri.^ 

The  owner  of  propert}'^  may  thus  and  otherwise,  whilst  in 
the  reasonable  exercise  of  established  rights,  casuall}'^  cause  an 
injury  which  the  law  regards  as  a  misfortune  merely,  and  for 
which  the  party  from  whose  act  it  proceeds  is  liable  neither  at 
law  nor  in  the  forum  of  conscience.  No  legal  liability  is  in- 
curred by  the  natural  and  lawful  use  of  his  land  by  the  owner 
thereof  in   the  absence  of  malice  or  negligence.*    Thus  one 

iForbell  v.    New  York,   164  N.  Y.  278;  O'Connor  v.  Fond  du  Lac,  etc. 

522,  51  K  R.  A.  695,  79  Am.  St.  666,  R.  Co.,  52  Wis.  526,  9  N.  W.  Rep.  287; 

58  N.  E.  Rep.  644,  atBrming  47  App.  Johnson  v.  Chicago,  etc.  R  Co.,  80 

Div.    ari,     61     N.   Y.     Supp.    1005;  Wis.  641,  50  N.  W.  Rep.  771,  14  L.  R. 

Willis  V.  Perry,  92  Iowa.  297,  60  N.  A.  495. 

W.  Rep.  727,  26  L.  R  A.  124.  3  Gould  on  Waters  (3d  ed.),  §  265. 

2  Edwards  v.  Charlotte,  etc,  R.  Co.,  *  Id.,  §  266.    See  Pfeiffer  v.  Brown, 

39  S.  C.  472.  18  S.  E.  Rep.  58,  22  L.  R  165  Pa.  267.  30  AtL  Rep.  844,  44  Am. 

A.  246;  Morrissey  v.  Chicago,  etc.  R  St.  598. 

Co.,  38  Neb.  406,  430,  56  N.  W.  Rep.  8  Pennsylvania  Coal  Co.  v.  Sander- 

946;  Rowe  v.    St.  Paul,  etc.   R   Co.,  son,    113  Pa.  126,  57  Am.  Rep.    445; 

41    Minn.   384.   43    N.    W.    Rep.    76;  Long  v.  Elberton,  109  Ga.  28,  34  S.  E. 

Cairo,  etc.  R  Co.  v.  Stevens,  73  Ind.  Rep.  333,  41  Am.  St.  454,  46  L.  R  A. 


§  3.]  EIGHT   TO    DAMAGES.  7 

opening  a  coal  mine  in  the  ordinary  and  usual  manner  may, 
■apon  bis  own  land,  drain  or  pump  tlie  water  which  percolates 
into  his  mine  into  a  stream  which  forms  the  natural  drainage 
of  the  basin  in  which  the  mine  is  situate,  although  the  quantity 
of  the  water  may  thereby  be  increased  and  its  quality  so  af- 
fected as  to  render  it  totally  unfit  for  domestic  purposes  by  the 
lower  riparian  owners.^  In  cases  of  this  nature  a  loss  or  dam- 
age is  indeed  sustained,  but  it  results  from  an  act,  which  is 
neither  unjust  nor  illegal,  done  by  another  free  and  respon- 
sible being.^  The  prosecution  in  good  faith  of  a  groundless  ac- 
tion may  give  the  defendant  great  annoyance,  and  cause  him 
loss  of  time  and  money;  but  the  plaintiff  in  such  case  is  exer- 
cising a  legal  right,  and  the  defendant,  according  to  the  weight 
of  authority,  if  there  has  been  no  interference  with  his  person 
or  property,  is  entitled  to  no  compensation  for  the  injury  he 
suffers  beyond  the  costs  which  may  be  taxed  in  his  favor.' 
Every  man  is  entitled  to  come  into  a  court  of  justice  and  claim 
what  he  deems  to  be  his  right;  if  he  fails  he  shall  be  amerced 
(according  to  the  old  principle)  for  his  false  claim;  and  the  de- 
fendant is  entitled  to  his  costs,  and  with  these  he  must  be  con- 
tent.* But  if  the  suit  be  malicious,  as  well  as  false  or  groundless, 

428;  Barnard  v.  Sherley,  135  Ind.  547,  erty  was  attached  and  a  new  action 

34  N.  E.  Rep.  600,  35  id.  117,  ^4  L.  R.  was  brouglit  for  the  same  cause  of 

A.  568,  575,  151  Ind.  160,  47  N.  E.  Rep.  action,  the  same  property  being  re- 

671.  attached,  the  only  claim  the  defend- 

1  Pennsylvania  Coal  Co.  v.  Sander-  ant  in  those  actions  could  maintain 

son,  supra.    This  case  has  been  con-  was  for  the  costs  for  failure  to  enter 

sidered  in  Robb  v.  Carnegie,  145  Pa.  the  first  writ;  for  the  malicious  suing 

324,  22  Atl.  Rep.  649,  27  Am.  St  694,  out  of  the  second  attachment  he  had 

14  L.  R   A.  329;  Lentz  v.  Carnegie,  no  remedy  because  no   wrong  was 

145  Pa,  612,  27  Am.  St.  717,  23  Atl.  done.  Johnson  v.  Reed.  136  Mass.  421. 

Rep.  219,  and  in  Drake  v.  Lady  Ens-  One  cannot  maintain  an  action  for 

ley  Coal,  Iron  &  R.  Co.,  103  Ala.  501,  the  malicious  prosecution  of  a  pro- 

48  Am.  St.  77,  14  So.  Rep.  749,  24  L.  ceeding  to  which  he  was  not  a  party. 

R.  A.  64,  the  latter  favoring  a  con-  Duncan  v.  Griswold,  92  Ky.  546,  18 

trary  rule.  S.  W.  Rep.   354;  Duncan  v.  Citizens' 

ii  Broom's  Max.  151.  Nat.  Bank,  20  Ky.  L.  Rep.  237,  45  & 

3Woodmansie  v.  Logan,  2  N.  J.  L.  W.  Rep.  1127. 

67;  Canter  v.   American  Ins.  Co.,  3  *Id-;  Henry  v.  Dufilho,  14  La.  48; 

Pet.  307;  Muldoon  v.  Rickey,  103  Pa.  Davies  v.  Jenkins,  11  M.  &  W.  745; 

110;    Eberly    v.    Rupp,    90   id.    259;  Boardman  v,  Marshalltown  Grocery 

Bishop  V.  American  Preservers  Co.,  Co..  105  Iowa,  445,  75  N.  W.  Rep.  343; 

105  Fed.  Rep.  845.     See  ch.  35.  Porter  v.  Johnson,  96  Ga.  145,  23  S. 

Where  there  was  an  intentional  E.  Rep.  123. 
non-entry  of  an  action  in  which  prop- 


8  EIGHT   TO    DAMAGES.  [§  3. 

the  party  bringing  it  is  answerable  in  an  action  at  law  by  the 
party  injured.^  The  making,  Ijona  jide,  of  defamatory  state- 
ments, though  they  are  harsh,  untrue  and  injurious,  in  the  as- 
sertion of  rights,  in  the  performance  of  a  duty,  or  in  fair 
criticism  upon  a  matter  of  public  interest,  is  also  damnum  ahs- 
[5]  que  injuria}  Private  houses  may  be  pulled  down  in  the 
interest  of  the  public  to  prevent  the  spread  of  fire,'  and  bul- 
warks may  be  raised  on  private  property  as  a  defense  against 
a  public  enemy.  So  owners  of  land  exposed  to  the  inroads  of 
the  sea,  or  commissioners  having  a  statutory  power  to  act  for 
a  number  of  such  owners,  have  a  right  to  erect  barriers,  though 
they  are  consequentially  prejudicial  to  others.*  Owners  of 
land  adjoining  streets  are  often  subjected  to  temporary  incon- 
venience while  work  is  being  done  thereon  for  their  improve- 
ment, or  to  change  their  grade,  or  by  their  temporary  use  for 
the  deposit  of  building  material  or  the  delivery  of  merchan- 
dise; yet,  in  the  absence  of  legislation,  there  is  no  right  to 
compensation  therefor;  no  legal  injury  is  recognized.^  The 
construction  of  a  new  way  or  the  discontinuance  of  an  old  one 
may  very  seriously  affect  the  value  of  property;  the  same  may 
result  from  the  removal  of  a  state  capital  or  county  seat;  but 
persons  suffering  loss  from  such  causes  have  no  legal  remedy.® 

1  Seech.  35.  233;  Griggs  v.    Foots,  4  Allen,  195; 

■-iTodd  V.  Hawkins,  8  C.  &  P.  88;  Benjamin  v.  Wheeler,  8  Gray,  409; 
Huntley  v.  Ward,  6  C,  B.  (N.  S.)  514;  Macey  v.  Indianapolis,  17  Ind.  267; 
Mackay  v.  Ford,  5  H.  &  N.  792;  Revis  Terre  Haute  v.  Turner,  36  Ind.  522; 
V.  Smith,  18  C.  B.  126;  Barnes  v.  Mc-  Radcliflf  v.  Mayor,  etc.,  4  N.  Y.  195; 
Crate,  32  Me.  442;  Henderson  v.  Mills  v.  Brooklyn,  32  N.  Y.  489;  Rome 
Broomhead,  4  H.  &  N.  569;  White  v,  v.  Omberg,  28  Ga.  46.  73  Am.  Dec. 
NichoUs,  3  How.  266;  Lawson  v.  748;  Hovey  v.  Mayo,  43  Me.  322;  Den- 
Hicks,  38  Ala,  279;  Calkins  v.  Sum-  ver  v.  Bayer,  7  Colo.  113,  2  Pac.  Rep. 
ner,  13  Wis.  193,  80  Am.  Dec,  738;  6;  Lake  Street  Elevated  R.  Co.  v. 
Allen  V.  Crofoot,  2  Wend.  515,  20  Brooks,  90  111.  App.  173;  Ridge  Ave- 
Am.  Dec.  647;  Lawler  v.  Earle,  5  nue  Passenger  R.  Co.  v.  Philadelphia, 
Allen,  22.  181  Pa.  592,  37  Atl.  Rep.  910:  Fernan- 

3  American  Print  Works  v.  Law-  dez  v.  Smith,  43  La.  Ann.  708;  Pueblo 

rence,  23  N.  J.  L.  9,  21  id.  248;  Su-  v.  Strait,  20  Colo.  13,  24  L.  R.  A.  392, 

rocco  V.  Geary,  3  Cal.  69;  Russell  v.  36  Pac.  Rep.  789;  Talbot  v.  New  York 

Mayor,   2  Denio,   461;  Field   v.  Des  &  H.  R,  Co..  151  N.  Y.  155,  45  N.  E. 

Moines.  39  Iowa,  575,18  Am.  Rep.  46;  Rep.  382;  Sanitary  District  of  Cbi- 

Aitken  v.  Wells  River,  70  Vt.  308,  40  cago  v.  McGuirl,  86  111.  App.  392. 
Atl.  Rep.  829,  41  L.  R.  A.  566.  ^  Swartz  v.  Board  of  Commission- 

*  King  V.  Pagham,  8  B.  &  C.  355.  ers,  158  Ind.  141,  63  N.  E.  Rep.  31,  and 

6 Reading  v.   Kepplemann,  61  Pa.  cases  cited;  Cooley's  Const.  Li m.  384 


§3.] 


EIGHT    TO    DAMAGES. 


9 


A  new  business  may,  by  competition,  greatly  impair  the  pro- 
ductiveness of  an  old  one,  but  there  is  no  redress  for  the  loss.- 
One  who  accepts  a  license  from  a  municipality  to  sell  liquors 
does  so  with  knowledge  that  it  is  revocable  at  the  pleasure  of 
the  officers  who  issued  it,  and  cannot  recover  damages  for  its 
revocation  though  that  be  done  without  cause,'-  or  through 
malice.^  Damage  by  way  of  increased  noise,  smoke,  cinders, 
etc.,  due  to  the  elevation  of  a  railroad  track  and  changes  in 
operating  the  road  is  da7nnuin  absque  injuria  as  to  one  who 
purchased  a  lot  adjoining  the  road  with  notice  of  the  existence 
of  a  right  of  way.*  A  breach  of  contract  does  not  afford  a 
cause  of  action  where  its  performance  is  prevented  by  law."* 
Kegardiess  of  his  motive,  so  long  as  his  acts  are  not  tainted 
with  fraud,^  a  person  may  sell  or  offer  for  sale  at  any  price 
goods  of  which  he  is  not  the  owner,  but  which  he  expects  or 
hopes  to  acquire,  and  may  make  his  price  public.'^     The  older 


See  Weeks'  Dam.  Absque  Injuria, 
ctu  1;  Stout  V.  Nobles ville  &  E. 
Gravel  R.  Co.,  S3  Ind.  466;  Hufif  v. 
Donehoo,  109  Ga.  638,  34  S.  E.  Rep. 
1035;  Nichols  v.  Richmond,  162  Mass. 
170,  38  N.  E.  Rep.  501;  Buhl  v.  Fort 
Street  Union  Depot  Co.,  98  Mich.  596, 
57  N.  W.  Rep.  829,  23  L.  R  A.  39-3; 
Frost  V.  Washington  County  R.  Co., 
96  Me.  76,  86,  51  Atl.  Rep.  806,  and 
cases  cited. 

iMasterson  v.  Short.  3  Abb.  Pr. 
<N.  S.)  154;  Hanger  v.  Little  Rock 
Junction  R.,  53  Ark.  61, 11  S.  W.  Rep. 
965. 

2Ison  v.  3Iayor  of  GriflSn,  98  Ga. 
623,  25  S.  E.  Rep.  611. 

SRaycroft  v.  Tayntor,  68  Vt.  219, 
33  L.  R.  A.  225,  35  Atl.  Rep.  53;  Doc- 
ter  V.  Riedel,  96  Wis.  158,  71  N.  W. 
Rep.  119,  37  L.  R.  A.  580. 

4Kotz  V.  Illinois  Central  R.  Co.,  188 
111.  578,  59  N.  E.  Rep.  240. 

^Malcomson  v.  Wappoo  Mills,  88 
Fed.  Rep.  680;  People  v.  Globe  Mut. 
L.  lus.  Co.,  91  N.  y.  174.  Contra, 
Spader  v.  Mural  Decoration  Manuf. 
Co.,  47  N.  J.  Eq.  18. 


"See  Richardson  v.  Silvester,  L, 
R.  9  Q.  B.  34. 

7  A jello  V.  Worslej'.  [1898]  1  Ch.  Div. 
274.  For  other  illustrations  see 
Southwestern  Telegraph  &  T.  Co.  v. 
Beatty,  63  Ark.  65,  37  S.  W.  Rep.  570; 
Cleveland  City  R.  Co.  v.  Osborn,  66 
Ohio  St.  45,  63  N.  E.  Rep.  604;  Ma- 
comber  V,  Nichols,  34  Mich.  212; 
Waffle  V.  Porter,  61  Barb.  130; 
Farmer  v.  Lewis,  1  Bush,  66;  Pon- 
tiac  V.  Carter.  32  Mich.  164;  Win- 
ters' Appeal,  61  Pa.  307;  Tinicum 
Fishing  Co.  v.  Carter,  id.  21;  Conger 
V.  Weaver,  6  Cal.  548;  Baker  v.  Bos- 
ton, 12  Pick.  184:  Winchester  v,  Os- 
born. 62  Barb.  337;  Gould  v.  Hudson 
River  R.  Co.,  6  N.  Y.  522;  Rood  v. 
New  York,  etc.  R.  Co.,  18  Barb.  80; 
Tyson  V.  Commissioners,  28  Md.  510; 
Tonawanda  R.  Co.  v.  Mungei%  5 
Denio,  255;  Radcliff  v.  Mayor,  etc.,  4 
N.  Y.  195;  Botsford  v.  Wilson,  75 
111.  132;  Mitchell  v.  Harmon}-,  13 
How.  135;  Cleveland,  etc.  R  Co.  v. 
Speer,  56  Pa.  325;  Snyder  v.  Penn- 
sylvania R.  Co.,  55 Pa.  340;  Hollister 
V.  Union  Co.,  9  Conn.  436;  Runnels  v. 
Bullen,  2  N.  H.  532. 


10  RIGHT    TO    DAMAGES.  .  [§  3.-. 

cases,  at  least  to  some  extent,  conditioned  the  exemption  of  the 
owner  of  property  from  liability  for  damages  to  another  caused 
by  his  lawful  use  of  it  upon  the  motive  which  actuated  such 
use,  and  that  qualification  has  been  embodied  in  several  of  the . 
propositions  stated  in  this  section.  The  better  rule  doubtless 
is  that  "  no  use  of  property  which  would  be  legal  if  due  to  a 
proper  motive  can  become  illegal  because  it  is  prompted  by  a 
motive  which  is  improper  or  even  malicious."  ^ 

[6]  The  futility  of  cases  of  wrong  without  injury  is  illus- 
trated by  cases  in  which  damages  are  the  gist  of  the  action 
and  none  are  shown.^  A  statute  making  it  a  misdemeanor  for 
any  citizen  to  assign  or  transfer  a  claim  for  debt  against  any 
other  citizen  for  the  purpose  of  having  the  same  collected  out 
of  the  wages  or  personal  earnings  of  the  debtor,  in  courts  out- 
side of  the  state  of  the  parties'  residence,  was  held  in  Indiana 
to  be  designed  merely  to  promote  the  public  welfare  and  not 
to  redress  private  grievances.  The  violation  of  it,  though  the 
consequence  is  the  collection  of  the  debt,  is  not  an  injury  in  a 
legal  sense  to  the  debtor,  though  such  collection  could  not 
have  been  enforced  under  the  exemption  laws  of  the  state  in 
which  the  debtor  and  creditor  resided.*     It  is  not  easy  to  har- 

1  Mayor,  etc.  of  Bradford  V.  Pickles,  A  statute  of  similar  import  is  re- 
[1895]  App.  Cas.  587;  Fisher  v.  Feige,  pugnant  to  the  fourteenth  amend- 
137  Cal.  39,  59  L.  R.  A.  333,  69  Pac.  nient  to  tlie  federal  constitution.  la 
Rep.  618.  A  limitation  of  the  rule  is  re  Flukes,  157  Mo.  125,  57  S.  W.  Rep. 
suggested  in  the  last  case,  based  on  545,  51  L.  R  A.  176.  But  not  void 
the  right  to  use  water  for  irrigating  under  the  constitution  of  Nebraska, 
purposes  under  the  local  law.  nor  under  sec.  1,  art.  4,  federal  con- 

2  Ford  V.  Smith,  1  Wend.  48;  Kim-  stitution.  Singer  Manuf.  Co.  v.  Flem- 
ball  V.  Connolly,  3  Keyes,  57,  33  How.  ing,  39  Neb.  679,  52  N.  W.  Rep.  226, 
Pr.   237;    Hutchins   v.   Hutchins,   7  28  L.  R  A.  210. 

Hill,  104;  Pollard  v.  Lyons.  91  U.  S.  A  debtor  is  not  defrauded  by  be- 

225;  Bassll  v.  Elmore,  65  Barb.  627;  ing  induced   by  a  false  representa- 

Kendall  v.  Stone,  5  N.  Y.   14;  Swan  tion  to  pay  his  debt.  Brown  v.  Blunt, 

V.  Tappan,  5  Gush.  104;  Dung  v.  Par-  73  Me.  415. 

ker,  52  N.  Y.  494;  Cook  v.  Cook,  100  A  creditor  who  fraudulently  in- 
Mass.  194;  Millard  v.  Jenkins,9  Wend,  duces  his  creditor  to  come  from  the 
298;  Stark  v.  Chitwood,  5  Kan.  141;  state  of  his  residence  into  that  of 
Franklin  v.  Smith,  21  Wend.  624;  the  former's  domicile,  with  intent  to 
Mayer  v.  Walter,  64  Pa.  283;  Birch  cause  his  arrest  and  compel  him  to 
V.  Benton,  26  Mo.  153;  Speaker  v.  pay  for  his  release,  commits  an  ac- 
McKenzie,  id.  255;  Gii-ard  v.  Moore,  tionable  fraud.  Sweet  v.  Kimball, 
86  Tex.  675,  26  S.  W.  R*ep.  845.  1G6  Mass.  332,  44  N.  E  Rep.  243,  h'^ 

^Uppinghouse  v.  Mundel,  103  Ind.  Am.  St.  406. 
238,  2  N.  E.  Rep.  719. 


§  4.]  EIGHT   TO   DAMAGES.  11 

monize  this  doctrine  Avith  that  which  mves  a  rii^ht  of  action 
against  a  creditor  who  seizes  his  debtor's  exempt  property  or 
garnishes  his  exempt  wages ;^  or  with  that  which  enjoins  a 
citizen  from  prosecuting  an  attachment  in  the  courts  of  an- 
other state  against  a  co-citizen  for  the  purpose  of  enforcing 
the  payment  of  a  demand  out  of  earnings  which  are  exempt 
by  the  law  of  the  domicile.-  In  a  late  case  it  is  held  that  a 
citizen  who  sues  a  debtor  in  another  state  for  the  purpose  of 
evading  the  exemption  laws  of  the  state  of  which  they  are 
both  residents  is  liable  for  such  damages  as  may  result.^  An- 
other such  case  determines  that  a  creditor  who  prosecutes  an 
attachment  in  a  foreign  state  against  a  resident  of  a  state  a 
statute  of  which  forbids  such  proceedings  against  a  debtor's 
exempt  property,  and  in  violation  of  an  order  of  court,  is  liable 
to  his  debtor  after  collection  of  his  demand.^ 

§  4.  Public  wrongs.  The  law  does  not  give  a  private  rem- 
edy for  anything  but  a  private  wrong.^  A  public  wrong,  though 
the  perpetrator  of  it  may  be  subject  to  prosecution  by  the 
public,  may  also  have  the  nature  and  consequences  of  a  private 
wrong,  and  be  actionable  as  such  in  behalf  of  a  person  who 
sustains  an  injury  differing  in  kind  from  that  which  the  public 
at  large  suffers.^     A  land-owner  who  has  a  right  of  egress  in 

^  Albrecht  v.  Treitschke,  17  Neb.  melin  v.  Coxe,  30  Ala.  318;  Lansing 

205,  22  N.  W.  Eep.  418;  Haswell  v.  v.  Wiswall,  5  Denio,  213;  Lansing  v. 

Parsons,  15  Cal.  266.  Smith,  8  Cow.  146,  4  Wend.  9;  Pierce 

2  Snook  V.  Suetzer,  25  Ohio  St.  516;  v.  Dart,  7  Cow.  609;  Mills  v.  Hall,  9 
Zimmerman  v.  Franke,  84  Kan.  650,  Wend.  315;  Myers  v.  Malcolm,  6  Hill, 
9  Pac.  Rep.  747;  Stewart  v.  Thorn-  292;  Gates  v.  Blincoe,  2  Dana.  158; 
son,  97  Ky.  575,  31  S.  W.  Rep.  133,  53  Shulte  v.  North  Pacific  Transporta- 
Am.  St.  431.  tion  Co..  50  Cal.  592;  Baxter  v.  Wi- 

3  Stark  V.  Bare,  39  Kan.  100,  17  nooski  Turnpike  Co.,  22  Vt.  114;  See- 
Pac.  Rep.  826.  ley  v.  Bishop,  19  Conn.  128;  Stetson 

4  Main  v.  Field,  13  Ind.  App.  401,  v.  Faxon,  19  Pick.  147;  Francis  v. 
40  N.  E.  Rep.  1103.  Schoellkopf,  53  N.  Y.  152;  Venard  v. 

5  3  Black.  Com.  219.  Cross,    8    Kan.   248;    Pittsburgh   v. 
^Chicago  V.  Union  Building  Ass'n,     Scott,  1  Pa.  309;  Runyan  v.  Bordine, 

102  111.  379,  393;  Whitsett  v.  Union  14  N.  J.  L.  472;  Hatch  v.  Vermont 

Depot  &  R.  Co.,  10  Colo.  243,  15  Pac.  Central  R.  Co.,  28  Vt.  142;  Brown  v. 

Rep.  339;  Rose  v.  Miles,  4  M.  &  S.  101 ;  Watson,  47  Me.  161;  Pruning  v.  New 

Greasly    v.    Codling,   2    Bing.   263;  Orleans,  etc.  Co.,  12  La.   Ann.  541; 

Mayor,  etc.  v.  Henley,  1  Bing.  N.  C.  Clark  v.  Peckham,  10  R.  I.  35:  Gor- 

222;  Goldthorpe  v.  Hardman,  13  M.  don  v.  Baxter,  74  N.  C,  470;  Dudley 

&   W.   377;    Wilkes  v.   Hungerford  v,  Kennedy,  63  Me.  465;  Hamilton  v. 

Market  Co.,  2  Bing.  N.  C.  281;  Crom-  Mayor,  etc.,  53  Ga.  435;  Baxter  v. 


12  EIGHT    TO    DAMAGES.  [§  5. 

a  given  direction  by  way  of  a  street  may  have  an  injunction 
to  restrain  the  closing  of  the  street,  on  the  theory  that,  by 
being  obliged  to  take  a  circuitous  route  to  reach  a  place  or  ob- 
ject, he  suffers  special  damage.^  On  grounds  of  public  policy, 
and  because  judgments  cannot  be  impeached  in  collateral  pro- 
ceedings, a  party  to  a  suit  cannot  maintain  an  action  against 
his  successful  adversary  for  suborning  a  witness  whose  false 
testimony  tended  to  produce  the  judgment;^  nor  for  the  ad- 
verse party's  fraud  and  false  swearing,  so  long  as  the  judgment 
stands.^  For  like  reasons  a  defeated  suitor  cannot  maintain  an 
action  for  damages  against  a  witness  for  fasely  testifying  in 
favor  of  the  adverse  party.''  "Where  a  statute  prohibited  the 
sending  of  animals  affected  with  a  contagious  disease  to  mar- 
ket, and  inflicted  penalties  on  any  person  so  sending  them,  the 
violation  of  it,  with  knowledge,  was  a  public  offense,  but  it  did 
not  amount,  by  implication,  to  a  representation  that  the  ani- 
mals sent  w^ere  sound,  and  did  not  raise,  as  between  the  par- 
ties to  a  sale  of  them,  any  right  on  the  part  of  the  purchaser 
to  claim  damages  in  respect  of  an  injury  he  had  suffered  in 
consequence  of  buying  the  animals.'^  A  citizen  cannot  recover 
damages  from  a  canal  company  for  its  failure  to  reconstruct  a 
part  of  its  canal  because  he  was  thereby  prevented  from  deriv- 
ing a  profit  by  the  use  of  his  boat  on  the  canal.® 

§  5.  Illegal  transactions.     It  may  be  assumed  as  an  undis- 
puted principle  that  no  action  will  lie  to  recover  a  demand,  or 

Coughlin,  70  Minn.  1,  72  N.  W.  Rep.  Barton,  62  Mich.  196,  28  N.  W.  Rep. 

797;  Pueblo  v.  Strait,  20  Colo.  13,  36  813;  Eyres  v.  Sedgewicke,  Cro.  Jac. 

Pac.  Rep.  789,  24  L.  R.  A.  392.     See  601;  Young  v.  Leach,  27  App.  Div. 

Shaubut  V.  St.  Paul.  etc.  R.  Co.,  21  293,  50  N.  Y.  Supp.  670. 

Minn.  502;  Proprietors,  etc.  v.  New-  3  Curtis  v.  Fairbanks,  16  N.  H.  542; 

comb,  7  Met.  276;  Pekin  v.  Brereton,  Lyford  v.  Denierritt,  32  N.  H.  234; 

67  111.  477.  Damport  v.  Sympson,  Cro.  Eliz.  520; 

1  Sheedy    v.    Union    Press    Brick  Revis  v.  Smith,  18  C.  B.  125. 

Works,  25  Mo.  App.  527;  Glasgow  v.  4 Stevens  v.  Rowe,  59  N.  H.  578,  47 

St.  Louis,  15  id.  112,  87  Mo.  678;  Cum-  Am.  Rep.  231. 

niings  V.   St.  Louis,  90  Mo.  259,  2  S.  &  Ward  v.  Hobbs,  L.  R.  4  App.  Cas. 

W.  Rep.  180.  13.     See  Mairs  v.  Baltimore  &  O.  R. 

2Bostwick  V.   Lewis,  2  Day,  447;  Co.,  73  App.  Div.  265,  76  N.  Y.  Supp. 

Smith  V.  Lewis,  3  Johns.  157;  Ross  838;  Midland  Ins.  Co.  v.  Smith,  6  Q. 

V.  Wood,  70  N.  Y.  8;  United  States  B.  Div.  561:  Bradlaugh  v.  Clarke,  L. 

V.  Throckmorton,  98  U.  S.  61;  Pico  v.  R  8  App.  Cas.  354. 

Cohn,  91  Cal.  129,  25  Pac.  Rep.  970,  «  Saylor  v.  Pennsylvania  Canal  Co., 

27  id.  537,  13  L.  R.  A.  336;  Gray  v.  183  Pa.  167,  38  AtL  Rep.  598. 


§  5.J  EIGHT   TO   DAMAGES.  13 

a  supposed  claim  for  damages,  if,  to  establish  it,  the  plaintiff 
requires  aid  from  an  illegal  transaction,  or  is  under  the  neces- 
sity of  showing  and  depending  in  any  degree  upon  an  illegal 
agreement  to  which  he  was  a  party.^  A  bank  is  not  liable  for 
failure  to  perform  its  contract  to  lend  or  advance  money  to  be 
used  in  speculating  in  futures.-  The  sender  of  a  telegram  re- 
lating to  a  gambling  contract  in  stocks  cannot  invoke  such 
contract,  or  the  gain  or  loss  resulting  from  it,  to  measure  the 
damages  sustained  in  consequence  of  its  non-delivery.^  This 
principle  does  not  extend  to  a  contract  which  is  merely  ultra 
vires,  involves  no  turpitude,  and  does  not  offend  against  any 
express  statute.*  Neither  does  it  follow  that  if  two  persons 
are  engaged  in  the  same  unlawful  enterprise,  each  of  them 
while  so  engaged  is  irresponsible  for  wilful  injuries  done  to 
the  property  of  the  other.  If,  in  such  a  case,  the  plaintiff  can 
maintain  his  action  without  being  obliged  to  show  that  he  was 
unlawfully  engaged  when  his  right  to  bring  it  accrued  he  may 
recover;  his  action  cannot  be  defeated  because  the  defendant 
makes  proof  of  the  illegal  act.  The  latter  cannot  be  relieved 
from  the  consequences  of  his  unlawful  conduct  by  showing 
the  wrong-doing  of  the  plaintiff  and  his  own  participation 
therein.^  In  Massachusetts,  if  the  injury  is  sustained  on  the 
Lord's  dav  and  results  from  the  negligence  of  the  defendant, 
no  element  of  wilfulness  existing,  the  violation  of  the  statute 

1  Welch  V.  Wesson,  6  Gray,  505;  Palace  Car  Co.  v.  Central  Transpor- 
Greggv.Wyman,4Cush.l22;  Phalen  tation  Co..  171  U.  S.  138,  150.  18  Sup. 
V.  Clark,  19  Conn.  421,  50  Am.  Dec.     Ct.  Rep.  80S;    Bishop  v.  American 


253;  Simpson  v.  Bloss,  7  Taunt.  246 
Myers  v.  Meinrath,  101  Mass.  366 
Connolly  v.  Boston,  117  Mass.  64 
Gulf,  etc.  R.  Co.  V.  Johnson,  71  Tex, 
619,  9  S.  W.  Rep.  602,  1  L.  R.  A.  730 
Kitchen  v.  Greenabaum,  61  Mo.  110 


Preservers  Co.,  105  Fed.  Rep.  845; 
Meyers  v.  Merrillion,  118  Cal.  352,  50 
Pac.  Rep.  662;  Edwards  v.  Randle, 
63  Ark.  318,  58  Am.  St.  108,  36  L.  R. 
A.  174,  38  S.  W.  Rep.  518;  Kelly  v. 
Courter,  1  Okla.  277, 30  Pac.  Rep.  372. 


The  Arrogante  Barcelones,  7  Wheat.  ^  Moss  v.  Exchange  Bank,  102  Ga. 

496;  The  Clarita  and  The  Clara,  23  808,   30  S.    E.   Rep.   267,    overruling 

WalL   1;    Meguire  v.   Corwine,   101  Western  U.  Tel.  Co.  v.  Blauchard,  68 

U.  S.  108;  Oscanyan   v.  Winchester  Ga.  299. 

Arms  Co.,  103  id.  261;  Niagara  Falls  » Morris  v.  Western  U.  Tel.  Co.,  94 

Brewing  Co.  v.  Wall,  98  Mich.   158,  Me.  423,  47  Atl.  Rep.  926. 

57  N.  W.  Rep.  99;  Haggerty  v.  St.  ^Bath  Gas  Light  Co.  v.  Clafify,  151 

Louis  Ice  Manuf.  &  Storage  Co.,  143  N.  Y.  24,  45  N.  E.  Rep.  390,  36  L.  R. 

Mo.  238,  65  Am.  St.  647.  40  L.  R.  A.  A.  664. 

151,  44  S.  W.  Rep.   1114;  Pullmans  5 Welch  v.  Wesson,  6  Gray.  505. 


14  EIGHT   TO    DAMAGES.  [§  6. 

concerning  the  observance  of  that  day  is  regarded  as  contrib- 
utory negligence,  though  the  plaintiff  is  otherwise  free  from 
fault.^  As  applied  to  actions  which  are  not  based  on  contract 
the  rule  stated  is  generally  disapproved.^  "  The  cases  may  be 
summed  up,"  said  Dixon,  C.  J.,  "  and  the  result  stated  gener- 
ally to  be  the  affirmance  of  two  very  just  and  plain  principles 
of  law  as  applicable  to  civil  actions  of  this  nature,  namely : 
first,  that  one  party  to  the  action,  when  called  upon  to  answer 
for  the  consequences  of  his  own  wrongful  act  done  to  the 
other,  cannot  allege  or  reply  the  separate  or  distinct  wrongful 
act  of  the  other,  done  not  to  himself  nor  to  his  injury,  and  not 
necessarily  connected  with,  or  leading  to,  or  causing  or  pro- 
ducing the  wrongful  act  complained  of;  and  secondly,  that 
the  fault,  want  of  due  care  or  negligence  on  the  part  of  the 
plaintiff  which  will  preclude  a  recovery  for  the  injury  com- 
plained of  as  contributing  to  it  must  be  some  act  or  conduct 
of  the  plaintiff  having  the  relation  to  that  injury  of  a  cause  to 
the  effect  produced  by  it." '  Though  an  illegal  contract  will 
not  be  executed,  yet  when  it  has  been  executed  by  the  parties 
themselves,  and  the  illegal  object  has  been  accomplished,  the 
money  or  thing  which  is  the  price  of  it  may  be  a  legal  consid- 
eration between  the  parties  for  a  promise,  express  or  implied, 
and  the  court  will  not  unravel  the  transaction  to  discover  its 
origin.^ 

§  6.  Contractual  exemption  from  liability  for  damages. 
The  benefit  of  the  rules  of  law  which  provide  compensation 
for  injury  may,  where  no  question  of  public  policy  is  involved, 

1  Bosworth  V.  Swansey,  10  Met.  363,  Pac.  Rep.  397,  50  L.  R.  A.  783,  citing 
43  Am.  Dec.  441;  Jones  v.  Andover,    numerous  cases. 

10  Allen,  18.  An  action  lies  for  injury  done  to 

2  Sutton  V.  Wauwatosa,  29  Wis.  21,  property  used  for  gaming  purposes 
9  Am.  Rep.  534;  Louisville,  etc.  R.  if  it  was  not  so  used  at  the  time  it 
Co.  V.  Buck,  116  Ind.  566,  2  L.  R.  A.  was  damaged.  Gulf,  etc.  R.  Co.  v. 
520,  19  N.  E.  Rep.  453.  9  Am.  St.  883:  Johnson,  71  Tex.  619,  9  S.  W.  Rep.  602, 
Same  v.  Frawley,  110  Ind.  18,  9  N.  E.  1  L.  R.  A.  730. 

Rep.  594,  1  L.  R.  A.  730:  Knowlton  ^  gutton     v.    Wauwatosa,    supra; 

V.  Milwaukee  City   R.  Co.,  59  Wis.  Taylor  v.  Western  U.   Tel.  Co.,   95 

278,  18  N.  W.  Rep.  17;  Gulf,  etc.  R,  Iowa,  740,  64  N.  W.  Rep.  660. 

Co.  V.  Johnson,  71  Tex.  619,  9  S.  W.  *  Planters'  Bank  v.  Union  Bank,  16 

Rep.  602,  and  numerous  other  cases  Wall.   483;    McBlair    v.   Gibbes,    17 

referred  to  in  the  three  first  cited;  How.   232;    Kinsman   v.   Parkhurst. 

Kansas  City  v.  Orr,  62  Kan.  61,  61  18  How.  289;    Brooks  v.  Martin,  2 

Wall.  70. 


C] 


BIGHT   TO    DAMAGES. 


be  waived  or  relinquished  in  whole  or  in  part  by  contract.^ 
Thus  persons  engaged  in  public  employnients  out  of  which 
spring  duties  and  responsibilities  to  patrons  may  be  relieved 
to  some  extent  by  contract  of  liabilities  imposed  by  law, 
where  such  waivers  or  limitations  are  reasonable  and  not  in- 
consistent with  sound  public  policy.  The  responsibility  of  a 
common  carrier  as  an  insurer  may  be  so  limited  by  contract.^ 
It  is  settled,  however,  that  a  carrier  cannot,  by  any  agree- 
ment with  shippers  or  patrons,  relieve  itself  from  responsibil- 
ity for  its  own  negligence,  or  that  of  its  servants;  and  this  be- 
cause such  release  is  unreasonable  and  contrary  to  public 
policy.*  The  weight  of  authority  is  to  the  contrary  where 
injury  is  sustained  by  a  passenger  while  riding  on  a  free  pass 
which  stipulates  for  the  release  of  the  carrier's  liability  for  in- 
jury sustained  through  its  negligence.* 

At  common  law  there  was  no  right  to  recover  damages  for 
negligence  which  caused  the  death  of  a  human  being.  That 
-right,  being  given  by  statute,  may  thereby  be  abolished  or 


1  Geiser  Manuf.  Co.  v.  Krogman, 
111  Iowa,  503,  83  N.  W.  Rep.  938,  cit- 
ing the  text;  Griswold  v.  Illinois 
Central  R.  Co.,  90  Iowa,  265,  57  N.  W. 
Rep.  843,  24  L.  R.  A.  647. 

2  See  Meehem's  Hutchinson  on  Car- 
riers, ch.  7;  note  to  Cole  v.  Goodwin, 
32  Am.  Dec.  495-506;  ch.  21. 

3  Bank  of  Kentucky  v.  Adams  Exp. 
Co.,  93  U.  S.  181;  Railway  Co.  v. 
Stevens,  95  id.  655;  Chicago,  etc.  R. 
Co.  V.  Abels,  60  Miss.  1017:  Walling- 
ford  V.  Columbia  &  G.  R.  Co.,  26  S. 
C.  258,  30  Am.  &  Eng.  R.  Cas.  40,  2  S. 
E.  Rep.  19;  Alabama,  etc.  R.  Co.  v. 
Little,  71  Ala.  611,  12  Am.  &  Eng.  R. 
Cas.  37;  American  Exp.  Co.  v.  Sands, 
55  Pa.  140;  United  States  Exp.  Co.  v. 
Backraan,  28  Ohio  St.  144;  Judson  v. 
Western  R.  Corp.,  6  Allen,  486;  Ball 
V.  Wabash,  etc.  R.  Co.,  83  Mo.  574; 
Christenson  v.  American  Exp.  Co., 
15  Minn.  270. 

The  rule  seems  to  be  different  in 
New  York  if  the  intention  is  clearly 
■expressed.  Nelson  v.  Hudson  River 
R.   Co.,   48  N.   Y.  498;    Nicholas  v. 


New  York  Central,  etc.  R.  Co.,  89  id. 
370. 

A  railway  company  may  contract 
as  a  private  carrier  for  the  transpor- 
tation of  matter  for  express  compa- 
nies, and  require  exemption  from  lia- 
bility as  a  condition  precedent  to 
carrying.  Pittsburgh,  etc.  R.  Co.  v. 
Mahoney.  148  Ind.  196,  46  N.  E.  Rep. 
917, 40  L.  R  A.  101.  Contra.  Voight  v. 
Baltimore,  etc.  R.  Co.,  79  Fed.  Rep.  561. 

*  Payne  v.  Terre  Haute  &  I.  R.  Co., 
157  Ind.  616.  62  N.  E.  Rep.  472;  Gris- 
wold V.  New  York,  etc.  R,  Co.,  53 
Conn.  371,  55  Am.  Rep.  115,  4  Atl. 
Rep.  261 ;  Rogers  v.  Kennebec  Steam- 
boat Co.,  86  Me.  261,  29  Atl.  Rep.  269, 
25  L,  R.  A.  491;  Quimby  v.  Bo-ston 
&  M.  R.  Co.,  150  Mass.  365,  23  N.  E. 
Rep.  205,  5  L,  R.  A.  846;  Kinney  v. 
Central  R.  Co.,  34  N.  J.  L.  513,  3  Am, 
Rep.  265;  Wells  v.  New  York,  etc.  R. 
Co.,  24  N.  Y.  181;  Muldoon  v.  Seattle 
City  R  Co,,  7  Wash.  528,  35  Pac.  Rep. 
422.  22  L.  R.  A.  794,  38  Am.  St.  901, 
10  Wash.  311,  38  Pac.  Rep.  995,  45 
Am.  St.  787. 


16  RIGHT   TO   DAMAGES.  [§  &;- 

limited.  But  after  the  right  of  unlimited  recovery  for  per- 
sonal injur}''  or  for  death  caused  by  negligence  has  been  de- 
clared b}^  the  constitution,  no  statute  which  purports  to  fix 
limits  to  the  amount  recoverable  can  have  effect.^  The  value 
of  the  interest  of  a  wife  and  children  in  the  life  of  the  hus- 
band and  father,  and  the  amount  they  may  recover  in  case  of  his- 
death  through  the  negligence  of  another,  cannot  be  affected  by 
any  contract  he  may  make.^  Neither  will  the  acceptance  of 
money  in  pursuance  of  such  a  contract,  nor  the  execution  of  a 
release  of  liability  by  the  widow,  affect  the  administrator's 
right  of  action  on  behalf  of  the  widow  and  children.' 

It  is  an  open  question  in  nearly  all  the  states  whether  a  con- 
tract between  persons  who  sustain  the  relation  of  master  and 
servant  to  each  other,  by  which  the  former  undertakes  to  se- 
cure immunity  beforehand  from  the  liability  attaching  to  hi& 
negligence  as  master,  is  valid.  In  Georgia  a  contract  by 
v/hich  the  servant  assumes  all  risks  connected  with  or  inci- 
dent to  his  employment,  whether  resulting  from  his  own  neg- 
ligence or  fault  or  that  of  any  other  person  in  the  master's 
service,  is  valid  if  any  criminal  neglect  is  not  waived.*  A  rail- 
road company  which  is  a  party  to  such  a  contract  does  not 
enter  into  it  as  a  common  carrier;  hence  the  principle  which 
limits  its  power  to  restrict  its  liability  in  the  latter  capacity 
does  not  affect  the  agreement.^  It  is  strongly  intimated  in 
Arkansas  that  a  stipulation  which  relieves  the  employer  from 
liability  for  the  negligence  of  co-servants  (he  having  selected 
such  as  are  competent  in  the  first  instance,  and  afterwards 
discharged  those  found  careless,  vicious  or  inefficient)  might 

1  Pennsylvania  R.  Co.  v.  Bowers,  1120;  Chicago,  etc.  R.  Co.  v.  Martin,. 
124  Pa  183,  6  Atl.  Rep.  836, 2  L.  R.  A.  59  Kan.  437,  53  Pac.  Rep.  461.     See 
621.  Oyster  v.  Burlington  Relief  Depart- 
Where  the  United  States  author-  ment,  —  Neb.  — ,  91  N.  W.  Rep.  699. 

izes  a  suit  to  be  brought  against  it  3  id. 

and  after  it  has  been  brought  repeals  *  Western  &  A.  R.  Co.  v.  Bishop,  50 

the  authorizing  act,  there  cannot  be  Ga.  465;  Galloway  v.  Western  &  A. 

a  recovery  for  damages    sustained  R  Co.,  57  Ga.  512;  Cook  v.  Western 

after  such  repeal     Paine   Lumber  &  A.  R.  Co.,  72  Ga.  48;  Fulton  Bag 

Co.  V.  United  States,  55  Fed.  Rep.  &  Cotton  Mills  v.  Wilson,  89  Ga,  318, 

854.  15  S.  E.  Rep.  322. 

2  Maney  v.  Chicago,  eta  R  Co.,  49  5  Western  &  A.  R  Co.  v.  Bishopi, 
111.  App.  105;  Chicago,  etc.  R.  Co.  v.  supra;  Little  Rock,  etc.  R  v.  Ea- 
Wymore,  40  Neb.  645,  58  N.  W.  Rep.  banks,  48  Ark.  460,  3  S.  W.  Rep.  808. 


§  G.]  EIGHT   TO    DAMAGES.  17 

be  sustained  as  reasonable,  notwithstanding  the  abolishment 
of  the  common-law  rule  of  non-liability  for  the  acts  and  omis- 
sions of  fellow-servants.^  This  intimation  was  made  with  de- 
cisions before  the  court  which  hold  otherwise.  The  Indiana 
supreme  court  has  declared  that  the  employer  may  not,  by  a 
contract  with  his  employee,  put  upon  the  latter  the  risks  aris- 
ing from  the  employers  disregard  of  specific  statutory  require- 
ments for  the  employee's  safety.^ 

The  cases  Avhich  deny  the  validity  of  such  contracts  do  so 
upon  the  ground  that  they  are  contrary  to  public  policy.'  On 
this  ground  contracts  which  assume  to  relieve  employers  from 
liability  for  neglect  to  furnish  suitable  appliances  are  void.* 
It  is  provided  by  the  statute  known  as  Uhe  English  employers' 
liabilit}'-  act,  1880,  that  where  personal  injury  is  caused  to  a 
workman  in  specified  cases  he  ma}'',  or  in  case  death  is  caused 
by  the  injury  his  representatives  shall,  have  the  same  right  of 
compensation  and  remedies  against  the  employer  as  if  the 
workman  had  not  been  in  the  employer's  service.  This  has 
been  held  to  affect  the  contract  so  far  only  as  to  negative  the 
implication  of  an  agreement  on  the  workman's  part  to  assume 
the  risks  of  the  employment.  It  does  not  render  invalid 
his  express  contract   to    relieve    the    employer    from    liabil- 

1  Little  Rock,  etc.  R  v.  Eubanks,  48  Ark.  460,  3  S.  W.  Rep.  808;  Roesner 

supra.  V.  Hermann,  10  Biss.  486,  8  Fed.  Rep. 

^  Davis  Coal   Co.    v.    PoUand.   158  782;  Runt  v.  Herring,  3  N.  Y.  Misc. 

Ind.  607,  618,  62  N.  E.  Rep.  492,  citing  105,  21  N.  Y.  Supp.  244  (including  be- 

Narramore  v.  Cleveland,  etc.  R.  Co.  sides  the  agreement  not  to  sue,  a 

96  Fed.  Rep.  298,  37  C.  C.  A.  499,  48  condition  not  to  appear  as  a  witness, 

L.  R.  A.  68;    Durant  v.   Lexington  etc.). 

Coal  Mining  Co.,  97  Mo.  62,  10  S.  W.        A  contract  to  vehich  an  employee 

Rep.  484;    Greenlee  v.  Southern  R.  is  not  a  party  cannot  affect  his  right 

Co.,  122  N.  C.  977,  30  S.  E.  Rep.   115,  to  recover    against    his    employer. 

41  L.  R.  A.  399.  65  Am.  St.  734;  Bad-  Ominger  v.  New  York  Central  R.  Co., 

deley  v.  Earl  Granville,  19  Q.  B.  Div.  6  Thomp.  &  Cook,  498;    Kenney  v. 

423,  17  Eng.  Rul.  Cas.  212;  Groves  v.  Same,  54  Hun,  143,  7  N.  Y.  Supp.  255. 

Wimborne,  [1898]  2  Q.  B.  402;  Cur-  The  master's  liability  is  not  affected 

ran  v.  Grand  Trunk  R.  Co.,  25  Ont.  by  a  rule,  which  is  made  part    of 

App.  407.  the  contract,  requiring  that  the  serv- 

3  Railway  Co.  v.  Spangler,  44  Ohio  ant  shall  be  responsible  for  the  con- 
st. 471;  Kansas  Pacific  R.  v.  Peavey,  dition  of  the  appliances  with  which 
29  Kan.  169,  34  Kan.  472,  8  Pac.  Rep.  he  works.  Ford  v.  Fitchburg  R.  Co., 
780.  110  Mass.  240,  261. 

<  Little  Rock,  etc.  R.  v.  Eubanks, 
Vol.  1  —  2 


18  EIGHT   TO   DAMAGES.  [§  G. 

ity  for  injuries  sustained  in  the  employment;  and  a  contract 
which  expressly  releases  all  right  on  behalf  of  the  servant 
and  his  representatives  to  claim  compensation  is  not  void  as 
against  public  policy  because  it  affects  only  the  interest  of  the 
emplo3'ed.^  This  position,  it  seems  to  the  writer,  is  well  an- 
swered by  Smith,  J.,  who  said:  But  surely  the  state  has  an  in- 
terest in  the  lives  and  limbs  of  all  its  citizens.  Laborers  for 
hire  constitute  a  numerous  and  meritorious  class  in  every  com- 
munity. And  it  is  for  the  welfare  of  society  that  their  em- 
ployers shall  not  be  permitted,  under  the  guise  of  enforcing 
contract  rights,  to  abdicate  their  duties  to  them.  The  conse- 
quence would  be  that  every  railway  company  and  every 
owner  of  a  factory,  mill  or  mine  would  make  it  a  condition 
precedent  to  the  employment  of  labor  that  the  laborer  should 
release  all  right  of  action  for  injuries  sustained  in  the  course 
of  the  service,  whether  by  the  employer's  negligence  or  other- 
wise. The  natural  tendency  of  this  would  be  to  relax  the 
employer's  carefulness  in  those  matters  of  which  he  has  the 
ordering  and  control,  such  as  the  supplying  of  machinery  and 
materials,  and  thus  increase  the  perils  of  occupations  which  are 
hazardous  even  when  well  managed.  And  the  final  outcome 
would  be  to  fill  the  country  with  disabled  men  and  paupers, 
whose  support  would  become  a  charge  upon  the  counties  or 
upon  public  charity.^ 

A  contract  of  membership  between  a  railroad  employee 
and  the  voluntary  relief  department  of  the  railroad,  such  de- 
partment being  a  beneficial  insurance  association  largely  sup- 
ported by  the  employer,  which  permits  the  employee,  if  he 
sustains  injury,  either  to  sue  for  damages  or  accept  the  benefit 
of  the  relief  fund,  and  which  makes  such  acceptance  a  release 

1  Griffiths  V.  Earl  of  Dudley,  9  Q.  to  accept  certain  benefits  in  lieu  of 
B.  Div.  357.  The  substance  of  the  damages,  and  the  acceptance  of  the 
opinion  in  this  case  is  given  in  a  note  benefits  does  not  bar  his  right  of 
in  44  Am.  Rep.  633.  action.      Pittsburgh,   etc.    R    Co.  v. 

2  Little  Rock,  etc.  R.  v.  Eubanks,  Montgomery,  153  Ind.  1, 49  N.  E.  Rep. 
48  Ark.  460.  468,  3  S.  W.  Rep.  808.  582.     As  to  what  contracts  are  not 

An  Indiana  statute  nullifies  con-  within  a  similar  statute,  see  Railway 

tracts   made   by  corporations  with  Co.  v.  Cox,  55  Ohio  St.  497,  45  N.  K 

their  employees  releasing  the  former  Rep.  641.      Such  statutes  are  void, 

from  liability  to  the  latter  for  per-  Shaver  v.  Pennsylvania  Co.,  71  Fed. 

sonal  injuries.  Such  statute  includes  Rep.  931. 
a  contract  which  binds  the  employee 


§T.] 


EIGHT   TO    DAMAGES. 


19 


and  satisfaction  of  his  damages,  is  not  void  as  against  public 
policy,  and  the  acceptance  of  money  from  such  department 
b^rs  an  action  for  damages,'  and  estops  the  employee  from 
alleging  that  the  contract  was  ultra  vires  his  employer.^  Such 
contracts  are  clearly  distinguishable  from  those  in  which  the 
right  of  action  is  bargained  away  in  advance  because  such 
right  exists  until  after  the  employee  has  knowledge  of  all  the 
facts,  and  then  he  elects  between  his  right  against  the  relief 
fund  and  his  action  for  damages.'  Such  a  contract  is  binding 
on  an  infant  if  beneficial  to  him."* 

§  7.  Nature  of  the  right  to  damages;  its  survival.  When 
a  cause  of  action  arises  it  has  a  legal  value  as  a  chose  in  [7] 
action;  it  is  a  species  of  property.^  The  right  to  damages  vests 
when  the  act  or  neglect  out  of  which  it  arises  occurs.  Even 
where  there  is  no  legal  measure  of  damages,  as  in  case  of 
slander  or  assault,  the  injured  party  has  an  indeterminate  right 


lEckman  v.  Chicago,  etc.  R.  Co., 
169  111.  312,  38  L.  R.  A.  750,  48  N.  E. 
Rep.  496,  affirming  64  111.  App.  444; 
Chicago,  etc.  R  Co.  v.  Miller,  22  C.  C. 
A.  264,  76  Fed.  Rep.  439:  Maine  v. 
Chicago,  etc.  R.  Co.,  70  N.  W.  Rep. 
630  (Iowa);  Chicago,  etc.  R.  Co.  v. 
Bell,  44  Neb.  44,  62  N.  W.  Rep.  314; 
Lease  v.  Pennsylvania  Co.,  10  Ind. 
App.  47, 37  N.  E.  Rep.  423;  Pittsburgh, 
etc.  R.  Co.  V.  Mahoney,  148  Ind.  196, 
40  L.  R.  A.  101.  46  N.  E.  Rep.  917; 
Same  v.  Moore,  152  Ind.  345,  44  L.  R. 
A.  638,  53  N.  E.  Rep.  290;  Chicago, 
etc.  R.  Co.  V.  Curtis,  51  Neb.  442,  71 
N.  W.  Rep.  42;  Railway  Co.  v.  Cox. 
55  Ohio  St.  497,  45  N.  E.  Rep. 
641;  Johnson  v.  Philadelphia  & 
R.  R.  Co.,  163  Pa.  127,  29  Atl.  Rep.  854; 
Riugle  V.  Pennsylvania  R.,  164  Pa. 
529,  30  Atl.  Rep.  492;  Vickers  v. 
Chicago,  etc.  R.  Co.,  71  Fed.  Rep.  139: 
Shaver  v.  Pennsylvania  Co.,  id.  931; 
Brown  v.  Baltimore  &  O.  R.  Co.,  6 
D.  C.  App.  Cas.  237;  Spitze  v.  Same, 
75  Md.  162,23  Atl.  Rep.  307;  Petty  v. 
Brunswick  &  W.  R.  Co.,  109  Ga.  666, 
35  S.  E.  Rep.  82;  Carter  v.  Same,  115 
Ga.  853,  42  S.  E.  Rep.  239;  Donald  v. 
Chicago,  etc.  R.  Co..  93  Iowa,  284,  61 


N.  W,  Rep.  971;  Fuller  v.  Baltimore, 
etc.  Ass'n,  67  Md.  433,  10  Atl.  Rep. 
237;  Otis  v.  Pennsylvania  Co.,  71 
Fed.  Rep.  136.  Contra,  Miller  v. 
Chicago,  etc.  R.  Co.,  65  Fed.  Rep. 
30.5.  The  South  Carolina  court  was 
equally  divided  on  the  question 
of  the  validity  of  such  a  contract, 
Johnson  v.  Charleston  &  S.  R.  Co.,  55 
S.  C.  152,  32  S.  E.  Rep.  2,  33  id.  174,  44 
L.  R.  A.  645.  The  doctrine  of  the 
Miller  case,  supra,  is  inferentially 
disapproved  in  76  Fed.  Rep.  439,  23 
C.  C.  264,  by  the  statement  that  the 
authorities  were  all  the  other  way, 
though  the  reviewing  court  did  not 
find  it  necessary  to  expressly  pass 
upon  tlie  question.  See  article  in  8 
Va.  Law  Reg.  858. 

^Eckman  v.  Chicago,  etc.  R.  Co., 
169  111.  312,  48  N.  E.  Rep.  496,  38  L. 
R  A.  750. 

3  Railway  Co.  v.  Cox,  55  Ohio  St. 
497,  45  N.  K  Rep.  641;  Johnson  v. 
Philadelphia  &  R.  R,  Co.,  163  Pa.  127, 
29  Atl.  Rep.  854. 

4  Clements  v.  London,  etc.  R  Co., 
[1894]  2  Q.  B.  482. 

5  2  Black.  Com.  43a 


20 


EIGHT   TO    DAMAGES. 


[§T. 


to  compensation  the  instant  be  receives  the  injury.  The  ver- 
dict of  the  jury  and  the  judgment  of  the  court  thereon  do  not 
give,  they  only  define,  the  right.^  Such  right  when  vested 
is  to  the  injured  party  of  the  nature  of  property,  and  is  pro- 
tected as  property  in  tangible  things  is  protected.  It  cannot 
be  annulled  -  or  changed  by  legislation,*  nor  extinguished  ex- 
cept by  satisfaction,  release  or  the  operation  of  statutes  of 
limitation.^  Trover  will  lie  for  its  conversion^  or  the  conver- 
sion of  paper  evidence  of  it;^  and  other  actions  will  lie  for 
breaches  of  duty  or  contract,  as  well  as  for  other  wrongs  relat- 
ing to  it.''  Except  when  the  right  of  action  and  to  damages 
is  for  a  personal  tort  or  breach  of  a  marriage  promise,  it  sur- 
vives the  death  of  the  injured  party  and  is  assignable.^ 

[8]  The  general  subject  embraces  the  principles  and  illus- 
trative examples  by  which  all  legal  causes  of  action  may  be 
tested  and  their  pecuniary  value  measured  or  adjudicated. 
By  these  courts  determine,  first,  whether  the  party  complain- 
ing has  suffered  a  legal  injury,  and  how  the  conclusion  that  he 


1  2  Black.  Com.  438. 

'  Cooley  on  Const.  Lim.  449;  Streu- 
bel  V.  Milwaukee,  etc.  R.  Co.,  12  Wis. 
67;  Wester velt  v.  Gregg,  12  N.  Y.  211 ; 
Dash  V.  Van  Kleeck,  7  Johns.  477; 
Thornton  V.  Turner,  11  Minn.  336;  Ter- 
rill  V.  Rankin,  2  Bush,  453,  92  Am. 
Dec.  500;  Williar  v.  Baltimore,  etc. 
Ass'n,  45  Md.  546;  Griffin  v.  Wilcox, 
21  Ind.  370. 

3  Chicago,  etc.  R.  Co.  v.  Pounds,  11 
Lea,  127. 

4  Bowman  v.  Teall,  23  Wend.  305; 
Allaire  v.  Whitney,  1  Hill,  484;  Whit- 
ney V.  Allaire.  1  N.  Y.  305:  Christian- 
son  V.  Lin  ford,  3  Robert.  215;  Baylis 
V.  Usher,  4  Moore  &  P.  790;  Bayliss  v. 
Fisher,  7  Bing.  153;  Willoughby  v. 
Backhouse,  4  DowL  &  Ry.  539,  2  B. 
&  C.  821;  Clark  v.  Meigs,  10  Bosw. 
337. 

s  Ayres  v.  French,  41  Conn.  151 ; 
Payne  v.  Elliot,  54  Cal.  341,  342. 

«  FuUam  v.  Cummings,  16  Vt.  697; 
Archer  v.  Williams,  2  C.  &  K.  26; 
Comparet  v.  Burr,  5  Blackf.  419:  Hud- 
speth V.  Wilson,  2  Dev.  372,  21  Am. 


Dec.  344;  Pierce  v.  Gilson,  9  Vt.  216; 
Moody  V.  Keener,  7  Port.  218. 

7  Terry  v.  Allis,  20  Wis.  32;  Evans 
V.  Trenton,  24  N.  J.  L.  764;  Allen  v. 
Suydam,  17  Wend.  368;  Walker  v. 
Bank,  9  N.  Y.  582;  McNair  v.  Burns, 
9  Watts,  130;  Rhinelander  v.  Bar- 
row. 17  Johns.  538. 

8  Hullett  V.  Baker,  101  Tenn.  689, 
49  S.  W.  Rep.  757;  Final  v.  Backus, 
18  Mich,  218;  Sears  v.  Conover,  3 
Keyes,  113:  North  v.  Turner,  9S.  &  R. 
244;  Johnston  v.  Bennett,  5  Abb.  Pr. 
(N.  S.)  331;  Richtmeyer  V.  Remsen,  38 
N.  Y.  206;  Waldrou  v.  Willard,  17 
N.  Y.  466;  McKee  v.  Judd,  12  N.  Y. 
622;  Rice  v.  Stone,  1  Allen,  566;  Mun- 
sell  V.  Lewis,  4  Hill,  635;  Jordan  v. 
Gillen,  44  N.  H.  424;  Grant  v.  Lud- 
low's AdmT,  8  Ohio  St.  1;  Taylor  v. 
Galland,  3  G.  Greene,  17;  Blakeney 
V.  Blakeney,  6  Port.  109;  Nettles  v. 
Barnett,  8  Port.  181 ;  Hoyt  v.  Thomp- 
son. 5  N.  Y.  347;  Brig  Sarah  Ann,  2 
Sumn.  211;  Meech  v.  Stoner,  19  N.  Y. 
20:  Linton  v.  Hurley,  104  Mass.  353. 
See  Barnard  v.  Harrington,  3  Mass.  228. 


J 


§  8.]  EIGHT    TO   DAMAGES.  21 

has  shall  be  expressed  in  damages;  and  secondly,  they  direct 
and  limit  the  inquiries  for  the  ascertainment  of  the  amount 
which  shall  be  recovered  by  way  of  recompense. 

§  8.  Injuries  to  unborn  cliild.  In  1884  the  question  was 
raised  in  Massachusetts  whether  a  child  prematurely  born,  and 
surviving  only  a  few  minutes,  in  consequence  of  an  injury  to 
its  mother,  was  a  "person"  within  the  meaning  of  a  statute 
giving  an  action  for  the  loss  of  life  against  the  town  whose 
defective  highway  caused  the  death  of  any  person.  The  court, 
after  reviewing,  by  Holmes,  J.,  the  argument  in  favor  of  the 
administrator  of  the  child,  which  was  based  on  Lord  Coke's 
statement  to  the  effect  that  if  a  woman  is  quick  with  child, 
and  takes  a  potion,  or  if  a  man  beats  her  and  the  child  is  born 
alive  and  dies  of  the  potion  or  battery,  this  is  murder,'  said 
that  "no  case,  so  far  as  we  know,  has  ever  decided  that,  if  the 
infant  survived,  it  could  maintain  an  action  for  injuries  re- 
ceived by  it  while  in  its  mother's  womb.  Yet  that  is  the  test 
of  the  principle  relied  on  by  the  plaintiff,  who  can  hardly  avoid 
contending  that  a  pretty  large  field  of  litigation  has  been  left 
unexplored  until  the  present  moment."  If  the  difficulties 
stated  by  the  court  could  be  got  over,  "  and  if  we  should  as- 
sume, irrespective  of  precedent,  that  a  man  might  owe  a  civil 
duty  and  incur  a  conditional  prospective  liability  in  tort  to  one 
not  yet  in  being,  and  if  we  should  assume  also  that  causing  an 
infant  to  be  born  prematurely  stands  on  the  same  footing  as 
wounding  or  poisoning,  we  should  then  be  confronted  with  the 
question  raised  by  the  defendant,  whether  an  infant  dying  be- 
fore it  was  able  to  live  separate  from  its  mother  could  be  said 
to  be  a  person  recognized  by  the  law  as  capable  of  having  a 
locus  standi  in  court,  or  of  being  represented  there  by  an  ad- 
ministrator.2     And  this  question  would  not  be  disposed  of  by 

1 3  Inst  50;  1  Hawk.  P.  C,  c.  31.  §16;  III.  23,  pi.  18;   which  seems  not  to 

1  Black.  Com.  129, 130;  4  id.  198;  Beale  have  been  doubted  by  Fitzherbert  or 

V.  Beale,  1  P.  Wms.  244,  246;   Burdet  Brooke,  and  which  was  afterwards 

V.  Hopegood,  id.  486;  Rex  v.  Senior,  cited  as  law   by  Lord   Hale.     Fitz. 

1  Moody  C.  C.  346.  Abr.,  "  Enditement,"  pi.  4;  '•  Corone," 

The  court  did  not  consider  how  far  pi.  146;  Bro.  Abr.,  "  Corone,"  pi.  146;  1 

the  statement  in  the  text  would  be  Hale  P.  C.  433.     See  note  3,  p.  22. 

followed  by  it,  if  the  question  were  ^  Marsellis  v.   Thalhimer,  2  Paige, 

to  be  regarded  as  one  at  common  law,  36;  Harper  v.  Archer,  4  Sm.  &  M.  99. 

but  observed  that  it  was  opposed  to  In  the  first  case  it  was  held  that 

the  case  in  3  Ass.,  pi.  2,  Y.   B.  1  Ed,  "an  unborn  child,  after  conception. 


22  EIGHT   TO    DAMAGES.  [§  8. 

citing  those  cases  where  equity  has  recognized  the  infant  pro- 
visionally while  still  alive  en  venire}  And  perhaps  not  by  show- 
ing that  such  an  infant  was  within  the  protection  of  the  crim- 
inal law.  .  .  .  Taking  all  the  foregoing  considerations 
into  account,  and  further,  that,  as  the  unborn  child  was  a  part 
of  the  mother  at  the  time  of  the  injury,  and  damage  to  it  which 
was  not  too  remote  to  be  recovered  for  at  all  was  recoverable 
by  her,  we  think  it  clear  that  the  statute  sued  upon  does  not 
embrace  the  plaintiff's  intestate  within  its  meaning."^  In  1891 
the  court  of  queen's  bench  in  Ireland  ruled  that  an  infant  who 
was  deformed  from  its  birth  by  reason  of  an  accident  which 
happened  to  its  mother  while  it  was  en  ventre  sa  mere  could  not 
maintain  an  action  for  the  permanent  injuries  thereby  inflicted. 
The  mother  was  injured  while  a  passenger  on  a  railroad  train. 
The  chief  justice  said  that  the  statement  of  claim  did  not  al- 
lege that  the  mother  made  an}''  contract  in  reference  to  the 
child  —  the  contract  was  with  the  mother  in  respect  of  herself 
alone.  It  did  not  allege  that  any  consideration  was  received 
by  the  company  in  respect  of  the  child.  It  did  not  allege  that 
the  company,  through  its  servants  or  otherwise,  knew  anything 
about  the  child  or  the  condition  of  the  mother.  "  It  is  quite 
plain,  for  aught  that  appears  in  this  statement  of  claim,  that 
however  the  child  in  the  womb  may  be  regarded,  whether  as 
part  of  the  mother  or  having  a  distinct  personality  —  whether 
an  entity  or  a  nonentity, —  it  was,  so  far  as  any  actual  relation 
the  company  had  with  it,  a  nonentity;  and  therefore,  in  my 
opinion,  the  existence  of  the  dutv,  for  the  breach  of  which  the 
defendants  would  be  liable  as  carriers  of  passengers,  cannot  b© 
inferred.  To  infer  the  existence  of  such  a  duty  from  the  mere 
possibility  that  the  mother  was  with  child  when  she  was  re- 
ceived as  a  passenger  by  the  defendants  would  be  to  act  with- 
out the  sanction  of  any  judicial  decision,  or,  in  my  opinion,  of 
any  legal  principle."*     The  same  judge  was  anxious  to  have  it 

is  to  be  considered  tn  esse  for  the  pur-  3  Atk.    114,   117.     See  Musgrave   v, 

pose  of  enabling  it  to  take  an  estate  Parry,  2  Vern.  710. 

or  for  any  other  purpose  vvhich  is  for  ^  Dietrich    v.    Northampton,     138 

the  benefit  of  the  child,  if  it  should  Mass.  14.  53  Am.  Rep.  243, 

be  afterwards  born  alive."    See  note  ^  Walker  v.  Great  Northern  R.  Co., 

3,  this  page.  28  L.  R.  Ire.  69. 

1  Lutterel's  Case,  stated  in  Hale  v.  The  arguments  for  the  respective 

Hale,  Free.  Ch.  50;  Wallis  v.  Hodson,  parties  are  thus  summarized  by  the 


§8-] 


EIGHT   TO    DAMAGES. 


23 


understood  that  he  did  not  go  so  far  as  to  hold  that  if  a  person, 
knowing  that  a  woman  is  enoiente,  wilfully  inflicts  injuries  on 
her  Avith  a  view  to  injuring  the  child,  which  is  born  a  cripplo 
or  becomes  so  subsequently  as  a  result  of  the  injuries,  an  ac- 


chief  justice  (O'Brien):  Counsel  for 
the  company  principally  rely  upon 
an  undoubted  proposition  of  criminal 
law,  that  under  no  circumstances  is 
it  held  at  the  present  day  to  be  mur- 
der to  destroy  a  child  whilst  in  the 
womb.  In  Russell  on  Crimes,  645, 
it  is  stated  on  the  authority  of  Lord 
Hale  "  that  an  infant  in  its  mother's 
womb,  not  being  in  rerum  natura, 
is  not  considered  as  a  person  who 
can  be  killed  within  the  description 
of  murder,  and  that  therefore,  if  a 
woman  being  quick  or  great  with 
child  take  any  potion,  or  cause  an 
abortion,  or  if  another  give  her  any 
such  potion,  or  cause  an  abortion,  or 
if  a  person  strike  her  whereby  the 
child  within  is  killed,  it  is  not  mur 
der  or  manslaughter."  And  they 
also  rely  upon  what  seems  clearly 
established  in  the  case  of  descent  at 
common  law,  that  a  child  en  ventre 
sa  mere  is  considered  not  in  exist- 
ence; and,  referring  to  Richards  v. 
Richards,  Johns.  754,  they  show  "  that 
the  qualified  heir  was  entitled  to  the 
rents  and  profits  until  the  posthu- 
mous heir  was  born."  Plaintiffs  re- 
plied that  the  last  point  was  an  ex- 
ception to  the  general  rule  which 
arose  from  the  rigor  of  the  common 
law  with  regard  to  real  estates  re- 
quiring a  tenant  to  the  prcBcipe,  as 
pointed  out  in  Thellusson  v.  Wood- 
ford, 4  Ves.  335.  Mr.  Justice  Buller 
in  that  case  observed  in  replying  to 
the  contention  that  a  child  en  ventre 
sa  mere  was  a  nonentity:  Let  us 
see  what  this  nonentity  can  do.  He 
may  be  vouched  in  a  recovery, 
though  it  is  for  the  purpose  of  mak- 
ing him  answer  over  in  value.  He 
may  be  even  executor.  He  may  take 
under  the  statute  of  distributions. 


He  may  take  by  devise.  He  may  be 
entitled  under  a  charge  for  raising 
portions.  He  may  have  an  injunc- 
tion, and  he  may  have  a  guardian. 
Some  other  cases  put  this  beyond  all 
doubt.  In  Wallis  v.  Hodson,  2  Atk. 
117,  Lord  Hardwicke  says:  The '  prin- 
cipal reason  I  go  upon  in  the  ques- 
tion is  that  the  plaintiff  was  en  ventre 
sa  mere  at  the  time  of  her  brother's 
death,  and  consequently  a  person  in 
rerum  natura,  so  that,  by  the  rules 
of  the  common  and  civil  law,  she  was 
to  all  intents  and  purposes  a  child  as 
much  as  if  born  in  the  father's  life- 
time.' In  the  same  case  Lord  Hard- 
wicke takes  notice  that  the  civil  law 
confines  these  rules  to  cases  where  it 
is  for  the  benefit  of  the  child  to  be 
considered  as  born;  but  notwith- 
standing, he  states  the  rule  to  be 
that  such  child  is  to  be  considered 
living  to  all  intents  and  purposes." 
Mr.  Justice  Buller  stated  in  Thellus- 
son v.  Woodford,  iiU]ira,  that  the 
words  "  '  that  whenever  such  consid- 
eration would  be  for  his  benefit,  a 
child  en  ventre  sa  mere  shall  be  con- 
sidered actually  born  '  were  used  by 
me  because  I  found  them  in  tiie  book 
whence  the  pasage  was  taken.  Why 
should  not  children  en  ventre  sa  mere 
be  considei'ed  generally  as  in  exist- 
ence? They  are  entitled  to  all  the 
privileges  of  other  persons."  In  Rex 
V.  Senior,  1  Moody  C.  C.  346,  all  the 
judges  except  two  sitting,  it  was 
unanimously  decided  that  a  doctor 
who,  through  culpable  ignorance 
and  want  of  skill,  inflicted  a  wound 
on  a  child  in  the  act  of  being  born, 
and  before  it  was  born,  and  of  which 
it  died  afterwards,  was  properly  con- 
victed of  manslaughter. 


2i  EIGHT    TO    DAMAGES.  [§  8. 

tion  will  not  lie  at  the  suit  of  such  child.  The  other  judges  con- 
curred in  separate  opinions  which  are  very  interesting  and 
instructive.  The  Massachusetts  case  and  the  Irish  case  have 
been  followed  where  an  action  was  brought  on  behalf  of  a  child 
born  with  serious  physical  defects  because  of  injuries  sustained 
by  its  mother  through  the  negligence  of  the  officers  of  a  hos- 
pital where  she  went  for  the  purpose  of  being  cared  for  during 
confinement.^  An  action  will  not  lie  to  recover  for  the  death 
of  a  child  prematurely  born,  as  the  result  of  injuries  to  the 
mother,  in  consequence  of  which  birth  it  died.^  It  is  worthy 
of  note  in  this  connection  that  it  has  been  held  in  England' 
that  a  child  en  ventre  sa  mere  is  a  child  within  the  meaning 
of  Lord  Campbell's  act,  so  as  to  be  capable,  after  its  birth,  of 
maintaining  an  action  in  respect  of  the  pecuniary  loss  sustained 
by  the  death  of  its  father  owing  to  the  wrongful  act  of  others 
done  while  it  was  in  the  womb. 

1  Allaire  v.  St.  Luke's  Hospital,  184  Pac,  Rep.  1021,  28  Am.  St.  72, 16  L.  R. 
111.  359,  56  N.  E.  Rep.  638,  75  Am.  St.  A.  808.  See  Lathrope  v.  Flood,  135 
176,  48  L.  R.  A.  225,  affirming  76  III  Cal.  458,  67  Pac.  Rep.  683,  57  L.  R.  A. 
App.  441.  215. 

2  Gorman  v.  Budlong,  —  R.  I.  — ,  ^  The  George  and  Richard,  L.  R.  3 
49  Atl.  Rep.  704;  Hawkins  v.  Front  Ad.  &  EccL  466. 

Street  Cable  R.  Co.,  3  Wash.  592,  28 


§  9.]  NOMINAL   DAMAGES.  25 

CHAPTER  11. 

NOMINAL  DAMAGEa 

§  9.  Nature  and  purpose  of  nominal  damages. 

10.  Illustrations  of  the  right  to  nominal  damages. 

11.  The  right  a  substantial  one;  new  trials. 

[9]    §  9.  Nature  and  purpose  of  nominal  damages.    For 

every  actionable  injury  there  is  an  absolute  right  to  damages; 
the  law  recognizes  such  an  injury  whenever  a  legal  right  is 
violated.  Rights  are  legal  when  recognized  and  protected  by 
law.  Every  invasion  of  such  right  threatens  the  right  itself, 
^nd  to  some  extent  impairs  the  possessor's  enjoyment  of  it. 
The  logical  sequence  of  finding  an  invasion  is  the  legal  se- 
quence,—  a  legal  injury;  this  entitles  the  injured  party  to 
compensation.  In  abstract  principle  the  law  is  that  the  per- 
son whose  rights  have  been  invaded  is  entitled  to  compensa- 
tion proportioned  in  amount  to  the  injury.  The  extent  of  the 
actual  injury,  however,  is  seldom  matter  of  law;  and  when  it 
is  not,  merely  showing  the  wrong  or  breach  of  contract  which 
constitutes  the  injury,  will  only  authorize  the  court  to  judi- 
cially declare  that  the  party  injured  is  entitled  to  some  dam- 
ages. If  there  is  no  inquiry  as  to  actual  damages,  or  none 
appear  on  inquiry,  the  legal  implication  of  damage  remains. 
This  requires  some  practical  expression  as  the  compensation 
for  a  technical  injury;  therefore,  nominal  damages  are  given, 
as  six  cents,  a  penny,  or  a  farthing,  a  sum  of  money  that  can 
be  spoken  of,  but  has  no  existence  in  point  of  quantity.  Yer- 
<iicts  and  judgments  for  damages  generally  specify  a  small 
sum  which  may  be  paid.^     When  actual  damages  are  assessed 

1  Clay  V.   Board,  85  Mo.  App.  337,  ing  Club  v.  Lamoreux,  114  Wis.  44, 

citing  the  text;  Quigley  v.  Birdseye,  58,  89  N.  W.  Rep.  880,  citing  the  text; 

11  Mont.  439,  28  Pac.  Rep.  741;  Trum-  Bourdette  v.  Sieward,  107  La.  258,  31 

bull  V.  School  District,  22  Wash.  631,  So.    Rep.   630;    Beaumont  v.    Great- 

61  Pac.  Rep.  714;  Greensboro  v.  Mc-  head,  2  C.  B.  499;  Ashby  v.  White,  3 

Gibboney,  93  Ga.  672,  20  S.  E.  Rep.  Ld.  Raym.  938;  Parker  v.  Griswold, 

37;   Jurnick  v.   Manhattan  Optical  17  Conn.  303:    Ripka   v.  Sergeant,  7 

Co.,  66  N.  J.  L.  380,  49  Atl.  Rep.  681;  W.  &  S.  9,  42  Am.  Dec.  214;  McCon- 

Douglass  V.  Railroad  Co.,  51  W.  Va.  nel  v.  Kibbe,  33  III.  175,  85  Am.  Dec. 

•523,  41  S.  E.  Rep.  911;  Diana  Shoot-  265;  Pleasants  v.  North  Beach,  etc. 


26 


NOMINAL   DAMAGES. 


[§9.- 


those  which  are  nominal  are  included  and  are  not  separately 
added.  Where  a  plaintiff  sued  in  an  inferior  court  for  a  debt 
of  oOl.,  which  was  the  extent  of  its  jurisdiction,  and  neither 
recovered  nor  sought  to  recover  damages  except  for  the  pur- 
pose of  obtaining  costs,  it  was  held  that  nominal  damages  for 
this  purpose  did  not  place  the  debt  beyond  the  jurisdiction.^ 
Where  judgment  by  default  was  taken  on  a  bond  in  the  pen- 
alty of  $250,  conditioned  to  pay  $150,  it  was  held  that  nom- 
inal damages  could  not  be  added  to  the  penalty  for  detention 
of  the  debt  to  affect  costs.^  The  theory  upon  which  and  the- 
purpose  for  which  such  damages  are  awarded  do  not  entitle 


R.  Co.,  34  Cal.  586;  Tootle  v.  Clifton, 
22  Ohio,  247,  10  Am.  Rep.  732:  Pas- 
torius  V.  Fisher,  1  Rawle,  27;  Hobson 
V.  Todd,  4  T.  R  71;  Clifton  v.  Hooper, 
6  Q.  B.  468;  Foster  v.  Elliott.  33  Io%va, 
216;  Leeds  v.  Metropolitan  Gas  L. 
Co.,  90  N.  Y.  26;  Anders  v.  Ellis,  87 
N.  C.  207;  Hill  v.  Forkner,  76  Ind,  115. 

If  there  is  no  substantial  right  in- 
volved a  judgment  awarding  $1  as 
damages  will  not  be  reversed  be- 
cause some  smaller  sum  would  have 
been  sufficient.  Hill  v.  Forkner,  76 
Ind.  115;  Moe  v.  Chesrown,  54  Minn. 
118,  55  N.  W.  Rep.  882;  Hogan  v. 
Peterson,  8  Wyo.  549,  564,  59  Pac. 
Rep.  162.  Contra,  White  v.  Wood- 
rufif,  25  Neb.  797,  806,  41  N.  W.  Rep. 
785. 

"Nominal  damages  mean  in  law 
some  small  amount  sufficient  to 
cover  and  carry  the  costs."  Ran- 
some  V.  Christian,  56  Ga.  351;  Con- 
ley  V.  Arnold,  93  Ga.  823,  20  S.  E.  Rep. 
762. 

An  award  of  $25  as  nominal  dam- 
ages has  been  sustained  (Quigley  v. 
Birdseye,  11  Mont.  439,  28  Pac.  Rep. 
741);  but  it  was  otherwise  when  the 
instruction  was  to  find  $1  or  any 
nominal  sum.  Trumbull  v.  School 
District,  22  Wash.  631,  61  Pac.  Rep. 
714. 

In  the  exercise  of  equity  powers 
in  an  action  to  recover  for  the  death 
of  a  child,  the  plaintiU  having  had 


reason  to  ask  judicial  investigation 
of  the  facts,  the  court  awai'ded 
"nominal  damages  at  $250."  Hamil- 
ton V.  Morgan's  L.  &  T,  R  &  S.  Co., 
42  La.  Ann.  824,  8  So.  Rep.  586. 

In  Bourdette  v.  Sieward,  107  La. 
258,  31  So.  Rep.  630,  $500  seems  to 
have  been  considered  nominal  dam- 
ages. 

There  appears  to  be  a  tendency 
in  some  states  to  treat  the  question 
of  nominal  damages  otherwise  than 
seriously.  No  doubt  there  are  cases 
in  which  no  injustice  results  from 
so  doing.  As  has  been  observed  by 
a  court  of  high  standing:  When  we 
consider  that  the  doctrine  of  res 
judicata,  or  even  the  title  to  prop- 
erty, may  rest  upon  a  judgment  for 
nominal  damages,  it  is  evident  that 
the  right  to  a  verdict  is  not  con- 
trolled by  the  incidental  question  of 
the  amount  of  damages  to  be  re- 
covered. New  Jersey  School  & 
Church  Furniture  Co.  v.  Board  of 
Education,  58  N.  J.  L.  646,  35  AtL 
Rep.  397.  See  Chicago  West  Di- 
vision R.  Co.  V.  Metropolitan  West 
Side  E.  R  Co.,  152  111.  519,  38  N.  E. 
Rep.  736;  Dady  v.  Condit,  188  111. 
234,  58  N.  E.  Rep.  900;  Stanton  v. 
New  York  &  E.  R  Co.,  59  Conn.  272» 
21  Am.  St,  110,  22  Atl.  Rep.  300. 

1  Joule  V.  Taylor,  7  Ex.  58. 

2  People  V.  Hallett,  4  Cow.  67. 


§  10.]  NOMINAL    DAMAGES.  27 

the  defendant  who  seeks,  under  a  pleaof  recoupment,  to  reduce 
the  claim  of  the  plaintiff,  arising  under  a  contract,  by  nom- 
inal damages,  in  consequence  of  some  breach  of  the  same  con- 
tract by  the  plaintiff.^ 

The  damages  which  the  law  thus  infers  from  the  infraction 
of  a  legal  right  are  absolute;  they  cannot  be  controverted; 
they  are  the  necessary  consequent.  The  act  complained  of 
may  produce  no  actual  injury;  it  may  be  in  fact  beneficial,  by 
adding  to  the  value  of  property  or  by  averting  a  loss  which 
would  otherwise  have  happened;  yet  it  will  be  equally  true, 
in  law  and  in  fact,  that  it  was  in  itself  injurious  if  violative  of 
a  legal  right.  The  implied  injury  is  from  that  circumstance^ 
the  fact  that  beyond  violating  a  right  it  was  not  detrimental, 
or  was  even  advantageous,  is  immaterial  to  the  legal  quality 
of  the  act  itself.^ 

§  10.  Illustrations  of  the  right  to  nominal  damages, 
A  message  containing  a  direction  to  purchase  a  specified 
quantity  of  wheat,  deliverable  at  a  stated  time  in  the  future, 
was  furnished  a  telegraph  company  for  transmission.  The 
message,  by  negligence  of  the  company's  servants,  was  not  de- 

iFoote  &  Davis  Co.  v.  Malony,  115  Wilkinson,  4  Mason,  397;  Bealey  v. 

Ga.  985,  42  S.  E.  Rep.  413.  '  Shaw,  6  East,  208;  Blodgett  v.  Stone, 

2  Jewett  V.  Whitney,  43  Me.  242;  60  N.  H.  167:  Fuikerson  v.  Eads,  19 
Cook  V.  Hull,  3  Pick.  269.  15  Am.  Mo.  App.  623;  Adams  v.  Robinson,  65 
Dec.  208;  Bolivar  Manuf.  Co.  v.  Ne-  Ala.  586;  Drum  v.  Harrison,  83  Ala. 
ponset  Manuf.  Co.,  16  Pick.  246;  384,3  So.  Re] >.  769;  Barlow  v.  Lowder, 
Stovvell  V.  Lincoln,  11  Gray,  434;  85  Ark.  493:  Empire  Gold  Mining  Co. 
Hathorne  v.  Stinson,  12  Me.  183,  28  v.  Bonanza  Gold  Mining  Co.,  67  Cal. 
Am.  Dec.  167;  Pollard  v.  Porter,  3  406, 7  Pac.  Rep.  810;  Hancock  v.  Hub- 
Gray,  312;  Newcomb  v.  Wallace,  112  bell,  71  Cal.  537,  12  Pac.  Rep.  618; 
Mass.  25;  Chamberlain  v.  Parker,  45  Kenney  v.  Collier,  79  Ga.  743,  8  S.  E. 
N.  Y.  569;  Marzetti  v.  Williams.  1  B.  Rep.  58;  Brant  v.  Gallup,  111  111.  487, 
&  Ad.  415;  Kimel  v.  Kimel,  4  Jones,  53  Am.  Rep.  638;  Mize  v.  Glenn,  38 
121;  Warre  v.  Calvert,  7  Ad.  &  El.  Mo.  App.  98;  Jones  v.  Hannovan,  55 
143;  Embrey  v.  Owen,  6  Ex.  353;  Mo.  462;  Tramraell  v.  Chambers 
Northam  v.  Hurley,  1  El.  &  Bl.  665;  County,  93  Ala.  388,  9  So.  Rep.  815; 
Medway  Nav.  Co.  v.  Romney,  9  C.  B.  Treadwell  v.  Tillis.  108  Ala.  262,  18 
(N.  S.)  575;  McLeod  v.  Boulton,  3  Up.  So.  Rep.  886;  Patrick  v.  Colorado 
Can.  Q.  B.  84;  Smith  v.  Whiting,  100  Smelting  Co.,  20  Colo.  268,  38  Pac. 
Mass.  122;  McConnelv.  Kibbe,  33  111.  Rep.  236;  New  Jersey  School  & 
175,  85  Am.  Dec.  265;  Barker  V.Green,  Church  Furniture  Co.  v.  Board  of 
2  Bing.  317;  Graver  v.  Sholl,  42  Pa.  58;  Education,  58  N.  J.  L.  646,  35  Atl.  Rep. 
Chapman  v.  Thames  Manuf.  Co.,  13  397.  See  cases  cited  in  notes  1,2.  §2. 
Conn.  269,  33  Am.  Dec.  401;  Tyler  v. 


28  NOMINAL   DAMAGES.  [§  10. 

livered.  The  market  price  of  wheat  advanced  for  two  days, 
then  fluctuated,  and  was  less  on  the  day  specified  in  the  mes- 
sage than  on  the  day  when  it  should  have  been  delivered,  so 
that  there  was  not  only  no  damage,  but  the  sender  was  saved 
from  the  loss  which  he  would  have  suffered  if  his  message 
had  been  delivered  and  acted  upon.  But  there  was  a  neglect 
of  duty,  an  infraction  of  the  sender's  right  to  have  care  and 
diligence  used  in  the  transmission  and  delivery  of  his  message; 
for  that  he  was  entitled  to  nominal  damages.^  The  plaintiff  and 
the  defendants  were  riparian  proprietors  on  a  water-course, 
and  had  mills  thereon;  various  other  mills  belonging  to  third 
persons  were  located  on  the  same  stream.  In  case,  the  plaint- 
iff complained  that  the  defendants  heated  the  water  of  the 
stream  by  operating  steam  boilers  in  their  mills,  increasing 
the  evaporation  five  per  cent.,  which  was  to  that  extent  an 
abstraction  of  the  water;  also  that  they  fouled  the  water  by 
discharging  into  it  soap  suds,  etc.  But  the  pollution  did  no 
actual  damage  to  the  plaintiff,  because  the  water  was  already 
so  polluted  by  similar  acts  of  other  mill  owners  and  dyers 
above  the  defendants'  mill  that  the  latter's  acts  made  no  ap- 
preciable difference;  that  is,  the  pollution  by  the  defendants 
did  not  make  the  stream  less  applicable  to  practical  purposes 
than  it  was  before.  It  was  held,  however,  that  the  plaintiff 
received  damage  in  point  of  law  from  such  pollution.  It  was 
an  injury  to  a  right;  but  that  the  loss  of  five  per  cent,  would 
not  give  a  cause  of  action  if  such  diminution  arose  from  a 
reasonable  use  of  the  stream.^  Where  a  part  owner  was  ex- 
pelled from  a  mill  property,  and  while  wrongfully  kept  out 
of  possession,  the  mill,  which  was  old,  was  replaced  by  a  new 
one  of  greater  value,  so  that  when  he  regained  possession  the 
property  was  much  more  valuable,  and  he  was  a  gainer  after 
deducting  all  intermediate  lost  profits,  he  was  entitled  to  nom- 
inal damages.^ 

1  Hibbard  v.  Western  U.  Tel.  Co.,  33  U.  Tel.   Co.,  92  Ala.  399,  9  So.  Rep. 

Wis.  558,  14  Am.  Rep.  775.     Nominal  200. 

damages  may  be  recovered  for  such        ^  Wood    v.  Waud,  3  Ex.   748;  Ul- 

negligence  though  it  does  not  appear  bricht  v.  Eufaula  Water  Co.,  86  Ala. 

that  anything  was  paid  for  sending  587,  11  Am.  St.  67,  6  So.  Rep.  78,  4  L. 

the  telegram.     Kennon  v.  Western  R.  A.  572. 

3  Jewett  V.  Whitney,  48  Me.  243. 


§  1<».]  NOMINAL    DAMAGES.  29 

The  principle  that  for  the  violation  of  every  legal  right  nom- 
inal damages  at  least  will  be  allowed  applies  to  all  actions, 
whether  for  tort  or  breach  of  contract,  and  whether  the  right 
is  personal  or  relates  to  property.  The  offer  of  violence  to  a 
person  is  an  assault,  and  the  least  unjustifiable  touching  of 
him  a  battery.  Where  a  debtor  was  arrested  on  a  ca.  sa.,  and 
judgment,  after  an  insolvent  discharge,  which  gave  him  im- 
munity from  arrest,  it  was  held  that  the  party  at  whose  [12] 
instance  the  writ  was  issued,  as  well  as  the  attorney  who  is- 
sued it,  were  liable  for  false  imprisonment  whether  they  were 
previously  notified  of  the  discharge  or  not.  Want  of  notice 
might  reduce  the  damages  to  a  nominal  sura,  but  could  not  be 
allowed  to  absolutely  excuse  a  trespass.^  The  death  of  a  child 
was  caused  by  the  neglect  or  unskilfulness  of  defendant's 
clerk  in  substituting  morphine  for  quinine.  As  the  child  could 
have  brought  an  action  for  the  injury  had  he  survived,  it  was 
held  that  a  liability  under  a  statute  of  Kew  York  existed  in 
favor  of  the  administrator;  and  because  the  statute  expressly 
gave  a  right  of  action,  at  least  nominal  damages  were  recov- 
erable.^ In  actions  for  libel  and  slander,  wherever  there  has 
been  publication  of  matter  in  itself  libelous  or  actionable  per 
se,  the  law  infers  some  damage.*  Every  unauthorized  entry 
upon  land  of  another  or  intermeddling  with  his  goods  is  an 
actionable  trespass,  whether  there  be  actual  injury  or  not; 
whether  the  owner  suffer  much  or  little,  he  is  entitled  to  a 
verdict  for  some  damages.^     In  an  action  for  fishing  in  the 

1  Deyo  V.  Van  Valkenburgh,  SHill,  tion    for  a  default  which  occurred 

242.  See  Flint  v.  Clark,  13  Conn.  361.  after  commencement  of  the   prior 

2Quin  V.Moore,  15  N.  Y.  432;  Mc-  action.     Shanklin  v.  Gray,  111  Cal. 

Intyre  v.  New  York  Central  R.  Co.,  88,  43  Pac.  Rep.  399.     Where  the  law 

43  Barb.   533;   Ihl    v.   Forty-second  gives  an  action  for  the  doing  of  an 

Street,   etc.  R.  Co.,  47  N.  Y.   317,   7  act,    the   doing    thereof    imports  a 

Am.  Rep.  450.  damage.     Whittemore  v.   Cutter,   1 

The  failure  to  comply  with  a  stat-  Gall.  429,  433.     See  Enos  v.  Cole,  53 

ute  requiring  that,  at  stated  times,  Wis.  235,  10  N.  W.  Rep.  377. 

the  officers  of  a  corporation  shall  file  ^  Ashby  v.  White,  1  Salk.  19,  2  Ld. 

verified  accounts  necessarily  implies  Raym.  955;  Flint  v.  Clark,  13  Conn, 

an  injury  to  the  stockholders  thouirh  361:  Kelly  v.  Sherlock,  L.  R.  1  Q.  B. 

no  actual    damages  be  shown;  and  6S6. 

neither   the  recovery   of  judgment  •*  Dixon  v.  Clow,  24  Wend.  188:  Mc- 

nor  the  pendency  of  an  action  for  a  Aneuny    v.   Jewett.    10   Allen,    151; 

l)ast  default  bars  a  subsequent  ac-  Carter  v.  Wallace,  2  Tex.  206;  Plum- 


50 


NOMINAL   DAMAGES. 


[§11. 


plaintiff's  several  fishery,  he  was  held  entitled  to  nominal  dam- 
aires  thouffh  the  defendant  took  no  fish  and  the  declaration 
did  not  allege  that  he  caught  any.^  One's  right  of  property 
is  infringed  by  any  unlawful  flowage  of  his  land.^  A  riparian 
owner  has  a  right  to  the  natural  flow  of  water  not  increased 
or  diminished  in  quantity,  and  unpolluted  in  quality,  and  for 
[13]  any  infraction  of  this  right  at  least  nominal  damages 
may  be  recovered.^  A  fraud  by  which  one  is  drawn  into  a 
contract  is  an  injury  actionable  ])er  se.*  Actual  damage  is 
not  necessary  to  an  action.  A  violation  of  a  right  with  the 
possibility  of  damage  is  suflBcient  ground.-^ 

§  11.  The  right  a  substantial  one;  new  trials.  The  fail- 
ure to  perform  a  duty  or  contract  is  a  legal  wrong  independ- 
ently of  actual  damage  to  the  party  for  whose  benefit  the  per- 


mer  v.  Harbut,  5  Iowa,  308;  Coe  v. 
Peacock,  14  Ohio  St.  187;  Pierce  v. 
Hosmer,  66  Barb.  345;  White  v.  Grif- 
fin, 4  Jones,  139;  Watson  v.  New  Mil- 
ford  Water  Co.,  71  Conn.  442,  42  Atl 
Rep.  265. 

1  Patrick  v.  Gi'eenway,  1  Saund. 
346&,  note. 

2  Amoskeag  Manuf.  Co.  v.  Goodale. 
46  N.  H.  53;  McCoy  v.  Danley.  20  Pa. 
89:  Tootle  v.  Clifton.  22  Ohio  St.  247, 
10  Am.  Rep.  732;  Kemmerrer  v.  Ed- 
elman,  23  Pa.  143;  WaiTen  v.  Deslip- 
pes,  33  Up.  Can.  Q.  B.  59;  Plumleigh 
V.  Dawson,  6  111.  544,  41  Am.  Dec. 
199;  Pastorius  v.  Fisher,  1  Rawle,  27; 
Whipple  V.  Cumberland  Manuf.  Co., 
2  Story,  661;  Jones  v.  Hannovan,  55 
Mo.  462;  Doud  v.  Guthrie,  13  111.  App. 
653;  Mellor  v.  Pilgrim,  7  id.  306; 
Mize  V.  Glenn.  38  Mo.  App.  98. 

3  New  York  Rubber  Co.  v.  Rothery, 
132  N.  Y.  293,  28  Am.  St.  575,  30  N. 
E.  Rep.  841;  Newhall  v.  Gilson,  8 
Cush.  595;  Tillotson  v.  Smith,  32  N. 
H.  90,  64  Am.  Dec.  365;  Wadsworth 
V.  Tillotson,  15  Conn.  366,  39  Am. 
Dec.  391;  Clinton  v.  Myers.  46  N.  Y. 
511,  7  Am.  Rep.  373;  Holsman  v. 
Boiling  Spring  B.  Co.,  14  N.  J.  Eq. 
835;  Embrey  v.  Owen,  6  Ex.  353; 
Northam  v.  Hurley,  1  El.  &  Bl.  665; 


Stockport  Water  Works  Co.  v.  Pot- 
ter, 7  H.  &  N.  160;  Tyler  v.  Wilkin- 
son, 4  Mason,  397;  Wood  v.  Waud,  3 
Ex.  748;  Tuthill  v.  Scott,  43  Vt.  525, 
5  Am.  Rep.  301;  Munroe  v,  Stickney. 
48  Me.  462;  Mitchell  v.  Barry,  26  Up. 
Can.  Q.  B.  416;  Blanchard  v.  Baker, 
8  Me.  253,  23  Am.  Dec.  504;  Stein  v. 
Burden,  24  Ala.  130,  60  Am.  Dec. 
453. 

4  Allaire  v.  Whitney,  1  Hill,  484; 
Ledbetter  v.  Morris,  3  Jones,  543; 
Pontifex  v.  Bignold,  3  Scott  N.  R. 
390. 

5 Id.;  National  Exchange  Bank  v. 
Sibley,  71  Ga.  726,  734;  Ross  v. 
Thompson,  78  Ind.  90;  Hooten  v. 
Barnard,  137  Mass.  36;  Blodgett  v. 
Stone.  60  N.  H.  167;  Alabama  Min- 
eral R.  Co.  V.  Jones,  121  Ala.  113,  25 
So.  Rep.  814. 

Mr.  Justice  Story  observed  in  Webb 
V.  Portland  Manuf.  Co.,  3  Sumner, 
189,  that  actual  perceptible  damage 
is  not  indispensable  as  the  founda- 
tion of  an  action.  The  law  toler- 
ates no  further  inquiry  than  whether 
there  has  been  the  violation  of  a 
right.  If  so,  the  party  is  entitled  to 
maintain  his  action  in  vindication  of 
bis  right. 


11.] 


NOMINAL   DAMAGES. 


31 


formance  of  such  duty  or  contract  is  due.^  The  omission  to 
show  actual  damages  and  the  inference  therefrom  that  none 
have  been  sustained  do  not  necessarily  render  the  case  trivial. 
The  law  has  regard  for  the  substantial  rights  of  parties  though 
it  may  overlook  trivial  things.-  When  such  a  right  is  violated 
the"  maxim  de  minimis  non  curat  lex  has  no  application.'  The 
court  will  add  nominal  damages  to  the  finding  of  a  jury  when 
necessary  to  such  rights,  as  to  carry  costs.*  So  where  [14-16] 
judgment  should  have  been  given  for  plaintifT  for  nominal 
damages,  but  was  rendered  for  defendant,  it  will  be  reversed 
if  such  damages  will  entitle  the  plaintiff  to  costs; ^otherwise  a 


1  Spaflford  v.  Goodell,  3  McLean,  97; 
Runlett  V.  Bell,  5  N.  H.  433;  Hagan 
V.  Riley,  13  Gray,  515:  Pond  v.  Merri- 
field,  12  Gush.  181;  Bagby  v.  Harris, 
9  Ala.  173;  Clinton  v.  Mercer,  3 
Murph.  119;  Conger  v.  Weaver,  20 
N.  Y.  140;  Mecklem  v.  Blake,  22  Wis. 
495;  Freese  v.  Crary,  29  Ind.  525; 
Worth  V.  Edmonds,  52  Barb.  40; 
French  v.  Bent,  43  N.  H.  448;  John- 
son V.  Stear,  15  C.  B.  (N.  S.)  380;  Steer 
V.  Crowley,  14  id.  337:  Brown  v.  Em- 
erson, 18  Mo.  103;  Laflin  v.  Willard, 
16  Pick.  64;  Goodnow  v.  Willard,  5 
Met.  517;  Browner  v.  Davis,  15  Cal. 
9;  Seat  v,  Moreland,  7  Humph.  575; 
Bond  V.  Hilton,  2  Jones,  149;  Craig 
V.  Chambers,  17  Ohio  St.  254;  Dow 
V.  Humbert,  91  U.  S.  294;  Smith  v. 
Whiting,  100  Mass.  122;  Blot  v.  Boi- 
ceau,  3  N.  Y.  78;  Hickey  v.  Baird,  9 
Mich.  32;  Newcomb  v.  Wallace,  112 
Mass.  25;  Chamberlain  v.  Parker,  45 
N.  Y.  569;  Wilcox  v.  Executor  of 
Plummer,  4  Pet.  172;  Clark  v.  Smith, 
9  Conn.  379;  Barker  v.  Green.  2Bing. 
317;  Pollard  v.  Porter,  3  Gray,  312; 
Marzetti  v.  Williams,  1  B.  &  Ad.  415; 
Jordan  v.  Gallup,  16  Conn.  536;  Coop- 
er V.  Wolf,  15  Ohio  St.  523;  Mickles 
V.  Hart,  1  Denio,  548;  Carl  v.  Granger 
Coal  Co.,  69  Iowa,  519,  29  N.  W. 
Rep.  437;  Rosser  v.  Timberlake,  78 
Ala.  162. 

2  Smith  V.  Gugerty,  4  Barb.  614; 


Hathorne  v.  Stinson,  12  Me.  183; 
Stowell  V.  Lincoln,  11  Gray,  434; 
Kimel  v.  Kimel,  4  Jones,  121;  EUi- 
cottville,  etc.  Plank  R.  Co.  v.  Buffalo, 
etc.  R.  Co.,  20  Barb.  644. 

The  Georgia  court  is  not  aware  of 
any  precedent  authorizing  a  trial 
court  to  deprive  a  plaintiff  of  his 
right  to  recover  nominal  damages. 
To  so  hold  would  put  it  in  the  power 
of  the  court  to  prevent  the  recovery 
thereof,  and  render  the  law  author- 
izing it  inoperative.  Addington  v. 
Western  &  A.  R.  Co.,  93  Ga.  566,  20 
S.  E.  Rep.  71.  Hence  if  the  right  to 
recover  such  damages  is  shown,  a 
judgment  directing  a  verdict  for  the 
defendant  will  be  reversed.  Id.  And 
so  of  a  judgment  sustaining  a  demur- 
rer to  the  petition,  only  nominal 
damages  being  recoverable,  Kenny 
V.  Collier,  79  Ga.  743,  8  S.  E.  Rep.  58; 
Sutton  V.  Southern  R.  Co..  101  Ga. 
776,  29  S.  E.  Rep.  53;  and  a  judgment 
dismissing  the  action.  Roberts  v. 
Glass,  112  Ga.  450,  37  S.  E.  Rep.  704. 

3  Wartman  v.  Swindell,  54  N.  J.  L. 
589,  25  Atl.  Rep.  356,  18  L.  R.  A.  44. 

*  Von  Schoening  v.  Buchanan,  14 
Abb.  Pr.  185. 

5  Potter  v.  Mellen,  36  Minn.  122,  SO 
N.  W.  Rep.  438;  Enos  v.  Cole,  53  Wis. 
235,  10  N.  W.  Rep.  377;  Sayles  v. 
Bemis,  57  Wis.  315,  15  N.  W.  Rep. 
432;  Eaton  v.  Lyman,  30  Wis.  41. 


32 


NOMINAL   DAMAGES. 


[§11- 


judgment  which  is  erroneous  only  because  it  fails  to  award 
plaintiff  nominal  damages  will  not  be  reversed,'  nor  will  a  new 
trial  be  granted.-  If  the  reviewing  court  recognizes  that 
substantial  damages  have  been  sustained  and  that  the  party 
entitled  to  them  mistook  the  basis  on  which  they  should  be 
determined,  the  denial  of  his  right  to  nominal  damages,  to 
which  he  was  entitled,  will  be  ground  for  reversing  the  judg- 
ment.' And  if  the  object  of  the  action  is  to  determine  some 
question  of  permanent  right,  and  through  error  the  plaintiff  is 
deprived  of  the  judgment  he  is  entitled  to,  the  fact  that  he 
can  recover  onlv  nominal  damages  will  not  be  reason  for  de- 


1  Hickey  v.  Baird,  9  Mich.  32;  Rob- 
ertson V.  Gentry,  2  Bibb,  542;  Watson 
V.  Van  Meter,  43  Iowa,  76;  Wire  v. 
Foster,  62  Iowa,  114,  17  N.  W. 
Rep.  174;  Ely  v.  Parsons,  55  Conn.  83, 
101,  10  Atl.  Rep.  499;  Platter  v.  Sey- 
mour, 86  Ind.  328;  Rhine  v.  Morris,  96 
Ind.  81;  Norman  v.  Winch.  65  Iowa, 
263.  21  N.  W.  Rep.  598;  Harris  v.  Kerr, 
37  Minn.  537,  35  N.  W.  Rep.  379;  Hib- 
bard  v.  Western  U.  Tel.  Co.,  33  Wis. 
558,  14  Am.  Rep.  775;  Benson  v.  Wau- 
kesha, 74  Wis.  31,41  N.  W.  Rep.  1017; 
Beatty  v.  Oille,  12  Can.  Sup.  Ct.  706; 
Mears  v.  Cornwall,  73  Mich.  78,  40  N. 
W.  Rep.  931;  Haven  v.  Manuf.  Co.,  40 
Mich.  286;  McLean  v.  Charles  Wright 
Medicine  Co.,  96  Mich.  479,  56  N.  W. 
Rep.  68;  Thisler  v,  Hopkins.  85  111. 
App.  207;  People  v.  Petrie,  94  id.  652; 
Coffin  V.  State,  144  Ind.  578,  43  N.  K 
Rep.  654,55  Am.  St.  188;  Smith  v.  Par- 
ker, 148  Ind.  127,  45  N.  E.  Rep.  770; 
Harwood  v.  Lee,  85  Iowa,  622,  52  N. 
W.  Rep.  521;  Boardman  v.  Marshall- 
town  Grocery  Co.,  105  Iowa,  445,  75  N. 
W.  Rep.  343;  United  States  Exp.  Co. 
V.  Koerner,  65  Minn.  540,  68  N.W.  Rep. 
181,  33  L.  R.  A.  600;  Kenyon  v.  West- 
ern U.  Tel.  Co.,  100  Cal.  454,  35  Pac. 
Rep.  75,  quoting  the  text;  Phillips  v. 
Covell.  79  Hun,  210,  29  N.  Y.  Supp. 
613;  Roberts  v.  Minneapolis  Thresh- 
ing 51.  Co.,  8  S.  D.  579,  67  N.  W.  Rep. 
607;  Ternes  v.  Dunn,  7  Utah,  497.  27 
Pac.  Rep.  692;  Farr  v.  State  Bank,  87 


Wis.  223,  58  N.  W.  Rep.  377,41  Am.  St. 
40;  East  Molina  Co.  v.  Weir  Plow 
Co.,  37  C.  C.  A.  62,  95  Fed.  Rep.  250; 
Kelly  V.  Fahrney.  38  C.  C.  A.  103, 
105,  97  Fed.  Rep.  176;  Scammell  v. 
Clark,  31  N.  B.  250:  Glasscock  v.  Ro- 
sengrant,  55  Ark.  376,  18  S.  W.  Rep. 
379;  Bunch  v.  Potts,  57  Ark.  257,  21 
S.  W.  Rep.  437:  Hartmann  v.  Burtis, 
65  App.  Div.  481,  72  N.  Y.  Supp.  914; 
Briggs  V.  Cook,  99  Va.  273,  38  S.  E> 
Rep.  148. 

If  the  judgment  is  reversed  be- 
cause of  error  in  the  instructions  the 
appellate  court  will  direct  judgment 
for  a  nominal  sum  for  the  plaintiff, 
it  being  clear  that  he  is  entitled  to 
nominal  damages.  Jones  v.  Tele- 
graph Co.,  101  Tenn.  442,  47  S.  W. 
Rep.  699. 

2  Id. ;  Brantingham  v.  Fay,  1  Johns. 
Cas.  256;  Jennings  v.  Loring,  5  Ind. 
250;  Watson  v.  Hamilton,  6  Rich.  75; 
Haines  v.  Dunlap,  33  N.  B.  556;  Ring- 
lehaupt  V.  Young,  55  Ark.  128,  17  S. 
W.  Rep.  710. 

Costs  are  not  taxed  in  the  court  of 
claim.s,  and  it  is  not  in  accordance 
with  the  practice  of  that  court  to 
render  a  judgment  for  nominal  dam- 
ages. Friedenstein  v.  United  States, 
35  Ct  of  Cls.  1,  9. 

s  Thomson-Houston  Electric  Co.  v. 
Durant  Land  Imp.  Co.,  144  N.  Y.  94, 
39  N.  E.  Rep.  7. 


§  11.]  NOMINAL   DAMAGES.  33 

nying  a  new  trial.^  If  the  right  to  such  damages  is  estab- 
lished the  court  cannot  ignore  it  and  give  the  defendant  judg- 
ment although  the  jury  erroneously  find  substantial  damages 
in  the  plaintiff's  favor."^  A  cause  of  action  may  be  so  intrin- 
sically trivial  and  vexatious  that  it  would  be  almost  a  pardon- 
able departure  from  the  technical  rule  to  apply  the  maxim  de 
minimis  non  curat  lex  and  direct  a  verdict  for  the  defendant. 
It  was  so  ruled  in  a  Vermont  case.  The  defendant  as  an  offi- 
cer had  attached  certain  hay,  straw,  etc.,  and  used  a  pitchfork 
belonging  to  the  debtor  in  removing  the  same;  he  did  no  in- 
jury to  the  fork,  and  after  its  use  returned  it  where  he  found 
it.  The  court  held  there  was  no  liability.^  It  is  to  be  observed 
that,  though  there  was  a  technical  wrong,  by  an  unauthorized 
intermeddling  with  another's  property,  there  was  no  assertion 
of  an  adverse  right  and  no  actual  injury.  The  action  was  not 
necessary  for  the  vindication  of  a  right  nor  to  redress  a  wrong 
deserving  compensation.  It  was,  however,  a  case  in  which, 
upon  strict  principles,  nominal  damages  should  have  been  given ; 
for  they  are  always  due  for  the  positive  and  wrongful  invasion 
of  another's  property.^  Technical  rules  and  rules  as  to  the 
forms  of  proceedings  must  be  observed  without  regard  to  the 
consequences  which  may  follow  in  particular  cases;  otherwise 
the  stability  of  judicial  decisions  and  the  certainty  of  the  law 
cannot  be  preserved.^ 

1  Merrill  v.  Dibble,  12  111.  App.  85;  was  said  that  whenever  the  maxim 
Ely  V.  Parsons,  55  Coun.  83,  101,  10  de  viinimis  non  curat  lex  is  applied 
Atl.  Rep.  499;  Skinner  v,  Allison,  54  to  take  away  a  right  of  recovery,  it 
App.  Div.  47,  66  N.  Y.  Supp.  288;  has  reference  to  the  injury  and  not 
Olson  v.  Huntimer,  8  S.  D.  220,  66  N.  to  the  resulting  damage.  The  opin- 
W.  Rep.  313;  Bungenstock  V.  Nish-  ion  of  Bennett,  J.,  in  that  case  states 
nabotna  Drainage  District,  163  Mo.  the  result  of  several  cases  on  this 
198,  64  S.  W.  Rep.  149.  proposition.     See  Ash  by  v.  White,  2 

2  Carl  v.  Granger  Coal  Co.,  69  Iowa,  Ld.  Raym.  938;  Kidder  v.  Barker,  18 
519,  29  N.  W.  Rep.  437.  Vt.   454;  Clifton  v.  Hooper,  6  Q.  B. 

3  Paul  v.  Slason.  22  Vt.  231,  54  Am.  4G8;  Barker  v.  Green,  2  Bing.  317; 
Dec.  75;  Pronk  v.  Brooklyn  Heights  Williams  v.  Mostyn,  4  M.  &  W.  145; 
R.Co.,68App.  Div.  390,74N.  Y.  Supp.  Cady  v.  Huntington.  1  N.  H.  138; 
375.  Young  v.  Spencer,  10  B.  &  C.  145; 

<  Seneca  Road  Co.  v.  Auburn,  etc,  Emhrey  v.    Owen,   6  Ex.   353.   372; 

R  Co..  5  Hill,  175;  Heater  v.  Pearce,  Williams  v.  Esling,  4  Pa.  486,  45  Am. 

59  Neb.  583,  81  N.  W.  Rep.  615,  citing  Dec.  710;  Glanvill  v.  Stacey,  6  B.  & 

the  text.  C.  543;  Seneca  Road  Co.  v.  Auburn, 

6  Clark  V.  Swift,  3  Met.  890,  395.  etc.  R.  Co.,  5  Hill,  175;  Bustamente  v. 

In  Fullam  v.  Stearns,  30  \t.  443,  it  Stewart,  55  Cal.  115. 
Vol.  1  —  3 


84  COMPENSATION.  [§  12. 

CHAPTEK  III. 

COMPENSATION. 

Section  1. 
compensatory  damages. 
§  13.  Award  of  compensation  the  object  of  the  law. 

13.  Limitation  of  liability  to  natural  and  proximate  consequencegL 

Section  3. 
direct  damages. 

14.  What  these  include. 

Section  3. 

consequential  damages  for  torts. 

15.  Awarded  for  probable  consequences. 

16.  Rule  of  consequential  damages  for  torts. 

17-19.  Illustrations  of  the  doctrine  of  the  preceding  sectioiu 

20.  Consequential  damages  under  fence  statutes. 

21.  Nervous  shock  without  impact:  the  Coultas  case  and  American  cases 

in  harmony  with  it. 

22.  Same  subject;  criticism  of  the  Coultas  case;  nervous  shock  a  phys- 

ical injury. 

23.  Same  subject;  an  earlier  ruling. 
23a.  Same  subject;  Dulien  v.  White. 

24.  Same  subject;  miscellaneous  cases. 

25.  Anticipation  of  injury  as  to  persons;  illustrations. 

26.  Consequential  damages  in  highway  cases. 

27.  Imputed  negligence. 

28.  Particular  injury  need  not  be  foreseen. 

29-31.  The  act  complained  of  must  be  the  efficient  cause. 

32.  Breach  of  statutory  duties. 

33.  Injury  through  third  person. 

34.  Liability  as  affected  by  extraordinary  circumstances. 

35.  Illustrations  of  the  doctrine  of  the  preceding  section. 

36.  Liability  of  carriers  for  consequential  damages;  extraordinary  cir- 

cumstances. 
37-38.  Intervening  cause. 

39.  Act  of  injured  party;  fraud  and  exposure  to  peril. 
40-43.  Act  of  third  person. 
43-44.  Wilful  or  malicious  injuries. 

Section  4. 
consequential  damages  for  breach  of  contraot 

45.  Recoverable  only  when  contemplated  by  the  parties. 

46.  Illustrations  of  liability  under  the  rule. 

47.  Liability  not  affected  by  collateral  ventures. 


§  12.]  COMPENSATION.  35 

§  48.  Distinction  between  consequential  liability  in  tort  and  on  contract. 

49.  Same  subject;  criticism  of  the  Hobbs  case. 

50.  Liability  under  special  circumstances;  Hadley  v.  Baxendale. 

51.  Same  subject;  illustrations  and  discussion  of  the  rule. 

52.  Market  value;  resale;  special  circumstances. 

Section  5. 
required  certainty  of  damages. 

53.  Damages  must  be  certain  in  their  nature  and  cause. 

54.  Liability  for  the  principal  loss  extends  to  details  and  incidents. 

55.  Onlj'  the  items  which  are  certain  are  recoverable. 
5G-58.  Recovery  on  successive  consequences. 

59-60.  Required  certainty  of  anticipated  profits. 

61.  Warranty  of  seeds. 

62.  Prospective  growth  of  orchard  and  of  animals, 
03.  Profits  of  special  contracts. 

64.  Same  subject;  Masterton  v.  IMayor. 

65.  Violation  of  contract  to  lease. 

66.  Profits  of  labor. 

67.  Profits  from  commercial  ventures. 

68.  Profits  on  dissolution  of  partnership. 

69.  Commercial  agencies. 

70.  Tortious  interference  with  business. 

71.  Chances  for  prizes  and  promotions. 
73.  Contingent  advantage. 

73.  Uncertain  mitigation  of  breach  of  marriage  promise. 

74.  Failure  to  provide  sinking  fund. 

Section  6. 

THE  constituents  OF  COMPENSATION,  OR  ELEMENTS  OF  DAMAGE. 

75.  Elementary  limitation  of  damages. 

76.  Damages  for  non-payment  of  money. 

77.  Greater  damages  than  interest  for  failure  to  pay  money. 

78.  Liability  for  gains  and  losses. 

79.  What  losses  elements  of  damage. 

80.  Same  subject;  labor  and  expenditures. 

81.  Same  subject;  damages  for  relying  on  performance. 

82.  Same  subject;  liabilities  to  third  persons;  covenants  of  indemnity. 

83.  Same  subject;  indemnity  to  municipalities;  counsel  fees, 

84.  Same  subject;  liability  for  losses  and  expenses. 

85.  Same  subject;  bonds  and  undertakings;  damages  and  costs. 
86-87.  Same  subject;  necessity  of  notice  to  indemnitor  to  fix  liability. 

88.  Expenses  incurred  to  prevent  or  lessen  damages. 

89.  Same  subject;  between  vendor  and  vendee. 

90.  Same  subject;  extent  of  the  duty. 

91.  Same  subject;  employer  may  finish  work  at  contractor's  expensa 

92.  May  damages  for  breach  of  contract  include  other  than  pecuniary 

elements  ? 


36  COMPENSATION.  [§  12. 

§  93.  Elements  of  damage  for  personal  torts. 
94.  Character  as  affecting  damages  for  personal  injuries. 
95-96.  Mental  suffering. 

97.  Same  subject;  liability  of  telegraph  companies. 

98.  Right  to  compensation  not  affected  by  motive. 

99.  Distinction  made  for  bad  motive;  contracts. 

100.  Motives  in  tort  actions. 

101.  How  motive  affects  consequences  of  confusion  of  goods. 
102-103.  Where  property  sued  for  improved  by  wrong-doer. 

104.  Distinctions  in  the  matter  of  proof. 

105.  Value  of  property. 

Section  1. 
compensatoky  damages. 

§  12.   Award   of  compensation  the  object   of  the  law. 

[17]  Actions  at  law  are  usually  brought  to  recover  compensa- 
tion for  the  wrong  complained  of.  The  law  which  is  denomi- 
nated the  law  of  damages  is  principally  that  which  defines, 
measures  and  awards  compensation.  Such  damages  as  are  not 
compensatory  are  either  nominal  or  exceptional.  Compensa- 
tion is  the  redress  which  the  law  affords  to  alf  persons  whose 
rights  have  been  invaded ;  in  the  nature  of  things  they  must 
accept  that  by  way  of  reparation.  Therefore  the  principles 
which  underlie  this  right,  so  necessary  and  so  frequently  in- 
voked, and  the  rules  which  govern  its  enforcement,  are  of  the 
greatest  importance.  The  law  defines  very  precisely  all  personal 
and  property  rights  so  that  every  person  may  enjoy  his  own 
with  confidence  and  repose.  If  they  are  infringed  the  extent 
of  the  encroachment  is  readily  seen  when  the  facts  appear. 
The  law  defines  the  scope  of  responsibility  with  as  much  pre- 
cision as  the  nature  of  the  subject  will  permit,  and  lays  down 
a  universal  measure  of  recompense  for  civil  injury  which  the 
sufferer  is  entitled  to  recover,  and  the  person  who  is  liable  is 
bound  to  pay,  when  the  injury  has  been  done  without  a  mo- 
tive for  which  the  law  subjects  him  to  punishment.  The  uni- 
versal and  cardinal  principle  is  that  the  person  injured  shall 
receive  a  compensation  commensurate  with  his  loss  or  injury, 
and  no  more;  and  it  is  a  right  of  the  person  who  is  bound  to 
pay  this  compensation  not  to  be  compelled  to  pay  more,  ex- 
cept costs.^     It  is  not  within  legislative  power  to  deprive  an 

1  Rockwood  v.  Allen,  7  Mass.  254;  Ferrer  v.  Beale,  1  Ld.  Raym.  692 
Dexter  v.  Spear,  4  Mason,  115;  Allison  v.  Chandler,  11  Mich.  542 
Walker  v.  Smith,  1  Wash.  C.  C.  152;     Northrup  v.  McGill,  27   Mich.   234 


§  12.]  COMPENSATORY    DAMAGES.  3T 

individual  who  has  been  injured  in  his  person  or  estate  of 
redress  either  in  whole  or  in  part.  "Nothing  less  than  the 
full  amount  of  pecuniary  damage  which  a  man  suffers  from 
an  injury  to  him  in  his  lands,  goods  or  person  fills  the  meas- 
ure secured  to  him  in  the  declaration  of  rights."  ^  The  prin- 
ciple of  just  compensation  is  paramount.  By  it  all  rules  [18] 
on  the  subject  of  compensatory  damages  are  tested  and  cor- 
rected. They  are  but  aids  and  means  to  carry  it  out;  and 
when  in  any  instance  such  rules  do  not  contribute  to  this  end, 
but  operate  to  give  less  or  more  than  just  compensation  for 
actual  injury,  they  are  either  abandoned  as  inapplicable  or 
turned  aside  by  an  exception.  There  are,  however,  upon  cer- 
tain subjects  some  arbitrary  rules,  or  those  which  have  been 
adopted  from  considerations  of  policy,  ostensible  on  the  basis 
of  compensation,  which  really  fall  short  of  that  object  in  a 
conservative  deference  to  possible  consequences  to  the  party 
who  must  respond  to  the  demand.  With  these  necesssary  or 
expedient  exceptions,  the  person  who  has  broken  his  contract 
or  caused  injury  by  any  tortious  act  is  liable  to  the  other 
party  to  the  contract  or  to  the  sufferer  from  such  act  for  such 
damages  as  will  place  the  person  so  injured  in  as  good  condi- 
tion as  though  the  contract  had  been  performed  or  the  tort 

Bussy  V.  Donaldson,  4  Dall.  206;  Horst  v.  Roehm,  84  Fed.  Rep.  565; 
Griffin  v.  Colver,  16  N.  Y.  494;  Mil-  Alleghany  Iron  Co.  v.  Teaford,  96  Va. 
waukee,  etc.  R.  Co.  v.  Arms,  91  U.  S.  372,  31  S.  E.  Rep.  525. 
489;  Baker  v.  Drake,  53  N.  Y.  216;  A  charge  on  the  subject  of  dam- 
United  States  V.  Smith,  94  U.  S.  214;  ages  is  objectionable  if  the  jury  are 
Robinson  v.  Harman,  1  Ex.  850;  told  that  plaintiff  is  entitled  to"  full, 
Peltz  V,  Eichele,  62  Mo.  171;  Noble  complete  and  ample  "  compensation. 
V.  Ames  Manuf.  Co.,  112  Mass.  492;  The  adjectives  should  not  be  used. 
Buckley  v.  Buckley,  12  Nev.  423;  Sale  v.  Eichberg,  105  Tenn.  332,  352, 
Suydam  v.  Jenkins,  3  Sandf.  614;  59  S.  W.  Rep.  1020. 
Parker  v.  Simonds,  8  Met.  205;  Ja-  To  say  to  the  jury  that  the  plaintiff's 
cobson  V.  Poindexter,  42  Ark.  97;  damages  may  be  assessed  at  such. 
Good  bar  v.  Lindsley,  51  Ark,  380,  14  sum  as  they  may  think  he  has  sus- 
Am.  St.  54.  11  S.  W.  Rep.  577;  Mason  tained  is  to  give  them  a  "roving 
V.  Hawes.  52  Conn.  12,  52  Am.  Rep.  commission  "  to  apply  their  oven 
552;  Jones  v.  People,  19  111.  App.  300;  measure  of  damages  instead  of  that 
Page  V.  Sumpter,  53  Wis.  652,  UN.  defined  by  the  law.  Campy,  Wabash 
W.  Rep.  60;  Henson-Herzog  Supply  R.  Co.,  94  Mo,  App.  272.  See  §  1256. 
Co.  V,  Minnesota  Brick  Co,,  55  Minn.  i  Thirteenth  &  F.  St.  P.  R.  v.  Boud- 
530,  57  N.  W.  Rep.  129,  citing  the  rou,  92  Pa.  475,  482. 
preceding     sentence    of    the    text; 


38  COMPENSATION.  [§  13. 

Lad  not  been  committed.  It  is  not  meant  b}^  tliis  that  the 
party  liable  must  answer  for  all  consequences  which  may  in- 
directly and  remotely  ensue.  The  latter  are,  beyond  a  certain 
point,  incapable  of  being  traced ;  they  combine  with  the  re- 
sults of  other  causes,  and  any  attempt  to  follow  and  apportion 
them  would  be  abortive,  and  any  conclusion  of  liability  based 
upon  such  consequences  would  rest  on  conjecture  and  lead  to 
great  injustice.  If  men  were  held  to  such  a  far-reaching  re- 
sponsibilit}''  they  would  be  timid  or  reckless;  if  it  were  legally 
recognized  it  would  be  fatal  to  all  activity  and  enterprise. 

§  13.  Liniitatioii  of  liability  to  natural  and  proximate 
consequences.  As  before  remarked,  the  law  defines  the  scope 
of  responsibility  for  consequences;  beyond  that  they  are  sup- 
posed to  cease  or  the  injured  party  is  presumed  to  counteract 
them  by  preventive  measures.  The  legal  scope  is  a  reasonable 
one;  in  general  it  extends  as  far  as  the  moral  judgment  and 
practical  sense  of  mankind  recognize  responsibility  in  the  do- 
main of  morals,  and  in  those  affairs  of  life  which  are  not  re- 
ferred to  the  courts  for  regulation  or  adjustment.  The  law 
[19]  defines  it  generally  by  the  principle  which  limits  the  re- 
covery of  damages  to  those  which  naturally  and  proximately 
result  from  the  act  complained  of;  or,  in  other  words,  to  those 
consequences  of  which  the  act  complained  of  is  the  natural 
and  proximate  cause.  This  limitation  is  expressed  in  such 
g-eneral  terms  that  the  distinction  between  those  damages 
which  are  compensable  and  those  which,  because  being  too  re- 
mote, are  not,  is  not  always  very  clear.  On  similar  facts  dif- 
ferent courts  have  come  to  diverse  conclusions,  though  equally 
acknowledging  the  principle.  It  is  made  more  specific,  how- 
ever, by  rules  of  an  elementary  character  formulated  under  it, 
and  by  judicial  exposition  and  illustrations  which  impart  to 
this  legal  generality  a  more  precise  and  determinate  import 
than  is  suggested  by  its  words;  and  it  is  only  by  resort  ta 
them  that  the  principle  of  this  limitation  can  be  definitely 
understood,  explamed  or  elucidated.  Damages  which  are  re- 
coverable may,  therefore,  be  conveniently  divided  primarily 
for  this  purpose  into  two  classes:  first,  direct;  second,  conse- 
quential. 


§  14.]  dikeot  damages.  39 

Section  2. 
direct  damages. 

§14,  What  these  include.  These  include  damages  for  all 
such  injurious  consequences  as  proceed  immediately  from  the 
cause  which  is  the  basis  of  the  action;  not  merely  the  conse- 
quences which  invariably  or  necessarily  result  and  are  always 
provable  under  the  general  allegation  of  damages  in  the  dec- 
laration, but  also  other  direct  effects  which  have  in  the  par- 
ticular instance  naturally  ensued,  and  must  be  alleged  specially 
to  be  recovered  for.  The  liability  of  the  defendant  for  these, 
if  responsible  for  the  cause,  is  clear.  All  such  damages, 
whether  for  tort  or  breach  of  contract,  are  recoverable  with- 
out regard  to  his  intention  or  motive,  or  any  previous  actual 
contemplation  of  them.  A  defendant  is  conclusively  presumed 
to  have  contemplated  the  damages  which  result  directly  and 
necessarily  or  naturally  from  his  breach  of  contract,'  as  will 
be  more  particularly  illustrated  in  another  place;  and  in  [20] 
cases  of  tort  his  responsibility  to  this  extent  is  absolute.^  An 
illustration  of  this  rule  is  found  in  a  case  in  Yirginia  where 
an  administrator  sold  a  chattel  which  the  intestate  had  in  his 
possession  when  he  died,  but  which  in  truth  belonged  to  an- 
other, and  applied  the  proceeds  to  the  payment  of  the  debts  of 
the  intestate,  in  due  course  of  administration,  without  notice  of 
the  right  or  claim  of  the  owner;  he  was  held  personally  liable 
to  such  owner  for  the  value  of  the  property.*  In  a  Massachu- 
setts case  a  factor  bought  goods  for  his  principal  residing  at 
W.,  and  by  mistake  sent  them  to  a  third  person  at  S.,  who  re- 
ceived them  in  good  faith  and  paid  the  freight;  he  was  held 
liable  for  the  goods  to  the  owner,  but  was  allowed  a  deduction 
for  the  freight  paid.* 

1  Hadley  v.  Baxendale,  9  Ex.  341;  v.  Ayres,  3  Sneed,  677;  Bowas  v.  Pio- 
Burrell  v.  New  York,  etc.  Co.,  14  ueer  Tow  Line,  2  Sawyer,  21;  Parley 
Mich.  34;  Brown  v.  Foster,  51  Pa.  165;  v.  Eastern  R.  Co.,  98  Mass.  414;  Lane 
Collard  v.  Southeastern  R.  Co.,  7  H.  v.  Atlantic  Works,  111  Mass.  136; 
&  N.  79;  Williams  v.  Vanderbilt,  28  Martachowski  v.  Orawitz,  14  Pa. 
N.  Y.  217,  84  Am.  Dec.  333;  Smith  v.  Super.  Ct.  175,  186,  citing  the  text. 
St.  Paul,  etc.  R.  Co.,  30  Minn.  169,  14  See  chs.  21,  22,  36;  Lathers  v.  Wy- 
N,  W,  Rep.  797;  Agius  v.  Great  man,  76  Wis.  616,  45  N.  W.  Rep.  669. 
Western  Colliery  Co.,  [1899]  1  Q.  B.  SNewsum  v.  Newsum,  1  Leigh,  86, 
413;   Cole  v.  Stearns,  20  N.  Y.  Misc.  19  Am.  Dec.  739. 

502,  46  N.  Y.  Supp.  238.  *  Whitney  v.  Beckford,  105  Mass. 

2  Cogdell  V.  Yett.  1  Cold.  280;  Tally    267;  Etea  v.  Luyster,  60  N.  Y.  252; 


10  compensation.  [§§  15,  16. 

Section  3. 
consequential  damages  for  torts. 

§  15.  Awarded  for  probable  consequences.  Consequential 
iamages  are  those  which  the  cause  in  question  naturally,  but  in- 
jirectly,  produced.  An  example:  the  defendant  was  liable  for 
tilling  a  mare;  the  plaintiff  suffered  injury  in  the  loss  of  that 
(iniraal  to  the  extent  of  her  value,  but  circumstances  gave  her 
an  additional  value  to  him;  she  had  an  un weaned  colt,  and  was 
suckling  the  colt  of  another  mare  which  had  died.  The  direct 
consequence  of  the  killing  of  the  mare  was  her  loss  —  the 
necessity  of  employing  other  means  to  raise  the  colts  was  con- 
sequentiaL'  The  consequential  damages  which  may  be  recov- 
ered are  governed  by  one  consideration  when  they  are  claimed 
for  a  tort,  and  by  another  when  they  are  sued  for  as  the  result 
of  a  breach  of  contract.  The  latter  will  be  the  subject  of  the  next 
section.  The  question  of  the  remoteness  of  damage,  if  the  mate- 
rial facts  are  not  in  dispute,  is  for  the  court.  Blackburn,  J., 
has  said  that  it  never  ought  to  be  left  to  a  jury;  to  do  that 
would  be  in  effect  to  say  that  there  shall  be  no  rule  as  to  dam- 
ages being  too  remote.^ 

[21]  §  16.  Biile  of  consequential  damages  for  torts.  In  an 
action  for  a  tort,  if  no  improper  motive  is  attributed  to  the  de- 
fendant, the  injured  party  is  entitled  to  recover  such  damages 
as  will  compensate  him  for  the  injury  received  so  far  as  it 
might  reasonably  have  been  expected  to  follow  from  the  cir- 
cumstances; such  as,  according  to  common  experience  and  the 
usual  course  of  events,  might  have  been  reasonably  anticipated. 
The  damages  are  not  limited  or  affected,  so  far  as  they  are  com- 

Keenan   v.  Cavanagh,    44  Vt.    288;  724;  Goodlander  Mill  Co.  v.  Standard 

Little  V.   Boston,  etc.  R.  Co.,  66  Me.  Oil  Co.,  63  Fed.  Rep.  400,  11  C.  C.  A. 

239;  Bowas  v.  Pioneer  Tow  Line,  2  253,27  L.  R.  A.  583;  Pennsylvania  Co. 

Sawyer,  21.  v.  Whitlock,  99  Ind.  16,  50  Am.  Rep. 

1  Teagarden  v.  Hetfield,  11  Ind.  522.  71:  Stone  v.  Boston  &  A.  R.  Co.,  171 

2  Hobbs  V.  London  &  S.  R.,  L.  R.  10  Mass.  536,  51  N.  E.  Rep.  1,  41  L.  R.  A. 
Q.  B.  Ill,  122;  Hammond  v.  Bussey,  794:  Deisenrieter  v.  Kraus-Merkel 
20  Q.  B.  Div.  79,  89;  Read  v.  Nichols,  Malting  Co.,  97  Wis.  279,  72  N.  W. 
118  N.  Y.  224,  23  N.  E.  Rep.  468,  7  L.  Rep.  735;  Consolidated  Electric  Light 
R.  A.  130:  Cuff  v.  Newark,  etc.  R  Co.,  &  P.  Co.  v.  Koepp,  64  Kan.  735,  67  Pac 
35  N.  J.  L..  17,  10  Am.  Rep.  205;  Rep.  608.  Contra,  Guif,  etc.  R.  Ca 
Behling  v.  Southwest  Pipe  Lines,  160  v.  Hayter,  93  Tex.  239,  54  S.  W.  Rep. 
Pa.  35'J,  28  Atl.  Kep.  777,  40  Am.  St.  944,  47  L.  R.  A.  325. 


§  IG.]  CONSEQUENTIAL    DAMAGES    FOR   TORTS.  41 

pensatory,  by  what  was  in  fact  in  contemplation  by  the  party 
in  fault.  lie  who  is  responsible  for  a  negligent  act  must 
answer  "  for  all  the  injurious  results  which  flow  therefrom,  by 
ordinary  natural  sequence,  without  the  interposition  of  any 
other  negligent  act  or  overpowering  force.  Whether  the  in- 
jurious consequences  may  have  been  '  reasonably  expected  '  to 
have  followed  from  the  commission  of  the  act  is  not  at  all  de- 
terminative of  the  liability  of  the  person  who  committed  the 
act  to  respond  to  the  person  suffering  therefrom.  Such  reason- 
able expectation  bears  more  clearly  upon  the  intent  with  which 
the  act  was  committed  than  upon  the  liability  of  the  doer  for 
the  injurious  consequences.  If  he  might  reasonably  have  ex- 
pected that  the  injurious  consequences  which  did  flow  from  the 
iict  would  flow  from  its  commission,  the  prima  facie  legal  pre- 
sumption would  be  that  he  intended  the  consequences,  and  the 
action  should  be  trespass  rather  than  case.  It  is  the  unex- 
pected rather  than  the  expected  that  happens  in  the  great  ma- 
jority of  the  cases  of  negligence."  '  Mr.  Wharton  sa3^s  that  a 
man  may  be  negligent  in  a  particular  matter  "a  thousand 
times  without  mischief;  yet,  though  the  chance  of  mischief  is 
only  one  to  a  thousand,  we  would  continue  to  hold  that  the 
mischief,  when  it  occurs,  is  imjiutable  to  the  negligence.  Hence 
it  has  been  properly  held  that  it  is  no  defense  that  a  particular 
injurious  consequence  is  'improbable,'  and  'not  to  be  reason- 
ably expected,'  if  it  really  appear  that  it  naturally  followed 
from  the  negligence  under  examination."  -     Continuing,  the 

1  Stevens  v.  Dudley,  56  Vt.  158,  166.  what  a  prudent  man  might  reason- 
"  When  negligence  is  established  it  ably  have  anticipated,  but  when  neg- 
im poses  liability  for  all  the  injurious  ligence  is  once  established,  that  con- 
consequences  that  flow  therefrom,  sideration  is  entirely  immaterial  on 
whatever  they  ai"e,  until  the  inter-  the  question  of  how  far  that  negli- 
vention  of  some  diverting  force  that  gence  imposes  liability."  Isham  v. 
makes  the  injury  its  own.  or  until  Dow's  Estate.  70  Vt.  588,  41  Atl.  Eep. 
the  force  set  in  motion  by  the  negli-  585,  67  Am.  St.  691,  45  L.  R.  A.  87. 
gent  act  has  so  far  spent  itself  as  to  Compare  Renner  v.  Canfield.  36 
be  too  small  for  the  law's  notice.  Minn.  90,  30  N.  W.  Rep.  435. 
But  in  administering  this  rule  care  '^  Wharton  on  Neg..  §  77,  referring 
must  be  taken  to  distinguish  be-  to  Higgins  v.  Dewey,  107  Mass.  494, 
tween  what  is  negligence  and  what  9  Am.  Rep.  63;  AVhite  v.  Ballou,  8 
tlie  liability  for  its  injurious  con.se-  Allen,  408;  Luce  v.  Dorchester  Ins. 
quences.  On  the  question  of  what  is  Co.,  105  Mass.  297,  7  Am.  Rep.  522; 
negligence,  it  is  material  to  consider  Lewis  v.  Smith,  107  Mass.  334,  and 


42 


COMPENSATION. 


[§  16- 


same  author  says :  "  Nor,  when  we  scrutinize  the  cases  in  which 
the  test  of  'reasonable  expectation  '  is  applied,  do  we  find  that 
the  '  expectation '  spoken  of  is  anything  more  than  an  expec- 
tation that  some  such  disaster  as  that  under  investigation  will 
occur  on  the  long  run  from  a  series  of  such  negligences  as  those 
with  which  the  defendant  is  charged."  ^  This  doctrine  is  fully 
approved  by  the  supreme  court  of  Vermont,^  and  is  logically 
sustained  by  other  recent  adjudications  in  this  country,  some 
of  which  are  cited  in  the  preceding  note;  others  will  be  re- 
ferred to  in  the  pages  devoted  to  this  branch  of  the  law  of 
damages. 

The  correct  doctrine,  as  we  conceive,  is  that  if  the  act  or 
neglect  complained  of  was  wrongful,  and  the  injury  sustained 
resulted  in  the  natural  order  of  cause  and  effect,  the  person, 
injured  thereby  is  entitled  to  recover.  There  need  not  be  in 
the  mind  of  the  individual  whose  act  or  omission  has  wrought 
the  injury  the  least  contemplation  of  the  probable  conse- 
quences of  his  conduct;  he  is  responsible  therefor  because  the 
result  proximately  follows  his  wrongful  act  or  non-action.  All 


several  English  cases.  See,  also,  Ste- 
vens V.  Dudley,  56  Vt.  158:  Brown  v, 
Chicago,  etc.  k  Co.,  54  Wis.  342,  11 
N.  W.  Rep.  356,  911;  Terre  Haute  & 
L  E.  Co.  V.  Buck,  96  Ind.  346,  49 
Am.  Rep.  168;  Winkler  v.  St.  Louis, 
etc.  R.  Co.,  21  Mo.  App.  99;  Evans  v. 
Same,  11  id.  463;  Baltimore  City  P. 
R.  V.  Kemp,  61  Md.  74;  Hoadley  v. 
Northern  Transp.  Co.,  115  Mass.  304, 
15  Am.  Rep.  106;  Ehrgott  v.  Mayor, 
96  N.  Y.  264,  281,  48  Am.  Rep.  623; 
Milwaukee,  etc.  R.  Co.  v.  Kellogg,  94 
U.  S.  469;  Wygant  v.  Crouse,  127  Mich. 
158,  86  N.  W.  Rep.  527,  53  L.  Pu  A. 
626. 

Where  there  was  a  fraudulent  in- 
crease of  the  mortgage  indebtedness 
of  a  corporation  which  had  issued 
stock  to  the  amount  of  $21,000,000 
from  $2,579,149  to  $4,299,000  and  the 
value  of  the  stock  was  depreciated 
$6,580,000,  it  was  held  that  such  re- 
sult was  not  to  have  been  expected. 
Rockefeller  v.  3Ierritt,  22  C.  C.   A. 


608,  76  Fed.  Rep.  909,  35  L.  R.  A.  633. 
The  test  applied  seems  to  indicate 
that  the  wrong-doer,  even  in  a  case 
of  fraud,  must  anticipate,  approxi- 
mately at  least,  the  extent  of  the  in- 
jury his  act  may  do.  Such  a  rule 
would  add  another  large  element  of 
uncertainty  as  to  what  constitutes 
proximate  cause.  It  ought  to  be 
enough  to  make  the  wrong-doer 
liable  for  all  the  financial  loss  result- 
ing from  a  fraudulent  transaction  if 
it  appears  that  such  loss,  to  any  con- 
siderable extent,  would  be  reason- 
ably sure  to  follow. 

The  fact  that  the  licensee  of  a  barn 
which  was  torn  down  was  obliged  to 
sell  his  horses  is  not  the  natural  and 
proximate  result  of  the  tortious  act, 
but  of  his  financial  situation.  Chand- 
ler V.  Smith,  70  111.  App.  658,  citing 
the  first  edition  of  this  work. 

i§78. 

2 Stevens  v.  Dudley,  56  Vt.  158. 


§1G.J 


CONSEQUENTIAL    DAMAGES    FOR    TOUTS. 


persons  are  imperatively  required  to  foresee  what  will  be  the 
natural  consequences  of  their  acts  and  omissions  according  to 
the  usual  course  of  nature  and  the  general  experience.  The 
lavrfulness  of  their  acts  and  the  degree  of  care  required  of 
them  depend  upon  this  foresight.^  An  apt  illustration  of  this 
principle  is  afforded  by  the  rule  of  law  which  compels  a  per- 
son who  is  insane,  unless  his  condition  was  caused  by  the  un- 
lawful violence  of  the  plaintiff,'  to  make  recompense  for  his 


iWitham  v.  Cohen,  100  Ga.  670, 
676,  28  S.  E.  Rep.  505,  citing  tlie  text; 
Murtlock  V.  Walker,  43  III.  App.  590; 
Chicago,  etc.  R.  Co.  v.  Mochell,  96  id. 
178;  Coy  v.  Indianapolis  Gas  Co.,  146 
Ind.  655,  663,  46  N.  E.  Rep.  17,  36  L. 
R.  A.  535,  quoting  the  major  portion 
of  the  section;  Licking  Rolling  Mill 
Co.  V.  Fischer,  8  Ky.  L.  Rep.  89,  95 
(Ky,  Super.  Ct.);  Hughes  v.  Austin, 
12  Tex.  Civ.  App.  178,  184-5,  38  S.  W. 
Rep.  607,  citing  the  text;  Hardaker 
V.  Idle  District  Council,  [1896]  1  Q. 
B.  335;  McHugh  v.  Schlosser,  159  Pa. 
480,  28  Atl.  Rep.  291,  39  Am.  St.  699, 
23  L.  R.  A.  574;  McPeek  v.  Western 
U.  Tel.  Co.,  107  Iowa,  356,  78  N.  W. 
Rep.  63. 70  Am.  St.  205.  43  L.  R,  A.  214; 
Bradshaw  v.  Frazier,  113  Iowa,  579, 
85  N.  W.  Rep.  752,  55  L.  R.  A.  258; 
Wallin  V.  Eastern  R.  Co.,  83  Minn. 
149,  86  N.  W.  Rep.  76.  See  McGowan 
V.  Chicago,  etc.  R.  Co.,  91  Wis.  147, 
154,  64  N.  W.  Rep.  891. 

A  person  who  places  a  man  whom 
He  has  made  helplessly  drunk  in 
charge  of  a  horse  is  presumed  to 
know  that  Injury  may  result,  be- 
cause horses  require  management  by 
persons  who  are  possessed  of  mental 
and  physical  capacities.  Dunlap  v. 
Wagner,  85  Ind.  529,  44  Am.  Rep.  42; 
Mead  v.  Stratton,  87  N.  Y.  493,  41 
Am.  Rep.  386;  Bertholf  v.  O'Reilly,  8 
Hun,  16,  74  N.  Y.  509,  30  Am.  Rep. 
323;  Aldrich  v.  Sager,  9  Hun.  537; 
Mulcahey  v.  Givens,  115  Ind.  286,  17 
N.  E.  Rep.  598;  Brink  v.  Kansas  City, 
etc.  R.  Co.,  17  Mo.  App.  177, 199.    See 


Smith  V.  Bolles,  132  U.  S.  125, 10  Sup. 
Ct.  Rep.  39. 

A  man  who  is  engaged  to  be  mar- 
ried and  who  is  examined  by  a  phy- 
sician employed  by  the  father  of  his 
fiancee  for  the  purpose  of  ascertain- 
ing whether  he  is  diseased  or  not 
may  maintain  an  action  against  the 
physician  for  a  negligent  diagnosis; 
the  breaking  of  the  marriage  en- 
gagement is  not  too  remote  a  dam- 
age. Harriott  v.  Plimpton,  166  Mass. 
585,  44  N.  E.  Rep.  992. 

One  who  negligently  causes  a  fire 
which  endangers  pi'operty  is  bound 
to  know  that  the  owner  of  the  prop- 
erty may  take  means  to  preserve  it, 
and  if,  in  doing  so,  he  is  personally 
injured,  without  negligence  on  his 
part,  may  recover  for  his  injury. 
Berg  V.  Great  Northern  R.  Co.,  70 
Minn.  272,  73  N.  W.  Rep.  648,  68  Am. 
St.  524. 

A  wife  who  endeavors  to  preserve 
her  husband's  property  from  a  fire 
so  set  is  not  a  mere  volunteer,  and 
the  damage  she  sustains  in  so  doing 
is  not  too  remote  to  be  recovered. 
Edwards  v.  Melbourne  &  M.  Board 
of  Works,  19  Vict.  L.  R.  432. 

This  measure  of  liability  may  be 
limited  by  statute,  as  under  the  In- 
dian Depredation  Act  of  1891,  which 
provided  for  the  recovery  of  prop- 
erty "taken  or  destroyed;"  claims 
for  consequential  damages  were  not 
recoverable.  Price  v.  United  States, 
33  Ct.  of  Cls.  106. 

2  Jenkins  v.  Hankins,  98  Tenn.  545, 
557,  41  S.  W.  Rep.  1028. 


44  COMPENSATION.  [§  16. 

torts.  This  is  rested,  it  is  true,  on  grounds  of  public  policy;^ 
and  the  liability  of  all  persons  may  be  rested  there  as  well  as 
on  the  principles  of  natural  justice.  The  injurj'^,  however, 
must  proceed  from  and  be  caused  by  the  wrongful  act  of  the 
defendant;  but  the  causation  is  not  to  be  tested  metaphysically 
or  by  any  occult  principles  of  science,  but  rather  as  persons  of 
ordinary  intelligence  apprehend  cause  and  effect.  The  law  is 
practical,  and  courts  do  not  indulge  refinements  and  subtleties 
as  to  causation  if  they  tend  to  defeat  the  claims  of  natural 
justice.  They  rather  adopt  the  practical  rule  that  the  efficient 
and  predominating  cause  in  producing  a  given  effect  or  result, 
though  subordinate  and  dependent  causes  may  have  operated, 
must  be  looked  to  in  determining  the  rights  and  liabilities  of 
the  parties.^  Hence  if  the  defendant's  negligence  greatly 
multiplied  the  chances  of  accident,  and  was  of  a  character 
naturally  leading  to  its  occurrence,  the  possibility  that  it  might 
have  happened  without  such  negligence  is  not  sufficient  to 
break  the  chain  of  cause  and  effect.^  An  act  of  negligence 
will  be  regarded  as  the  cause  of  an  injury  which  results  unless 
the  consequences  were  so  unnatural  and  unusual  that  they 
could  not  have  been  foreseen  and  prevented  by  the  highest 
practicable  care.'' 

It  is  competent  for  the  legislature  to  change  the  rule  of  the 
common  law,  which  looks  only  to  the  proximate  cause  of  the 
mischief  so  far  as  legal  responsibility  is  concerned,  and  allow 
a  recovery  to  be  had  against  those  whose  acts  contributed,  al- 
though remotely,  to  produce  the  wrong.^  This  is  the  effect  of 
statutes  in  several  states  making  the  vendor  of  intoxicants,  who 
sells  them  contrary  to  the  terms  of  the  law,  liable  to  any  per- 

1  Williams  v.  Hays,  143  N.  Y.  442,  Co..  171  Mass.  536,  51  N.  E.  Rep.  1,  41 
47  Am.  St.  748,  38  N.  E.  Rep.  449,  36    L.  R.  A.  794. 

L.  R.  A.  153;  Donaghy  v.  Brennan,  19  3  Reyuolds  v.  Texas  &  P.  R.  Co.,  37 

N.  Z.  L.  R.  289;  Mclntyre  v.  Sholty,  La.   Ann.    694;    Windeler    v.    Rush 

121  111.  600,  2  Am.  St,  140,  13  N.  E.  County  Fair  Ass'n,  27  Ind.  App.  92, 

Rep.  239;  Krom  v.   Schoonmaker,  3  59  N.  E.  Rep.  209,  60  id.  954. 

Barb.  647;   Behrens  v.  McKenzie,  23  *  Louisville,  etc.  R.  Co.  v.   Lucas, 

Iowa,  333,  92  Am.  Dec.  428:  Ward  v.  119  Ind.  583,  21  N.  E.  Rep.  968,  6  L.  R. 

Conatser,  4  Baxter,  04;  Cross  v.  Kent,  A.  193. 

32  Md.  581;  In  re  Heller,  3  Paige.  199.  5  Bertholf  v.  O'Reilley,  74  N.  Y.  509, 

See  §  394.  30  Am.  Rep.  323;  Beers  v.  Walhizer, 

2  Baltimore  &  P.  R.  Co.  v.  Reaney,  43  Hun,  254;  Homire  v.  Halfman, 
42  Md.  117, 136;  Stone  V.  Boston  &  A.  R.  156  Ind.  470.  60  N.  K  Rep.  154. 


§  10.]  CONSEQUENTIAL    DAMAGES    FOli    TORTS.  45 

son  who  shall  sustain  any  injury  or  damage  to  person,  prop- 
erty or  means  of  support  by  reason  of  such  violation.  Such  a 
statute  includes  both  direct  and  consequential  injuries  and 
creates  a  right  of  action  unknown  to  the  common  law.^  The 
rule  is  laid  down  in  many  cases  that  an  action  may  be  main- 
tained under  similar  statutes  for  loss  of  means  of  support,  when 
occasioned  in  whole  or  in  part  by  such  sales.  If  the  means  of 
support  are  lessened,  and  this  result  can  be  traced  to  the  sale 
of  intoxicants,  there  is  a  right  of  recovery  for  such  loss,  as 
in  case  of  lessened  ability  to  labor,  and  loss  of  attention  to 
business.-  So,  where  sickness  or  insanity  is  the  result  of  in- 
toxication,^ and  wliere  expenses  are  incurred  for  care  and 
medical  attention.^  Where  the  husband  was  robbed  while  in- 
toxicated the  wife  was  allowed  to  sue.*  And,  so,  where  the 
husband  spent  his  wife's  money  for  drink.®  And  a  mother  was 
allowed  to  recover  where  her  son  overdrove  her  horse  because 
he  was  intoxicated.'^  The  mere  spending  by  the  husband  of 
his  own  money,  it  has  been  said,  will  give  a  right  of  action  by 
the  wife.-  And  so  a  widow,  dependent  on  her  son,  may  maintain 
an  action  for  the  sale'  of  liquors  to  him  if  injury  results  to  her 
means  of  support,''  and  a  father,  if  dependent.^"  Where  a  husband 
became  so  crazed  by  liquor  that  he  committed  murder  and  was 
sent  to  the  penitentiary,  his  wife  had  a  cause  of  action  against 
the  person  who  sold  the  liquor  to  hira.^^  But  if  the  statute  does 
not  give  a  wife  an  action  for  an  injury  to  the  person  or  property 
of  her  husband,  she  cannot  recover  because  he  has  been  impris- 
oned for  a  crime  committed  while  under  the  influence  of  liquor 
unlawfully  sold  to  him.     His  imprisonment  is  not  the  proxi- 

1  Volans  V.  Owen,  74  N.  Y.  528,  30  6  McEvoy  v.  Humphrey,  77  111.  388. 
Am.  Rep.  337;  Meade  v.  Stratton,  87  ^Bertholf  v.  O'Reilly,  8  Hun,  16. 
N.  Y.  493,  41  Am.  Rep.  386;  Homire  8Quain  v.  Russell,  8  Hun,  319;  Mul- 
V.  Halfman,  supra;  Neu  v.  McKech-  ford  v.  Clewell,  supra;  Woolheather 
nie,  95  N.  Y.  633,  47  Am.  Rep.  89.  v.  Risley,  38  Iowa,  486;  Hackett  \. 

2  Wightman  v.  Devere,  33  Wis.  570;  Smelsley,  77  111.  109. 
Hutchinson  v.  Hubbard,  21  Neb.  33,  mcClay  v.  Worrall,  18  Neb.  44,  24 
31  N.  W.  Rep.  245;  Volans  v.  Owen,  N.  W.  Rep.  429. 

supra;  Schneider  v.  Hosier,  21  Ohio  lo  Stevens  v.  Cheney,  36  Hun,  1; 
St.  98.  Volans  v.  Owen,  Bertholf  v.  O'Reilly, 

3  Mulford  V.  Clewell,  21  Ohio  St.  191.     supra. 

4  Wightman  v.  Devere,  supra.  ii  Homire  v.  Halfman,  supra;  Beers 
•''  Franklin  v,  Schermerhorn,  8  Hun,     v.  Walhizer,  43  Hun,  254 

112. 


46  COMPENSATION.  [§  17. 

mate  consequence  of  the  dealer's  unlawful  act,  out  is  the  act 
of  the  law,  the  direct  result  of  the  intervention  of  an  independ- 
ent agency.^  The  Pennsylvania  act  provides  that  any  person 
furnishing  liquor  to  another  in  violation  of  law  shall  be  civilly 
responsible  for  any  injury  to  person  or  property  in  consequence 
thereof,  and  that  any  person  aggrieved  may  recover  full  dam- 
ages. This  does  not  extend  the  common-law  rule  as  to  prox- 
imate cause,  and  there  was  no  liabilitj'^  for  the  death  of  a  man 
to  whom  liquors  were  sold  while  intoxicated  where  death  re- 
sulted in  an  an  attempt  to  evade  arrest  for  violating  the  law 
after  deceased  left  the  place  where  the  liquors  were  sold  him.- 

Under  a  statute  providing  that  if  a  person  is  injured  in  his 
person  or  property  by  collision  with  the  engines  or  cars  of  a 
railroad  corporation  at  a  crossing,  and  it  appears  that  the  cor- 
poration neglected  to  give  the  signals  required,  and  that  such 
neglect  contributed  to  the  injury,  the  corporation  shall  be  lia- 
ble for  all  damages  caused  by  the  collision,  unless  the  person 
injured,  etc.,  was  guilty  of  gross  or  wilful  negligence,  the  lia- 
bility of  the  company  does  not  depend  upon  whether  its  neg- 
ligence was  the  proximate  or  efficient  cause  of  the  injury.'' 

§17.  Illustrations  of  the  doctrine  of  the  preceding  sec- 
tion. It  is  a  misfeasance  to  go  through  a  militia  drill  in  the 
public  squares  and  business  resorts  of  towns  or  villages;  the 
officer  under  whose  command  it  is  done  is  responsible  for  con- 
sequential damages;  if  a  team  hitched  to  a  wagon  and  stand- 
ing in  the  usual  place  takes  fright  at  the  exercises,  the  dis- 
charge of  small  arms,  and  the  "  pomp  and  circumstance  "  of 
mimic  war,  and  runs  away,  and  one  of  the  horses  is  thereby 
killed,  the  officer  is  responsible  for  its  value.*  This  case  is  a 
fair  exemplification  of  the  rule  under  consideration.  Drilling 
the  militia  was  lawful,  but  doing  it  in  an  improper  manner  or 
in  an  unsuitable  place  was  a  legal  wrong  to  any  person  who 
in  consequence  thereof  received  injury.  In  ordering  it  to  take 
place  in  a  public  square,  the  officer  may  not  have  considered 

1  Bradford  v.  Boley,  167  Pa.  506,  31  105, 25  S.  K  Rep.  76,  58  Am.  St.  870,  33 
Atl.  Rep.  751,  disapproving  Beers  v.  L.  R.  A.  191;  Chattanooga  Rapid 
Walhizer,  supra.  Transit  Co.  v.  Walton,  105  Tenn.  415, 

2  Roach  V.  Kelly,  194  Pa.  24,  44  Atl.  58  S.  W.  Rep.  737. 

Rep.  1090,  75  Am.  St.  685.  ■*  Childress  v.  Yourie,  Meigs.  561 ; 

3  Wragge  v.  Railroad  Co.,  47  S.  C.    Forney  v.  Geldmacher,  75  Mo.  113. 


§  IT.]  CONSEQUENTIAL    DAMAGES    FOR    TORTS.  47 

the  effect  of  frightening  horses,  but  such  an  effect  was  natural ; 
horses  have  to  be  trained  to  witness  such  a  spectacle  witliout 
being  frightened;  tliey  were  to  be  expected  where  the  drill 
was  appointed  to  take  place,  and  if  one  or  a  team,  with  or 
without  a  driver  or  attendant,  got  frightened,  it  would  natu- 
rally run  away,  and  in  running  away  the  usual  collisions  and 
casualties  might  occur.  The  officer  who  gave  the  command 
was  bound  to  consider  all  these  probabilities.  Giving  the  com- 
mand, w^hich  no  subordinate  could  decline  to  obey,  made  the 
drill  at  the  place  appointed  the  act  of  the  officer,  whether  he 
was  present  or  not;  the  frightening  of  the  horses  which  en- 
sued was  probable  from  their  known  characteristics,  and  from 
their  being  where  horses  were  likely  to  be;  their  break-  [22] 
ing  loose  and  running  off  in  a  state  of  fright,  wnth  or  without 
a  driver,  made  the  usual  collisions  and  casualties  a  natural  se- 
quence. Here  were  a  series  of  acts  so  concatenated  that  the 
final  damage  from  killing  a  horse  was  a  result  Avhich  the  ofii- 
cer  was  bound  to  consider  as  likely  to  ensue;  all  the  effects  of 
the  drill  were  an  entirety,  and  therefore  proceeded  naturally 
and  proximately  from  his  act. 

In  a  Massachusetts  case  this  subject  was  well  illustrated  and 
explained.  By  careless  driving  the  defendant's  sled  was 
caused  to  strike  against  the  sleigh  of  one  Baker  with  such 
violence  as  to  break  it  in  pieces,  throwing  Baker  out,  frighten- 
ing his  horse,  and  causing  the  animal  to  escape  from  the  con- 
trol of  his  driver,  and  to  run  violently  along  Fremont  street, 
round  a  corner  near  by  into  Eliot  street,  where  he  ran  over 
the  plaintiff  and  his  sleigh,  breaking  that  in  pieces  and  dash- 
ing him  on  the  ground.  "  Upon  this  statement,"  says  Fos- 
ter, J,,  delivering  the  opinion,  "indisputably  the  defendant 
would  be  liable  for  the  injuries  received  by  Baker  and  his 
horse  and  sleigh.  Why  is  he  not  also  responsible  for  the  mis- 
chief done  by  Baker's  horse  in  its  flight?  If  he  had  struck 
that  animal  with  his  whip,  and  so  made  it  run  away,  would  he 
not  be  liable  for  an  injury  like  the  present?  By  the  fault  and 
direct  agency  of  his  servant  the  defendant  started  the  horse  in 
uncontrollable  flight  through  the  streets.  As  a  natural  conse- 
quence it  was  obviously  probable  that  the  animal  might  run 
over  and  injure  persons  traveling  in  the  vicinity.  Every  one 
<5an  plainly  see  that  the  accident  to  the  plaintiff"  was  one  very 


48  COMPENSATION.  [§  17. 

likely  to  ensue  from  the  careless  act.  We  are  not,  therefore, 
dealing  with  remote  or  unexpected  consequences,  not  easily 
foreseen,  nor  ordinarily  unlikely  to  occur;  and  the  plaintiff's 
case  falls  clearly  within  the  rule  already  stated  as  to  the  lia- 
bilit}^  of  one  guilty  of  negligence  for  the  consequential  dam- 
ages resulting  therefrom.  .  .  .  Here  the  defendant  is  al- 
leged to  have  been  guilty  of  culpable  negligence.  And  his 
liability  depends,  not  upon  any  contract  or  statute  obligation, 
but  upon  the  duty  of  due  care  which  every  man  owes  to  the 
community,  expressed  by  the  maxim  sic  utere  tuo  ut  alienum 
[23]  non  Icsdas.  Where  a  right  or  duty  is  created  wholly  by 
contract  it  can  only  be  enforced  between  the  contracting  par- 
ties. But  where  the  defendant  has  violated  a  law  it  seems, 
just  and  reasonable  that  he  should  be  held  liable  to  every  per- 
son injured,  whose  injury  is  the  natural  and  probable  conse- 
quence of  the  misconduct.  In  our  opinion  this  is  the  well 
established  and  ancient  doctrine  of  the  common  law;  and  such 
a  liability  extends  to  consequential  injuries  by  whomsoever 
sustained,  so  long  as  they  are  of  a  character  likely  to  follow 
and  which  might  reasonably  have  been  anticipated  as  the 
natural  and  probable  result  under  ordinary  circumstances  of 
the  wrongful  act.  The  damage  is  not  too  remote  if,  according- 
to  the  usual  experience  of  mankind,  the  result  was  to  be  ex- 
pected. This  is  not  an  impracticable  or  unlimited  sphere  of 
accountability  extending  indefinitely  to  all  possible  contingent 
consequences.  An  action  can  be  maintained  only  where  there 
is  shown  to  be,  first,  a  misfeasance  or  negligence  in  some  par- 
ticular as  to  which  there  was  a  duty  towards  the  party  injured 
or  the  community  generally;  and  secondly,  where  it  is  ap- 
parent that  the  harm  to  the  person  or  property  of  another 
which  has  actually  ensued  was  reasonably  likely  to  ensue 
from  the  act  or  omission  complained  of.  .  .  .  It  is  clear 
from  numerous  authorities  that  the  mere  circumstance  that 
there  have  intervened  between  the  wrongful  cause  and  the  in- 
jurious consequence  acts  produced  by  the  volition  of  animals 
or  of  human  beings  does  not  necessarily  make  the  result  so  re- 
mote that  no  action  can  be  maintained.  The  test  is  to  be 
found,  not  in  the  number  of  intervening  events  or  agents,  but 
in  their  character  and  in  the  natural  and  probable  connection 
between  the  wrong  done  and  the  injurious  consequence.     So 


§  18.]  CONSEQUENTIAL    DAMAGES    FOE    TORTS.  49 

long  as  it  affirmatively  appears  that  the  mischief  is  attribu- 
table to  the  negligence  as  a  result  which  might  reasonably 
have  been  foreseen  as  probable  the  legal  liability  continues. 
There  can  be  no  doubt  that  the  negligent  management  of 
horses  in  the  public  street  of  a  city  is  so  far  a  culpable  act  that 
any  party  injured  thereby  is  entitled  to  redress.  Whoever 
drives  a  horse  in  a  thoroughfare  owes  the  duty  of  due  care  to 
the  community  or  to  all  persons  whom  his  negligence  [24] 
may  expose  to  injury.  Nor  is  it  open  to  question  that  the 
master  in  such  a  case  is  responsible  for  the  misconduct  of  his 
servant.'" 

§  18.  Further  illustrations.  Where  a  teamster's  wagon, 
while  being  loaded  at  a  depot,  was  injured  by  a  train  of  cars, 
it  was  held  he  was  entitled  to  recover  for  damage  done  thereto, 
for  the  loss  of  the  trip  in  which  he  was  engaged  and  for  the 
loss  of  the  use  of  the  wagon  until  it  could  be  repaired.^  A 
similar  measure  is  applied  in  cases  of  collision  of  boats;  a  rea- 
sonable sum  for  the  damage  the  injured  boat  has  received ;  the 
expense  of  raising  it,  if  sunk,  and  of  repairing  it,  and  compen- 
sation for  the  loss  of  the  use  during  the  time  it  is  being  refitted, 
with  interest  on  such  items.*  In  an  action  of  trespass  by  for- 
cibly invading  a  plantation,  carrying  off  some  slaves  and 
frightening  others  away,  it  was  held  proper  for  the  plaintiff  to 
give  in  evidence  the  consequential  damages  which  resulted  to 
his  wood  and  crops  —  to  the  former  for  want  of  the  assistance 
of  the  slaves  to  preserve  it  from  a  subsequent  flood,  and  to  the 
latter  to  protect  them  against  animals.^  The  wrong  included 
leaving  a  plantation  Avith  growing  crops  and  other  property 

'  McDonald  v.  Snelling,  14  Allen,  -  Shelby  ville,  etc.  R.  Co.  v.  Lewark, 

292;   Weick    v.   Lander,   75   111.   93;  4  Ind.  471. 

Clowdis  V.  Fresno  Flume  &  Irriga-  *  Mailler  v.  Express  Propeller  Line, 

tion  Co.,  118  Cal.  315,  63  Am.  St.  238,  61  N.  Y.  313;  Brown  v.  Beatty,  35  Up. 

50  Pac.  Rep.  373;  Clark  v.  Chambers,  Can.  Q.    B.   338;    Steamboat  Co.    v. 

3  Q.  B.  Div.  337,  7  Cent.  L.  J.  11.  Whilldin,  4  Harr.  238;  New  Haven. 

In   the  last  case    defendant  was  etc.  Co.  v.  Vanderbilt,  16  Conn.  420; 

held  liable  for  an  injury  caused  by  a  Williamson  v.  Barrett,  13  How.  101. 

dangerous  thing   put  by  him  in  a  See  ch.  39. 

carriage  way,  although  it  was  after-  ^  McAfee  v.  Crofford,  13  How.  447; 

wards  removed  to  a  footpath  by  a  Hobbs  v.  Davis,  30  Ga.  423;  Johnson 

third  person,  and   was  there  when  v.    Courts,   3   Har.   &  McHen.    510; 

the  plaintiff  was  injured.  Crane  v.  Patton,  57  Ark.  340,  346,  21 

S.  W.  Rep.  466. 
Vol  I  — 4 


60  COMPENSATION.  [§  18. 

exposed  to  injury  from  any  cause  which  might  arise;  there 
being  no  force  of  kiborers  to  meet  any  exigency,  the  wrong- 
doer was  bound  to  take  notice  at  his  peril  of  any  exposure  to 
injury  thus  created  by  flood,  marauding  cattle  or  otherwise; 
whether  an  action  would  lie  against  the  owner  of  trespassing 
cattle  or  not  for  the  damage  done  by  them  was  held  immate- 
rial.' The  owner  of  sheep  which  had  a  contagious  disease 
suffered  them  to  trespass  on  another's  land  and  to  mingle  with 
his  sheep,  to  which  the  disease  was  communicated,  causing  the 
death  of  many  of  the  latter.  He  was  held  liable  for  the  breach 
of  the  close,  also  for  the  loss  of  the  sheep  that  so  died.^  A 
[25]  railroad  company's  servant  left  bars  down  between  the 
plaintiff's  field  and  the  railroad  track;  horses  escaped  through 
the  opening  to  the  railroad  and  were  killed  by  the  engine;  the 
company  was  held  liable.'  Plaintiff's  horses  escaped  into  the 
defendant's  close  by  reason  of  the  latter  not  keeping  his  fence 
in  repair,  and  were  there  killed  by  the  falling  of  a  hay  stack; 
he  was  held  responsible.*  The  defendant's  cow  escaped  from 
his  enclosure  without  fault  on  his  part,  passed  to  the  plaintiff's 
premises  and  entered  his  barn;  her  weight  broke  the  sleepers 
and  floor  at  a  point  over  a  cistern  and  she  fell  into  it.  Soon 
after  this  the  plaintiff  went  to  his  barn  and  fell  into  the  cistern 
through  the  hole  made  by  the  cow.  It  was  conceded  that  the 
defendant  was  liable  for  the  trespass  by  the  cow,^  but  the  dam- 
ages resulting  to  the  plaintiff  from  his  fall  were  too  remote.® 
The  proximate  cause  of  a  personal  injury  produced  by  the  run- 
ning away  of  a  horse  which  left  a  race  track  through  an  open- 

1  Where  a  dog  went  onto  plaintiff's  Rep.  982,  affirmed,  sub  nom.  Grayson 
land  and  barked  at  his  horse  grazing  v.  Lynch,  163  U.  S.  468,  16  Sup.  Ct. 
in  an  enclosed  field,  and  the  horse     Rep.  1064. 

ran.  tried  to  leap  a  fence,  and  fell  »  White  v.  McNett,  33  N.  Y.  371; 

and  broke  its  neck,  the  owner  of  the  Henly  v.  Neal  2  Humph.  551. 

dog  was  liable.     Doyle  v.  Vance,  6  *  Powell  v.  Salisbury.  2  Y.&  J.  391; 

Vict.  L.  R.  (law)  87.  Gilbertson  v.  Richardson,  5  C.  B.  502; 

2  Baruum  v.  Vandusen,  16  Conn.  Lawrence  v.  Jenkins,  L.  R.  8  Q.  B. 
200;  Fultz  V.  Wycoff,  25  Ind.  331.  See  274;  Couch  v.  Steel,  3  El.  &  B.  402; 
Gilman  v.  Noyes,  57  N.  H.  627.  See,  Lee  v.  Riley,  18  C.  B.  (N.  S.)  722. 

as  to  liability  under  the  act  of  con-  &  Dickson  v.  McCoy,  39  N.  Y.  400, 

gress  of   1884,  23  Stats.  31,   Croff  v.  «  Hollenbeck  v.  Johnson,  79  Hun, 

Cresse,  7  Okl.  408,  54  Pac.  Rep.  558;  499,  29  N.  Y.  Supp.  945. 
Lynch  v.  Grayson,  5  N.  M.  487.  25  Pac. 


I  18.]  CONSEQUENTIAL    DAMAGES    FOR    TORTS.  51 

ing  in  the  fence  surroimding  the  same,  is  not  the  running 
away  of  the  horse  but  the  opening.' 

The  lessee  of  a  wharf  was  guilty  of  negligence  in  not  keep- 
ing it  in  repair;  he  suffered  the  railing  to  become  dilapidated, 
and  in  consequence  a  horse  backed  into  the  river  with  a  wagon, 
and  both  were  lost.  This  loss  was  held  to  be  the  natural  and 
proximate  effect  of  the  negligence.^  A  gas  company,  having 
contracted  to  supply  plaintiff  with  a  service  pipe  from  its  main 
to  the  meter  on  his  premises,  laid  a  defective  pipe  from  which 
the  gas  escaped.  A  workman,  in  the  employ  of  a  gas-fitter 
engaged  by  the  plaintiff  to  lay  pipes  leading  from  the  meter 
over  his  premises,  negligently  took  a  lighted  candle  for  the 
purpose  of  finding  out  where  the  gas  escaped.  An  explosion 
took  place  damaging  the  plaintiff's  premises;  he  brought  an 
action  against  the  gas  company  and  it  was  held  that  the  dam- 
ao^es  were  not  too  remote.^  The  failure  of  a  natural-ijas  com- 
pany  to  supply  gas  to  a  consumer  in  accordance  with  its  con- 
tract is  a  tort,  the  agreement  being  a  mere  statement  of  the 
reasonable  conditions  under  which  the  company's  duty  was  to 
be  performed.  If  there  is  a  failure  to  supply  gas  during  cold 
winter  weather  and  the  company  has  been  notified  of  its  cus- 
tomer's inability  to  procure  fuel  elsewhere,  and  of  the  sickness 
of  his  children,  and  as  a  result  of  such  failure  the  sick  children 
take  a  relapse  and  die,  the  company  is  responsible  for  their 
death.*  In  consequence  of  the  negligence  of  a  contractor  for 
a  public  body  in  constructing  a  sewer  a  gas  main  was  broken, 
and  the  gas  escaped  from  it  by  percolation  into  the  plaintiffs' 
house,  and  an  explosion  followed  which  injured  one  of  them 

1  Windeler  v.  Rush  County  Fair  sale  of  plants  injured  by  escaping 
Ass'n,  27  Ind.  App,  92,  97,  59  N.  E.  gas  and  which  were  sold  as  sound. 
Rep.  209,  60  id.  954.  but  were  not,  is  too  remote.     Dow  v. 

2  Radway  v.  Briggs,  37  N.  Y.  256,  Winnipesaukee  Gas  &  Electric  Co., 
35  How.  Pr.  422.  69  N.  H.  312,  41  Atl.  Rep.  288,  42  L. 

3  Burrows  v.  March  Gas  Co..  39  L.  R.  A.  569. 

J.  (Ex.)  33,  L.  R.  5  Ex.  67;  Lannen  v.  ^  Coy  v.   Indianapolis  Gas  Co.,  146 

Albany  Gas  L.  Co.,  44  N.  Y.  459;  Louis-  Ind.  655,  46  N.  E.  Rep.  17,  36  L.  R.  A. 

ville  Gas  Co.  v.  Gutenkuntz,  82  Ky.  535;  Hoehle  v.    Allegheny  Heating 

432;  Koelsch  v.  Philadelphia  Co.,  152  Co.,  5  Pa.  Super.  Ct.  21.    In  the  latter 

Pa.  355,  25  Atl.  Rep.  522,  34  Am.  St.  case   the  defendant  had  no  knowl- 

653,  18  L.  R.  A.  759.  edge  of  the  illness  of  the  person  who 

The  injury  resulting  to  the  busi-  died, 
ness  reputation  of  a  florist  from  the 


52  COMPENSATION.  [§  18. 

and  damaged  the  furniture  of  the  other.  The  damaf^es  were 
not  too  remote,  and  the  contractor's  negligence  was  that  of 
the  public  body  because  he  failed  to  do  what  it  was  its  duty 
to  do.^  A  railroad  company  by  wrongfully  excavating  in  a 
public  street  destroyed  the  lateral  support  of  the  soil  to  the 
foundation  of  a  house,  and  thereby  plaintiff's  adjoining  house, 
depending  on  the  other  for  support,  was  injured;  it  was  held 
that  the  company  was  liable  for  the  injury.^  By  the  weight 
of  authority  a  person  who  negligently  sets  a  fire  is  not  only 
liable  for  the  first  building  consumed,  but  for  all  subsequently 
destroyed  by  the  same  continuous  conflagration,  without  re- 
gard to  the  distance  the  fire  runs  or  the  time  it  is  in  progress.^ 
In  Kew  York  the  liability  is  much  more  restricted  on  the 
ground  that  the  loss  of  the  first  building  which  is  negligently 
set  on  fire  was  to  be  anticipated ;  its  destruction  was  the  ordi- 
nary and  natural  result  of  its  being  fired.  But  this  does  not 
hold  good  as  to  subsequent  buildings  or  other  property  which 
became  ignited  from  the  first  building;  that  the  fire  should 
spread  and  other  buildings  be  consumed  is  not  a  necessary  or 
the  usual  result.  That  result  depends,  not  upon  any  necessity 
of  a  further  communication  of  the  fire,  but  upon  a  concurrence 
of  accidental  circumstances,  such  as  the  degree  of  the  heat,  the 
state  of  the  atmosphere,  the  condition  and  materials  of  the  ad- 
joining structures,  and  the  direction  of  the  wind.  These  are 
said  to  be  accidental  and  varying  circumstances  over  which 
the  party  responsible  for  the  loss  of  the  first  building  has  no 

1  Hardaker  v.  Idle  District  Council,  Rep.  63;  Pennsylvania  R  Co.  v.  Hope, 
[1896]  1  Q.  B.  335.  80  Pa.  373.  21  Am.  Rep.  100;  St.  Jo- 

2  Baltimore,  etc.  R.  Co.  v.  Reaney,  seph,  etc.  R  Co.  v.  Chase,  11  Kan.  47; 
42  Md.  118.  Atchison,  etc.  R.  Co.  v.  Stanford,  12 

3  Atkinson  v.  Goodrich  Transpor-  Kan.  354,  15  Am.  Rep.  362;  Atchison, 
tation  Co.,  60  Wis.  141,  50  Am.  Rep.  etc.  R.  Co.  v.  Bales,  16  Kan.  252; 
352,  18  N.  W.  Rep  764;  Adams  v.  Dougherty  v.  Smith,  5  N.  Z.  (Supreme 
Young,  44  Ohio  St.  80,  4  N.  E.  Rep.  Ct.)  374;  Chicago  &  E.  R.  Co.  v.  Lud- 
599;  Small  v.  C,  R.  I.  &  P.  R.  Co.,  55  dington.  10  Ind.  App.  636,  38  N.  E. 
Iowa,  582,  7  N.  W.  Rep.  398;  Kellogg  Rep.  342;  Chicago,  etc.  R.  Co.  v,  Will- 
V.  Chicago,  etc.  R.  Co.,  26  Wis.  223,  iams,  131  Ind.  30,  30  N.  E.  Rep.  596; 
7  Am.  Rep.  69;  Hart  v.  Western  R.  Louisville,  etc.  R.  Co.  v.  Nitsche,  126 
Co.,  13  Met.  99;  Milwaukee,  etc.  R.  Ind.  229,  26  N.  E.  Rep.  51,  9  L.  R.  A. 
Co.  v.  Kellogg,  94  U.  S.  469;  Perley  750;  Wyant  v.  Crouse,  127  Mich.  158, 
V.  Eastern  R.  Co.,  98  Mass.  414;  Hig-  86  N.  W.  Rep.  527,  53  L.  R.  A.  626. 
gins  v.  Dewey,  107  Mass.  494,  9  Am. 


§  18.]  CONSEQUENTIAL   DAMAGES    FOR   TORTS.  53 

control,  and  is  not  liable  for  their  effects.'  The  same  rule  has 
been  applied  where  two  buildings  owned  by  one  person  were 
burned  —  the  recovery  was  limited  to  the  one  to  which  the  fire 
was  directly  carried  from  the  engine.^  The  same  rule  applies 
to  fires  on  woodlands  as  to  fires  in  villages  or  cities.'  This 
restriction  seems  very  arbitrary,  and  to  be  out  of  harmony 
with  the  general  principle  of  the  law  governing  proximate 
cause.  It  has  not  become  the  rule  in  New  York  without 
vigorous  dissent  from  individual  members  of  the  court  of  ap- 
peals, extending  to  the  latest  case  cited.  The  burning  of 
property  is  not  the  natural  and  proximate  result  of  an  engineer 
running  a  train  of  oil-tanks  into  a  mass  of  earth  which  had 
come  on  the  track  as  a  result  of  a  landslide,  the  obstruction 
being  unexpected  and  an  engine  having  passed  over  a  clear  track 
only  ten  minutes  before  the  accident.  He  was  not  bound  to 
anticipate  the  bursting  of  the  tanks,  the  taking  fire  of  the  oil, 
the  burning  oil  being  carried  down  the  stream  into  which  the 
tanks  rolled,  the  sudden  rise  of  the  water,  and  the  setting  fire 
of  property  on  the  bank  of  the  stream.* 

The  fall  of  a  negligently  constructed  tower,  the  overturning 
of  a  lighted  lamp  and  the  consequent  death  of  a  person  are 
the  proximate  result  of  the  negligent  construction.^  The 
maintenance  of  a  culvert  in  a  condition  to  hold  a  large  pool  of 
water  in  close  proximity  to  the  street  and  sidewalk  is  the 
cause  of  the  death  of  a  child  who  falls  therein  while  playing 
along  the  edge  thereof.^  The  negligent  operation  of  a  defect- 
ive locomotive  which  emits  sparks  is  the  proximate  cause  of 
the  death  of  an  infant  asleep  in  the  house  of  its  parents  when 
the  fire  occurs  from  such  sparks.^  If  a  train  is  stopped  on  a 
mountain  side,  and  the  engineer  leaves  his  engine,  and  during 

1  Ryan  v.  New  York  Central  R.  Co.,  55  N.  E.  Rep.  401,  73  Am.  St.  715,  46 

35  N.  Y.  210,  91  Am.  Dec.  49:  Webb  v.  L.  R.  A.  672. 

Rome  &  O.  R.  Co.,  49  N.  Y.  420, 10  Am.  4  Hoag  v.  Lake   Shore,  etc.  R.  Co., 

Rep.  389.     See  Lowery  v.  Manhattan  85  Pa.  293,  27  Am.  Rep.  653. 

R.  Co.,  99  N.  Y.   158,   1    N.  E.  Rep.  ^Rigdon  v.   Temple  Water- works 

608.  Co.,   11   Tex.  Civ.  App.  542,  32  S.  W. 

2Frace  v.   New  York.  etc.   R.  Co.,  Rep.  828. 

143  N.  Y.  182,  88  N.  E.  Rep.  102;  Read  «Elwood  v.  Addison,  26  Ind.  App. 

V.  Nichols,  118  N.  Y.  224,  23  N.   E.  28,59  N.  E.  Rep.  47. 

Rep.  468,  7  L.  R.  A.  130.  ^  Gulf,  etc.  R.  Co.  v.   Johnson,   51 

3  Hoffman  v.  King.  160  N.  Y.  618,  S.  W.  Rep.  531  (Tex.  Civ.  App.). 


54  COMPENSATION.  [§  19, 

bis  absence  the  fireman,  accidentally  or  otherwise,  sets  the 
engine  in  motion  and  the  train  moves  downward,  the  violation 
of  the  rules  of  the  company  by  the  engineer  will  authorize  a 
finding  that  his  act  was  the  proximate  cause  of  the  injury  to 
the  conductor,  who  was  thrown  off  the  train.^ 
[26]  §  19.  Further  illustrations.  The  owner  of  a  horse 
and  cart  who  leaves  them  unattended  in  a  public  street  is  lia- 
ble for  any  damage  to  children  resorting  there  and  meddling 
with  either.^  The  owner  of  a  loaded  gun,  who  puts  it  into  the 
hands  of  a  child,  by  whose  indiscretion  it  is  discharged,  is  lia- 
ble for  the  damage  occasioned  thereby.^  It  is  negligence  for 
a  dealer  to  sell,  contrary  to  law,  dangerous  explosives  to  chil- 
dren. "When  this  is  done  with  knowledge  that  the  purchasers 
are  not  familiar  with  their  use  the  vendor  is  held  to  know  that 
the  probable  consequences  will  be  injury  to  them  or  to  their 
associates;  and  he  is  liable  to  the  party  injured  although  the 
injuries  were  the  result  of  the  natural  conduct  of  a  child  who 
did  not  purchase  the  article  which  produced  them.*  But  the 
mere  fact  that  the  law  forbids  the  sale  of  fire-arms  to  a  minor 
does  not  make  the  vendor  liable  for  the  consequences  unless 
he  knew  that  the  purchaser  was  ignorant  of  their  character, 
inexperienced  in  the  use  of  them,  or  that  there  was  something 
in  his  character  or  disposition  which  rendered  it  unsafe  for  him 
to  have  thera.-^  Leaving  an  iron  truck  with  a  hot  iron  casting 
upon  it  in  a  street  where  children  are  accustomed  to  go  and  in 
a  condition  to  do  injury  by  slight  interference  is  negligence, 
which  will  be  regarded  as  the  proximate  cause  of  any  injury 
to  a  child  which  may  result  therefrom.*'  The  rule  is  the  same 
when  lumber  is  so  carelessly  piled  on  an  unfenced  lot  abutting 

1  Mexican  National  R.  Co.  v.  Mus-  ^Binford  v.  Johnston,  82  Ind.  426, 
sette,  86  Tex.  708,  24  L.  R.  A.  642,  26  S.    42  Am.  Rep.  508. 

W.  Rep.  1075,  7  Tex.  Civ.  App.  169,  5  Poland  v.  Earhart,  70  Iowa,  285, 

24  S.  W.  Rep.  520.  30  N.  W.  Rep.  637;  Meyer  v.  King,  73 

2  Lynch  v.  Nurdin.  1  Q.  B.  29;  II-  Miss.  1,  7,  16  So.  Rep.  245,  35  L.  R. 
lidge  V.  Goodwin,  5  C.  &  P.  190;  A.  474,  citing  the  text,  and  disapprov- 
Dickson  v.  McCoy,  39  N.  Y.  400;  ing  a  criticism  of  the  Iowa  case  in 
Millsv.Bunke,59App.Div.39,69N.Y.  36  Am.  St.  807,817.  See  Harris  v. 
Supp.  96:  Mahoney  v.  Dwyer,  84  Hun,  Cameron,  81  Wis.  239,  29  Am.  St.  891, 
34,  32  N.  Y.  Supp.  346.  51  N.  W.  Rep.  437. 

3  Dixon  V.  Bell,  5  M.  &  S.  198;  Meers  ^  Lane  v.  Atlantic  Works,  107  Mass. 
V.  McDowell,  23  Ky.  L.  Rep.  461,  62  104;  Osake  v.  Larkin,  40  Kan.  206,  2 
S.  W.  Rep.  1013,  53  L.  R.  A.  789.  L.  R.  A.  56,  19  Pac.  Rep.   65S;  Mc- 


§  19.]  CONSEQUENTIAL    DAMAGES    FOR   TORTS.  55 

upon  a  street  as  to  fall  upon  children  playing  near  it.^  The 
defendant's  servant  left  a  truci^  standing  near  a  sidewalk  in  a 
public  street,  with  the  shafts  shored  up  by  a  plank  in  the  usual 
way.  Another  truckman  temporarily  left  his  loaded  truck  di- 
rectly opposite  on  the  other  side  of  the  same  street;  after 
which  a  third  person  tried  to  drive  his  truck  between  those  two. 
In  attempting  to  do  so  with  due  care  he  hit  the  defendant's 
truck  in  such  a  manner  as  to  whirl  its  shafts  round  on  the  side- 
walk so  that  they  struck  the  phiintiff,  who  was  walking  by, 
and  broke  her  leg.  For  this  injury  she  was  allowed  to  main- 
tain her  action,  the  only  fault  imputable  to  the  defendant  be- 
ing the  careless  position  in  which  the  truck  was  left  by  his 
servant  on  the  street.  This  was  treated  as  the  sole  cause  of 
the  plaintiff's  injury,  and  was  deemed  sufficiently  proximate 
to  render  the  defendant  responsible.-  He  was  liable  for  the 
act  of  his  servant,  for  the  latter  was  engaged  in  his  master's 
work;  it  was  nefflio^ence  to  leave  the  truck  in  the  street  when 
not  in  use ;  it  was  considered  that  the  driver  of  the  truck,  who 
was  the  immediate  agent  of  the  force  which  injured  the  plaint- 
iff, had  a  right  to  attempt  to  pass  between  the  two  trucks,  if 
he  conducted  himself  with  due  care,  and  exercised  a  sound  dis- 
cretion in  determining  whether  the  attempt  could  be  [27] 
made  with  safety  to  persons  lawfully  using  the  street.  And 
as  the  jury  found  that  in  the  exercise  of  such  care,  prudence 
and  discretion  he  made  the  attempt  which  resulted  in  the  in- 
jury sustained  by  the  plaintiff,  the  defendant  was  liable  inas- 
much as  his  truck  was  unlawfully  in  the  street,  and  that 
should  be  regarded  as  the  natural  and  proximate  cause  of  the 
injury.  The  decision  imports  that  a  danger  not  apparent 
enough  to  deter  the  driver  from  attempting  to  pass  the  truck 
of  the  defendant  could  legally  be  apparent  enough  to  render 
the  injury  proximate  to  the  illegal  use  of  the  street  by  leaving 
the  truck  there. 

The  jury  may  find  that  the  injury  was  probable,  although 
brought  about  by  a  new  agency,  when  heavy  articles  left  near 

Dowall   V.  Great    Western    R.    Co.,  iBransom's  Adm'r    v.   Labrot,  81 

[1902]  1  K.  B.  618;  Travail  v.  Banner-  Ky.  638. 

man,  71  App.  Div.  439,  75  N.  Y.  Supp.  '^  Powell  v.  Deveney,  3  Cush.  300, 

866.  50  Am.  Dec.  738. 


56  COMPENSATION.  [§  19. 

an  opening  in  the  floor  of  an  unfinished  building  or  in  the  deck 
of  a  vessel  were  accidentally  jostled  so  that  they  fell  upon 
persons  below.^ 

A  man  who  negligently  sets  and  keeps  a  fire  on  his  own 
land  is  liable  for  any  injury  done  by  its  direct  communication 
to  his  neighbor's  land,  whether  through  the  air  or  along  the 
ground,  and  whether  or  not  he  might  reasonably  have  antici- 
pated the  particular  manner  and  direction  in  which  it  was 
communicated."^  The  defendants  moored  their  boats  in  the 
channel  and  entrance  to  the  locks  at  a  dam  across  a  river  so 
that  the  boats  of  others  were  stopped  outside  and  exposed  to 
the  current,  then  rapidly  rising,  until  by  its  force  such  boats 
were  carried  over  the  dam  and  lost  without  any  fault  of  the 
owners.  It  was  held  that  the  defendants  negligently  or  wan- 
tonly caused  this  injury  and  were  liable  for  it.*  The  plaintiff's 
boat  had  anchored  at  a  wharf  when  the  water  was  low.  The 
river  rose  afterwards,  covering  certain  piles  of  pig  iron  negli- 
gently left  by  the  defendant  on  the  wharf  about  a  foot  above 
low-water  mark.  To  avoid  these  piles  the  boat  was  compelled 
to  back  out  into  the  stream,  where  she  was  struck  by  some 
floating  body,  stove  and  sunk.  The  defendant  was  held  liable 
for  the  loss  of  the  boat.'*  The  defendant  broke  and  entered 
the  plaintiff's  close  adjacent  to  a  river  and  carried  away  gravel 
from  a  bank,  near  to  a  dam  across  the  river,  in  consequence  of 
which  a  flood  in  the  river  three  weeks  afterward  swept  away 
a  portion  of  the  close  and  a  cider  mill.  It  was  held  that  the 
[28]  whole  damage  might  be  recovered.^  A  harbor  company 
which  had  been  in  the  habit  of  keeping  a  light  on  the  end  of 
one  of  its  piers  to  enable  vessels  to  safely  enter  the  harbor  at 
night  discontinued  the  light  without  public  notice.  A  vessel 
was  afterwards  lost  in  attempting  to  enter  in  the  absence  of 
the  light.     It  was  held  that  the  harbor  company  was  liable  for 

iMcCauley  v.  Norcross.  155  Mass.  Hesters,  90  Ga.  11,  15  S.  E.  Rep.  828. 

584,  30  N.  E.  Rep.  464;  The  Joseph  B.  See  ^  18. 

Thomas,  81  Fed.  Rep.  578,  30  C.  C.  A.  3  gcott  v.  Hunter,  46  Pa.  193. 

33,  46  L.  R.  A.  58.  *  Pittsburgh  v.  Grier,  22  Pa.  54,  60 

-  Higgins  V.  Dewey,  107  Mass.  494,  Am.  Dec.  65. 

9  Am.  Rep.  63;  Martin  v.  New  York,  5  Dickinson  v.  Boyle,  17  Pick,  78,  28 

etc.  R.  Co.,  63  Conn.  331,  25  All.  Rep.  Am.  Dec.  281 
239;  East  Tennessee,  etc.   R.  Co.  v. 


§  19.]  CONSEQUENTIAL   DAMAGES    FOR   TORTS.  57 

the  value  of  the  vessel  lost  and  also  for  certain  moneys  ex- 
pended in  good  faith,  with  a  reasonable  expectation  of  success, 
m  attempting  to  raise  her.'  One  who  maliciously  causes  the 
arrest  of  an  engineer  while  he  is  engaged  in  running  a  train 
is  liable  to  his  employer  for  the  damage  resulting  from  the 
delay.^ 

It  cannot  be  affirmed  that  it  is  not  the  natural  and  reason- 
able consequence  of  the  sale  of  liquors  to  an  intoxicated  per- 
son between  whose  home  and  the  place  where  the  sale  is  made 
there  are  railroad  tracks  that  such  person  should  in  a  dark 
night  meet  with  injury  or  death  from  a  train  of  cars.*  If 
weeds  or  brush  are  allowed  to  grow  upon  the  right  of  way  of 
a  railroad  company  to  such  a  height  as  to  obstruct  the  view  of 
a  highway  crossing  and  animals  are  injured  by  a  train  the 
company  will  be  liable;'' and  so  if  cattle  concealed  in  such 
weeds  or  brush  cause  the  wrecking  of  a  train  and  the  injury 
of  a  person  thereon.^  If  the  unlawful  speed  of  a  train  upon 
station  grounds  stampedes  animals  at  large  there  and  they  run 
upon  the  track,  either  by  breaking  down  fences  or  otherwise, 
•and  are  killed  by  the  negligent  running  of  the  train,  such  speed 
is  the  direct  cause  of  the  killing.^  It  is  not  the  natural  con- 
sequence of  the  intoxication  of  a  man  to  whom  liquors  are 
sold  in  violation  of  law  that  his  wife,  while  following  him  in 
the  street  for  the  purpose  of  ascertaining  where  he  procures 
liquor,  shall  fall  and  injure  herself,  and  the  seller  is  not  liable 
for  such  in  jury.''  The  neglect  to  fence  a  railroad  and  track  is 
not  the  proximate  cause  of  an  injury  to  an  animal  sustained 
by  putting  its  foot  into  a  small  hole  while  running  along  the 
track;  such  an  occurrence  is  so  unusual  as  not  to  be  expected 
by  a  reasonable  man.^  There  is  no  connection  between  the 
failure  of  a  railroad  company  to  provide  separate  accommoda- 
tions for  white  and  colored  passengers,  where  that  is  required, 
and  an  assault  made  upon  one  of  the  latter,  by  a  fellow  pas- 

1  Sweeney  v.  Port  Burwell  Harbor  s  Eames  v.  T.  &  N.  O,  E,  Co.,  63  Tex. 

Co..  17  Up.  Can.  C.  P.  574.  660. 

^St.  Johnsbury,  etc.  R.  Co.  v.  Hunt,  '''Story  v.  Chicago,  etc.   R.  Co.,  79 

55  Vt.  570,  45  Am.  Rep.  639.  Iowa,  402,  44  N.  W.  Rep.  690. 

'■^Schroeder  v.    Crawford,    94    111.  "^Johnson    v.   Drummond,   16    IlL 

357.  App.  641. 

*  Indianapolis,  etc.  R.  Co.  v.  Smith,  «  Nelson  v.  Chicago,  etc.  R.  Co.,  30 

.78  111.  112.  Minn.  74,  14  N.  W.  Rep.  360. 


58  COMPENSATION,  [§  20.- 

senger,  without  the  knowledge  or  consent  of  the  company's- 
servants,  after  the  removal  of  the  passenger  assaulted  from  the 
ladies'  car  to  a  smoking  car;^  nor  between  the  act  of  a  mort 
gagee  who  takes  possession  of  property  under  his  mortgage 
before  default  and  injury  to  crops  because  a  mule  needed  to 
work  them  was  taken  ;2  nor  between  threats  made  to  arrest  a 
debtor  and  a  miscarriage  b}'^  his  Avife,  no  physical  violence 
being  used;^  nor  between  a  like  result  and  the  false  imprison- 
ment of  a  husband;*  nor  as  a  result  of  the  wrongful  finding 
of  an  indictment  against  him.-^  One  who  invites  a  person  to 
drink  liquor  with  him  is  not  responsible  for  an  assault  made 
by  the  person  who  accepts  such  invitation  upon  a  third  indi- 
vidual, although  the  liquor  so  drank  made  him  intoxicated,® 

§  20.  Consequential  damages  under  fence  statutes.  When 
a  new  right  is  conferred  by  statute  and  a  corresponding  duty 
is  thereby  enjoined,  the  liability  of  the  defaulting  party  to  the- 
other  is  confined  to  the  limits  prescribed  by  the  statute.  Hence, 
when  a  statute  concerning  division  fences  provides  that  the 
party  who  shall  neglect  to  maintain  such  fences  shall  be  liable 
to  the  party  injured  by  his  default  for  "  such  damages  as  shall 
accrue  to  his  lands,  crops,  fruit-trees,  shrubbery  and  fixtures," 
there  is  no  liability  for  injuries  which  may  be  sustained  by 
animals  while  trespassing  on  the  lands  of  the  party  who  has 
failed  to  maintain  his  fence.^  It  has  been  attempted,  in  order 
to  restrict  the  liability  of  railroad  companies  for  neglect  to 
fence  their  tracks,  to  apply  this  principle.  The  duty  is  for  the 
protection  of  the  public  as  well  as  for  the  benefit  of  persons 
who  stand  in  other  relations  to  the  party  upon  whom  it  is  en- 
joined, and  the  neglect  of  the  duty  entitles  the  party  who  is- 
thereby  injured  to  all  the  relief  due  him  in  either  or  both  re- 
lations.^ But  this  view  is  not  accepted  in  some  jurisdictions, 
or  at  least  the  strict  construction  given  such  statutes  is  not  in 
harmony  with  it,  though  the  question  in  the  aspect  stated  is 

*  Royston  V.  Illinois  Central  R.  Co.,        sjjampton  v.  Jones,  58  Iowa,  317, 
67  Miss.  376,  7  So.  Rep.  320.  12  N.  W.  Rep.  276. 

2  Jackson  v.  Hall,  84  N.  C.  489.  eswinfin  v.  Lowry,  37  Minn.  345, 

sWulstein   v.  Mohlman,  57  N.  Y.  34  N.  W.  Rep.  22. 

Super.  Ct.  50,  5  N.  Y.  Supp.  569.  ^Crandall  v.  Eldridge,  46  Hun,  411. 

*  Ellis    V.   Cleveland,   55    Vt.   358;  8  Graham  v.  President,  etc.,  46  Hun^ 
Huxley  v.  Berg,  1  Starkie,  98.  386;  Crandall  v.  Eldridge,  id.  411. 


§  20.]  CONSEQUENTIAL    DAMAGES    FOE    TORTS.  59 

not  considered.  Under  a  statute  requiring  railroad  companies 
to  fence  and  declaring  them  liable  for  all  damages  resulting 
from  their  neglect  to  do  so  which  may  be  done  by  their  "  agents, 
engines  or  cars,"  liability  does  not  extend  to  consequential  in- 
juries to  an  animal  which  gets  upon  the  track  by  reason  of  the 
failure  to  fence,  as  wh6re  it  is  injured,  after  being  frightened 
by  an  approaching  train,  either  b}'-  jumping  a  cattle-guard  or 
by  coming  in  contact  with  a  wire  fence,  or  both,  no  wilful 
misconduct  being  charged  against  the  train-men.'  The  injuries 
contemplated  by  such  language  are  only  those  which  result 
from  a  direct  or  actual  collision  of  the  engines  or  cars  with 
the  animal  injured.^  The  same  conclusion  has  been  reached 
from  language  which  imposed  liability  if  animals  "shall  be 
killed  or  injured  by  the  cars,  or  locomotive,  or  other  carriages," ' 
Where  it  is  provided  that  railroad  companies  shall  be  liable 
for  animals  killed  or  injured  by  their  negligence,  and  that  a 
"  failure  to  build  and  maintain  fences  shall  be  deemed  an  act 
of  negligence,"  such  a  construction  as  was  given  in  the  above 
cases  is  unwarranted.'*  Under  a  statute  which  provides  that 
on  neglect  to  fence  the  road  the  company  shall  be  liable  for 
all  damages  sustained  by  any  person  in  consequence,  damages 
may  be  recovered  for  injury  done  to  a  farm  by  rendering  it 
less  fit  for  pasturage  because  of  such  neglect.^  The  same  lia- 
bility has  been  declared  to  exist  under  a  statute  which  employs 
the  words  "shall  be  liable  for  all  damages  which  shall  be  done 
by  their  agents  or  engines  to  cattle,  horses  or  other  animals;  "^ 

^Schertz    v.    Indianapolis,  etc.  R.  struck  by  the  train ;  both  were  killed. 

Co.,  107  111.  577;  Knight  v.  New  York,  A  recovery  was  allowed  for  but  one. 

etc.  R  Co.,  99  N.  Y.  25,  1  N.  E.  Rep.  The  construction  given   the   Mis- 

108,    reversing    30    Hun,    415,    dis-  souri  statute  is  forcibly  criticised  in 

tinguished  in  Leggett  v.  Rome,  etc.  25  Am.  L.  Rev.  114,  264. 

R.  Co.,  41  Hun,  80.  *  Nelson  v.  Chicago,  etc.  R.  Co.,  30 

2 Ibid.;  LaflFerty  v.  Hannibal,  etc.  Minn.  74,  14  N.  W.  Rep.  360. 

R  Co.,  44  Mo.  291;  Foster  v.  St.  Louis,  ^  Emmons  v.  Minneapolis,  etc.  R. 

etc.  R  Co.,  90  Mo.  116,  2  S.  W.  Rep.  Co.,  35  Mmn.  503,  29  N.  W.  Rep.  202; 

138,  and  other  Missouri  cases  cited  Nelson  v.  Same,  41  Minn.  131,  42  N. 

therein.  W.  Rep.  788. 

3  Peru  &  I.  R  Co.  v.  Hasket.  10  Ind.  «  Leggett  v.  Rome.  etc.  R  Co.,  41 

409,  71  Am.  Dec.  335;  Jeflfersonville,  Hun,   80.     It    is    doubtful    whether 

etc.  R.  Co.  V.  Downey,  61  Ind.  287.  this  case  is  in  harmonj'  with  Knight 

In  the  last  case  one  of  two  ani-  v.  New  York,  etc.  R  Co.,  99  N.  Y.  25, 

mals,  which  were  tied  together,  was  1  N.  E.  Rep.  108. 


60 


COMPENSATIOX. 


[§21. 


and  under  that  statute  a  railroad  company  has  been  held  liable 
where  a  horse  fell  into  a  cut  raade  by  the  company  along  a 
pasture,  which  cut  was  not  fenced.^ 

§  21.  Nervous  shock  without  impact;  the  Coultas  case 
and  American  eases  in  liarmony  with  it.  In  1888  the  ques- 
tion whether  damages  for  a  nervous  shock  or  injury  caused  by 
the  defendant's  negligence  in  permitting  the  plaintiff  to  cross 
its  track  when  it  was  dangerous  to  do  so,  and  its  servant  had 
knowledge  of  the  danger,  came  before  the  English  privy  coun- 
cil on  appeal  from  the  supreme  court  of  Victoria.  The  latter 
court  was  of  the  opinion  that  the  damages  were  not  tooremote.'- 
Its  judgment  was  reversed,  and  the  rule  declared  to  be  that 
damages  arising  from  mere  sudden  terror,  unaccompanied  by 
actual  ph3^sical  injury,  cannot  be  considered  a  consequence 
which,  in  the  ordinary  course  of  things,  would  flow  from  such 
nealiirence.^     The  court  observed  that  it  was  remarkable  that 


1  Graham  v.  President,  etc.,  46  Hun, 
386. 

2  Coultas  V.  Victorian  Ry.  Commis- 
sioners. 12  Vict.  L.  R,  895. 

"Victorian  Ry.  Commissioners  v. 
Coultas,  13  App.  Cas.  222.  The  facts 
are  stated  in  the  next  section. 

The  doctrine  of  the  Coultas  case, 
though  repeatedly  dissented  from  in 
England  (see  §  23a)  and  denied  in 
Ireland,  has  been  declared  by  several 
American  courts.  Braun  v.  Craven, 
175  111.  401,  51  N.  E.  Rep.  657,  42  L. 
R.  A.  199,  afBrming  Craven  v.  Braun, 
73  III.  App.  401;  Mitchell  v.  Roches- 
ter R.  Co.,  151  N.  Y.  101,  45  N.  E.  Rep. 
354,  34  L.  R.  A.  781,  56  Am.  St.  604, 
reversing  77  Hun,  607;  Gulf.  etc.  R. 
Co.  V.  Trott,  86  Tex.  412.  25  S.  W. 
Rep.  419,  40  Am.  St.  866;  San  Anto- 
nio, etc.  R.  Co.  V.  Corley,87  Tex.  432. 
29  S,  W.  Rep.  231  (see  ^  24  for  Texas 
cases  allowing  recovery,  under  some 
circumstances,  for  nervous  injury); 
Gatzow  v.  Buening,  106  Wis.  1,  20,  81 
N.  W.  Rep.  1003,  49  L.  R  A.  475,  80 
Am.  St.  17;  Denver,  etc.  R.  Co.  v. 
Roller,  41  C.  C.  A.  22,  100  Fed.  Rep. 
738,  49  L.  R.  A.  77;  Spade  v.  Lynn  & 


B.  R.  Co.,  172  Mass.  488,  52  N.  E.  Rep. 
747,  70  Am.  St.  298,  168  Mass.  285,  47 
N.  E.  Rep.  88,  60  Am.  St.  393,  38  L. 
R.  A.  512;  Evring  v.  Pittsburgh,  etc. 
R.  Co..  147  Pa.  40.  23  Atl.  Rep.  340, 14 
L.  R.  A.  666.  30  Am.  St.  709;  Wyraan 
V.  Leavitt,  71  Me.  227;  Haile  v.  Texas 
&  P.  R.  Co.,  60  Fed.  Rep.  557,  9  C.  C. 
A.  134,  23  L.  R  A.  774;  Kalen  v. 
Terre  Haute  &  I.  R.  Co.,  18  Ind.  App. 
202,  47  N.  E.  Rep.  694;  Gaskins  v. 
Runkle,  25  Ind.  App.  548.  58  N.  E. 
Rep.  740:  Lee  v.  Burlington,  113 
Iowa,  356,  85  N.  W.  Rep.  618,  86  Am, 
St.  379:  Nelson  v.  Crawford.  123 
Mich.  466,  80  Am.  St.  577,  81  N.  W. 
Rep.  335;  Johnson  v.  Wells,  Fargo  & 
Co.,  6  Nev.  224,  3  Am.  Rep.  245;  At- 
chison, etc.  R,  Co.  V.  McGinnis,  46 
Kan.  109,  26  Pac.  Rep.  453;  St.  Louis, 
etc.  R.  Co.  V.  Bragg,  69  Ark.  402,  64 
S.  W.  Rep.  226,  86  Am.  St.  206.  And 
is  recognized  as  binding  in  Ontario 
(Henderson  v.  Canada  Atlantic  R. 
Co.,  25  Ont.  App.  437),  as  it  doubtless 
is  in  all  the  other  British  colonies. 
It  has  been  said  of  it  in  New  South 
Wales  that  it  is  binding  there,  "and 
when  we  are  called  upon  to  decide  a 


21.] 


CONSEQUENTIAL    DAMAGES    FOR   TORTS. 


61 


no  precedent  was  cited  of  a  similar  action  having  been  main- 
tained or  even  instituted.^  It  has  since  come  to  the  knowl- 
edge of  the  legal  world  that  such  an  action  had  been  main- 
tained before  that  time.      In  1890  substantially    the    same 


case  in  whicli  the  facts  are  identi- 
cal, we  sliall  be  compelled  to  follow 
it.  But  I,"  said  the  chief  justice, 
"do  not  feel  inclined  to  extend  the 
principle  of  the  decision  in  any  way." 
Rea  V.  Balmain  New  Ferry  Co.,  17 
N.  S.  W.  (law)  92.  See  Pelmothe  v. 
Phillips,  20  id.  61,  and  1  Beven  on 
Neg.  (2d  ed.),  p.  76  et  seq. 

The  American  cases  which  deny 
redress  for  nervous  shock  and  its  re- 
sults do  not  all  rest  upon  the  same 
ground,  though  most  of  them  take 
the  view  that  the  damages  are  too 
remote.  It  is  said  in  Massachusetts: 
"The  logical  vindication  of  this  rule 
is,  that  it  is  unreasonable  to  hold 
persons  who  are  merely  negligent 
bound  to  anticipate  and  guard 
against  friglit  and  the  consequences 
of  fi'ight;  and  that  this  would  open 
a  wide  door  for  unjust  claims,  which 
could  not  successfully  be  met."  The 
rule  is  thus  limited  there:  "It  is 
hardly  necessary  to  add  that  this  de- 
cision does  not  reach  those  classes  of 
actions  where  an  intention  to  cause 
mental  distress  or  to  hurt  the  feel- 
ings is  shown,  or  is  reasonably  to  be 
inferred,  as,  for  example,  in  cases  of 
seduction,  slander,  malicious  prose- 
cution, or  arrest,  and  some  others. 
Nor  do  we  include  cases  of  acts  done 
with  gross  carelessness  or  reckless- 
ness, showing  utter  indifference  to 
such  consequences,  when  they  must 
have  been  on  the  actor's  mind." 
Spade  V.  Lynn  &  B.  R.  Co.,  168  Mass. 
28.-),  47  N.  E.  Rep.  88,  60  Am.  St.  393, 
38  L.  R.  A.  512.  See  Homans  v.  Boston 
E.  R.  Co.,  180  Mass.  4.-36,  57  L.  R.  A. 
291,  62  N.  E.  Rep.  737,  stated  in  last 
paragraph  of  §  22. 


In  a  Wisconsin  case  the  rule  was 
applied  under  conditions  which 
make  it  particularly  noticeable,  and 
lead  to  some  doubt  as  to  wliether 
the  decision  is  right  if  damages  for 
nervous  shock  are  recoverable  at  all. 
A  combination  of  liverymen  was 
formed  to  limit  their  services  to  per- 
sons patronizing  them  exclusively 
and  to  monopolize  the  livery  busi- 
ness in  Milwaukee,  including  service 
for  funerals.  Such  combination,  the 
court  held,  was  unlawful,  and  any 
member  of  it  who  acted  in  accord- 
ance with  the  regulations  was  lia- 
ble for  compensatory  damages  to  a 
person  specially  injured  by  an  overt 
act.  A  member  of  such  association 
let  a  hearse  and  carriage  to  the 
plaintiff"  for  the  funeral  of  his  child, 
but,  upon  learning  that  the  person 
in  charge  was  an  undertaker  and 
liveryman  doing  an  independent 
business,  joined  with  the  association 
in  sending  the  vehicles  away  from 
the  plaintiff's  house  just  as  they  were 
about  to  be  used.  Here,  then,  is  an 
unlawful  combination,  doing  or 
causing  the  doing  of  an  act  wilfully, 
with  knowledge  that  the  natural  re- 
sult will  be  to  cause  plaintiff' mental 
distress  or  nervous  shock.  It  is  said 
in  the  opinion:  "There  was  no  phy- 
sical injury  to  plaintiff,  and  no  per- 
sonal injury  to  him  of  any  kind  save 
to  his  feelings.  The  case  does  not 
fall  within  the  few  exceptions  to  the 
rule,  —  which  prevails  in  this  state 
and  in  most  jurisdictions, — that  men- 
tal disti-ess  alone  is  too  remote  and 
difficult  of  measurement  to  be  the 
subject  of  an  assessment  of  dam- 
ages.    The  true  idea  is  that,  under 


1  But  see  y  23. 


<)2 


COMPENSATION. 


[§21. 


question  came,  for  tlie  second  time,  before  the  courts  of  Ire- 
land, and  they  reached  a  conclusion  squarely  opposite  to  that 
arrived  at  by  the  privy  council,  and  one  which  is  supported  by 
better  reasoning  and  is  more  in  harmony  with  justice.     The 


the  general  principle  applicable  to 
tort  actions  that  recoverable  dam- 
ages are  limited  to  such  as  are  the 
natural  and  proximate  result  of  the 
act  complained  of,  some  physical  in- 
jury is  necessary  to  a  definite  causal 
connection  between  the  wrongful 
act  and  the  mental  condition,  to  ren- 
der the  former,  in  a  legal  sense,  tlie 
cause  of  the  latter,  and  such  condi- 
tion, with  its  immediate  cause,  suffi- 
ciently significant  to  be  compre- 
hended and  measured  in  a  money 
standard  by  average  human  wisdom 
with  a  reasonable  degree  of  cer- 
tainty." Gatzow  V.  Buening,  100  Wis. 
1,  20,  81  N.  W.  Rep.  1003,  49  L.  R.  A. 
475,  80  Am.  St.  17. 

In  the  New  York  case  plaintiff  was 
standing  upon  a  crosswalk  awaiting 
an  opportunity  to  board  one  of  the 
defendant's  cars  which  had  stopped 
there.  While  there,  and  as  she  was 
about  to  step  upon  the  car,  a  horse 
of  the  defendant  came  down  the 
street,  and  as  the  team  attached  to 
it  drew  near  it  turned  and  came  so 
close  to  the  plaintiff  that  she  stood 
between  the  horses'  heads  when  they 
were  stopped.  The  fright  and  excite- 
ment rendered  her  unconscious,  and 
there  was  a  miscarriage  and  conse- 
quent illness.  Because  there  could 
be  no  recovery  for  the  fright,  there 
could  be  none  for  the  illness  conse- 
quent upon  it.  The  miscarriage  was 
not  the  proximate  result  of  the  de- 
fendant's negligence,  but  the  result 
of  an  accidental  or  unusual  combina- 
tion of  circumstances  which  could 
not  have  been  reasonably  antici- 
pated. Another  reason  for  denying 
the  right  of  action  was  that  a  flood 
■of  litigation  might  be  anticipated, 
•with  a  wide  field  opened  for  fictitious 


or  speculative  claims.  Mitchell  v. 
Rochester  R.  Co.,  151  N.  Y.  107,  56 
Am.  St.  604,  45  N.  E.  Rep.  854,  34  L. 
R.  A.  781. 

See  15  Harvard  L.  Rev.  304,  for  an 
answer  to  some  of  the  foregoing  ob- 
jections to  recovery  in  such  cases. 

The  Minnesota  cases  on  this  ques- 
tion are  reviewed  in  Sanderson  v. 
Northern  Pacific  R.  Co.,  92  N.  W. 
Rep.  542.  In  that  case  the  plaintiff 
sought  to  recover  for  personal  in- 
juries, due  solely  to  fright  and  grief, 
because  an  attempt  was  made  to  put 
her  children  off  the  car,  she  not 
having  been  interfered  with,  nor 
having  been  put  in  fear  of  any 
physical  injury  or  personal  violence. 
The  rule  was  declared  to  be  that 
there  can  be  no  recovery  for  fright 
which  results  in  physical  injuries,  in 
the  absence  of  contemporaneous  in- 
jury to  the  plaintiff,  unless  the  fright 
is  the  pi'oxiraate  result  of  a  legal 
wrong  against  the  plaintiff  by  the 
defendant.  See  Bucknam  v.  Great 
Northern  R.  Co.,  76  Minn.  373,  79 
N.  W.  Rep.  98. 

Purcell  v.  St.  Paul  City  R.  Co.,  48 
Minn.  184,  50  N.  W.  Rep.  1034,  16  L. 
R,  203,  is  an  illustration  of  what  con- 
stitutes a  legal  wrong  so  as  to  afford 
a  basis  for  the  recovery  of  damages 
resulting  from  mental  disturbance. 
The  plaintiff,  who  was  pregnant, 
was  a  passenger  on  one  of  the  de- 
fendant's cars.  By  its  negligence  in 
tlieir  management  a  collision  seemed 
inevitable,  and  the  plaintiff  was  put 
in  a  position  of  such  peril  as  to  cause 
fright,  which  produced  a  miscarriage. 
Though  there  was  no  collision  and 
no  impact,  the  negligence  was  the 
cause  of  the  plaintiff's  injury,  and 
entitled  her  to  recover. 


§  21.]  CONSEQUENTIAL    DAMAGES    FOR    TORTS.  G3 

action  was  brought  by  a  husband  and  his  wife,  and  arose  out 
of  tlie  following  facts:  The  female  plaintiff  was  a  passenger 
in  an  excursion  train  on  the  defendant's  railway.  The  train 
was  too  heavy  to  be  drawn  up  an  incline,  and  was  divided, 
the  car  in  which  the  plaintiff  was  remaining  attached  to  the 
engine.  The  rear  part  of  the  train  descended  the  incline  with 
great  velocity;  the  engine  was  thereafter  reversed  and  with 
the  car  the  plaintiff  occupied  followed  at  a  high  rate  of  speed, 
until  stopped  witl)  a  violent  jerk.  The  proof  showed  that  A. 
was  put  in  great  fright  by  the  occurrence,  and  suffered  from 
nervous  shock  in  consequence ;  that  she  was  incapacitated  from 
performing  her  ordinary  avocations;  medical  witnesses  ex- 
pressed the  opinion  that  paralysis  might  result.  The  jury 
were  charged  that  if  great  fright  was,  in  their  opinion,  a 
reasonable  and  natural  consequence  of  the  circumstances  in 
which  the  defendant  had  placed  the  plaintiff,  and  she  was 
actually  put  in  great  fright  by  the  circumstances,  and  if  in- 
jury to  her  health  was,  in  their  opinion,  a  reasonable  and  nat- 
ural consequence  of  such  fright,  and  was  actually  occasioned 
thereby,  damages  for  such  injury  would  not  be  too  remote. 
The  material  facts  were  found  in  the  plaintiff's  favor.  In  con- 
sidering the  objections  to  the  refusal  of  the  court  to  charge,  as 
requested  by  the  defendant,  that  if  damages  or  injury  were 
the  result  of,  or  arose  from,  mere  fright,  not  accompanied  by 
actual  physical  injury,  even  though  there  might  be  a  nervous 
or  mental  shock  occasioned  by  the  fright,  such  damages  would 
be  too  remote,  Palles,  C.  B.,  said :  "  This  objection  presupposes 
that  the  plaintiff  sustained,  by  reason  of  the  defendant's  negli- 
gence, '  injury  '  of  the  class  left  to  the  consideration  of  the 
jury  by  the  summing-up,  i.  e.,  injury  to  health,  which  is  bodily 
or  physical  injury;  and  the  proposition  presented  is  that  dam- 
ages for  such  injury  are  not  recoverable  if  two  circumstances 
occur:  (1)  if  the  only  connection  between  the  negligence  and 
this  bodily  injury  is  that  the  former  caused  fright,  which 
caused  nervous  or  mental  shock,  which  shock  caused  the  bodily 
injury  complained  of;  and  (2)  that  this  so-called  bodily  injury 
did  not  accompany  the  fright,  which  I  suppose  means  that  the 
injury,  although  in  part  occasioned  by  the  fright,  assumed  the 
character  of  bodily  injury  subsequently  to,  and  not  at,  the 
time  of  the  neorlisence  or  friijht.     To  sustain  this  contention, 


64  COMPENSATION.  [§21. 

it  must  be  true  whether  the  shock  which  it  assumed  to  have 
been  caused  was  either  mental  or  nervous;  and  as  the  intro- 
duction of  the  word  'mental'  may  cause  obscurity,  by  involv- 
ing matter  of  a  wholly  different  nature,  unnecessary  to  be 
taken  into  consideration  here,  I  eliminate  it  from  the  question. 
If  there  be  a  distinction  between  mental  shock  and  nervous 
shock,  then  the  objection  cannot  be  sustained.  It  is  then  to 
be  observed:  (1)  that  the  negligence  is  a  cause  of  the  injury, 
at  least  in  the  sense  of  a  causa  sine  qua  non;  (2)  that  no  inter- 
vening independent  cause  of  the  injury  is  suggested ;  (3)  that 
jurors,  having  regard  to  their  experience  of  life,  may  hold 
fright  to  be  a  natural  and  reasonable  consequence  of  such  neg- 
ligence as  occurred  in  the  present  case.  If,  then,  such  bodily 
injury  as  we  have  here  may  be  a  natural  consequence  of  fright^ 
the  chain  of  reasoning  is  complete.  But  the  medical  evidence 
here  is  such  that  the  jury  might  from  it  reasonably  arrive  at 
the  conclusion  that  the  injury,  similar  to  that  which  actually 
^suited  to  the  plaintiff  from  the  fright,  might  reasonably 
nave  resulted  to  any  person  who  had  been  placed  in  a  similar 
position.  It  has  not  been  suggested  that  there  was  anything 
special  in  the  nervous  organization  of  the  plaintiff  which 
might  render  the  effect  of  the  negligence  or  fright  upon  her 
different  in  character  from  that  which  it  would  have  produced 
in  any  other  individual.  I  do  not  myself  think  that .  proof 
that  the  plaintiff  was  of  an  unusually  nervous  disposition 
Avould  have  been  material  to  the  question;  for  persons,  whether 
nervous  or  strong-minded,  are  entitled  to  be  carried  by  rail- 
way companies  without  unreasonable  risk  of  danger;  and  my 
only  reason  for  referring  to  the  circumstance  is  to  show  that, 
in  this  particular  case,  the  jury  might  have  arrived  at  the  con- 
clusion that  the  injury  which  did  in  fact  ensue  was  a  natural 
and  reasonable  consequence  of  the  negligence  which  actually 
caused  it. 

"  Again,  it  is  admitted  that,  as  the  negligence  caused  fright, 
if  the  fright  contemporaneously  caused  physical  injur}'^,  the 
damage  would  not  be  too  remote.  The  distinction  insisted 
upon  is  one  of  time  only.  The  proposition  is  that,  although, 
if  an  act  of  negligence  produces  such  an  effect  upon  particular 
structures  of  the  body  as  at  the  moment  to  afford  palpable 
evidence  of  physical  injury,  the  relation  of  proximate  cause 


§  22.]  CONSEQUENTIAL    DAMAGES    FOE  TOKTS.  G5 

and  effect  exists  between  such  negligence  and  the  injury,  yet 
such  relation  cannot  in  law  exist  in  the  case  of  a  similar  act 
producing  upon  the  same  structures  an  effect  which,  at  a  sub- 
sequent time  —  say  a  week,  a  fortnight,  or  a  month  —  must 
result,  without  any  intervening  cause,  in  the  same  physical 
injury.  As  well  might  it  be  said  that  a  death  caused  by  poi- 
son is  not  to  be  attributed  to  the  person  who  administered  it 
because  the  mortal  effect  is  not  produced  contemporaneously 
with  its  administration.  This  train  of  reasoning;  mi^ht  be 
pursued  much  farther;  but  in  consequence  of  the  decision  to 
which  I  shall  hereafter  refer,  I  deem  it  unnecessary  to  do  so." 
§  22.  Same  subject;  criticism  of  the  Couitas  case;  nerv- 
ous shock  a  physical  injury.  The  chief  baron  then  proceeded 
to  review  the  English  case  cited  in  the  opening  paragraph  of 
the  previous  section:  "In  support  of  their  contention  the  de- 
fendants relied  upon  the  Victorian  Railway  Commissioners  v. 
Couitas.  That  was  a  remarkable  case.  The  statement  of 
claim  alleged  that  through  the  negligence  of  the  servants  of 
the  defendants,  in  charge  of  a  railway  gate  at  a  level  cross- 
ing, the  plaintiffs,  while  driving  over  it,  were  placed  in  immi- 
nent peril  of  being  killed  by  a  train,  and  by  reason  thereof 
the  plaintiff,  Mary,  received  a  shock  and  suffered  personal 
injuries.  It  appeared  that  the  female  plaintiff,  whilst  re- 
turning with  her  husband  and  brother  in  the  evening,  from 
Melbourne  to  Hawthorn,  in  a  buggy,  had  to  cross  the  defend- 
ant's line  of  railway  at  a  level  crossing.  When  they  came  to 
it  the  gates  were  closed ;  the  gate-keeper  opened  the  gates 
nearest  to  the  plaintiffs,  and  then  went  across  the  line  to  those  on 
the  opposite  side.  The  plaintiffs  followed  him,  and  were  partly 
onto  the  up-line  (the  further  one),  when  the  train  was  seen  ap- 
proaching on  it.  The  gate-keeper  directed  them  to  go  back, 
but  James  Couitas,  who  was  driving,  shouted  to  him  to  open 
the  opposite  gate,  and  went  on.  He  succeeded  in  getting  the 
buggy  across  the  line,  so  that  the  train,  which  was  going  at  a 
rapid  speed,  did  not  touch  it,  although  it  passed  close  at 
the  back  of  it.  As  the  train  approached  the  plaintiff,  Mary, 
fainted.  The  medical  evidence  showed  that  she  received  a  severe 
nervous  shock  from  the  fright,  and  that  the  illness  from  which 
she  afterward  suffered  (and  which  is  stated  in  Mr.  Beven's  book 
Vol.  1  —  5 


t)()  COMPENSATION.  [§  22. 

on  ISTeirlijrence  to  have  included  a  miscarriasre)  was  the  conse- 
quonce  of  the  fright.  One  of  the  plaintiffs'  witnesses  said  she 
was  suffering  from  profound  impression  on  the  nervous  sys- 
tem—  nervous  shock;  and  that  the  shock  from  which  she  suf- 
fered would  be  a  natural  consequence  of  the  fright.  Another 
said  he  w^as  unable  to  detect  any  physical  damage;  he  put 
down  her  symptoms  to  nervotis  shock.  It  is  to  be  observed 
from  this  evidence  the  jury  might  have  inferred  that  physical 
injury  was  sustained  by  the  female  plaintiff  at  the  time  of  the 
occurrence  in  question.  Although  one  witness  spoke  of  nerv- 
ous shock  as  contradistinguished  from  physical  damage,  the 
question  would  still  have  been  open  for  the  jury  whether  the 
nervous  shock  was  not  —  as  in  the  generality  of,  if  not  indeed 
all,  cases  it  necessarily  must  be  —  physical  injury.  The  jury 
found  for  the  plaintiffs.  Upon  an  appeal  the  privy  council, 
without  deciding  that  an  Impact  was  necessary  to  sustain  the  ac- 
tion, not  only  set  aside  the  verdict,  but  entered  judgment  for 
the  defendants.  In  delivering  judgment  Sir  R.  Couch  says: 
*  Her  fright  was  caused  from  seeing  the  train  approaching, 
and  thinking  she  was  going  to  be  killed.  Damages  arising 
from  mere  sudden  terror,  unaccompanied  by  any  actual  phys- 
ical,injury,  but  occasioning  a  nervous  or  mental  shock,  cannot, 
under  such  circumstances  (their  lordships  think),  be  considered 
a  consequence  w^hich,  in  the  ordinary  course  of  things,  would 
flow  from  the  negligence  of  the  gate-keeper.' 

"  Amongst  the  reasons  stated  in  the  judgment  in  support  of 
this  conclusion  are:  1,  that  a  contrary  doctrine  would  involve 
damages  on  account  of  mejital  injury  being  given  in  every  case 
where  the  accident  caused  by  the  negligence  had  given  the 
person  a  severe  nervous  shock;  2,  that  no  decision  of  an  En- 
glish court  had  been  produced  in  which,  upon  such  facts,  dam- 
ages were  recovered ;  3,  that  a  decision  of  the  supreme  court 
of  New  York  (Vandenburgh  v.  Truax)^  which  was  relied  upon, 
was  distinguishable  as  being  a  case  oi palpable  injury.  Of  these 
reasons,  the  first  seems  to  involve  that  injuries  other  than  men- 
tal cannot  result  from  nervous  shock;  and  the  third  implies 
that  injuries  resulting  from  such  a  shock  cannot  be  '  palpable.' 
I  am  unable  (I  say  it  with  deference)  to  follow  this  reasoning; 

1 4  Denio,  464 


g  22.]  CONSEQUENTIAL   DAMAGES    FOR   TORTS.  67 

and  further,  it  seems  to  me  that  even  were  the  proposition  of 
law  upon  which  the  judgment  is  based  sustainable,  the  privy- 
council  were  not  warranted  in  assuming  as  a  fact,  against  the 
verdict  of  the  jury,  and  without  any  special  finding  in  regard 
to  it,  that  the  fright  was,  in  that  particular  case,  unaccompanied 
b}''  any  actual  physical  injury.  Further,  the  judgment  assumes, 
as  a  matter  of  law,  that  nervous  shock  is  something  which 
affects  merely  the  mental  functions,  and  is  not  in  itself  a  pecul- 
iar physical  state  of  the  body.  This  error  pervades  the  entire 
judgment.  Mr.  Beven  states  in  his  recent  work  on  Negligence,^ 
and  I  entirely  concur  with  him,  that  '  the  starting  point  of  the 
reasoninir  there  is  that  nervous  shock  and  mental  shock  are 
identical;  and  that  they  are  opposed  to  actual  physical  in- 
jury.' " 

This  view  is  in  accord  with  that  favored  by  the  California 
court,  which  has  thus  expressed  itself  in  case  in  which  there 
was  a  nervous  shock  without  physical  impact:  "The  interde- 
pendence of  the  mind  and  body  is  in  many  respects  so  close 
that  it  is  impossible  to  distinguish  their  respective  influence 
upon  each  other.  It  must  be  conceded  that  a  nervous  shock 
or  paroxysm,  or  a  disturbance  of  the  nervous  system,  is  distinct 
from  mental  anguish,  and  falls  within  the  physiological,  rather 
than  the  psychological,  branch  of  the  human  organism.  It  is 
a  matter  of  general  knowledge  that  an  attack  of  sudden  fright 
or  an  exposure  to  imminent  peril  has  produced  in  individuals 
a  complete  change  in  their  nervous  system,  and  rendered  one 
who  was  physically  strong  and  vigorous  weak  and  timid.  Such 
a  result  must  be  regarded  as  an  injury  to  the  body  rather  than 
to  the  mind,  even  though  the  mind  be  injuriously  affected. 
Whatever  may  be  the  influence  by  which  the  nervous  system 
is  affected,  its  action  under  that  infiuence  is  entirely  distinct 
from  the  mental  process  which  is  set  in  motion  by  the  brain. 
The  nerves  and  nerve  centers  of  the  body  are  a  part  of  the 
physical  system,  and  are  not  only  susceptible  of  lesion  from 
external  causes,  but  are  also  liable  to  be  weakened  and  de- 
stroyed from  causes  primarily  acting  upon  the  mind.  If  these 
nerves  or  the  entire  nervous  system  is  thus  affected  there  is  a 
physical  injury  thereby  produced,  and  if  the  primal  cause  of 

1  P.  67  (1st  ed.). 


G8  COMPENSATION.  [§  22. 

this  injury  is  tortious,  it  is  irnmaterial  whether  it  is  direct,  as 
by  a  blow,  or  indirect  through  some  action  upon  the  mind."^ 
The  Massachusetts  court  has  reached  the  point  where  the 
distinction  between  the  doctrine  announced  by  it  in  the  cases 
heretofore  noticed^  and  that  of  the  California  court  is  almost 
imperceptible.  The  action  was  for  a  recovery  for  personal  in- 
juries received  by  the  plaintiff  on  one  of  the  defendant's  cars, 
in  consequence  of  a  collision  for  which  the  latter  was  to  blame. 
The  plaintiff  afterwards  had  a  good  deal  of  suffering  of  a  hys- 
terical nature.  The  effort  of  the  defendant  was  to  require  the 
plaintiff  to  prove  that  the  nervous  shock  was  the  consequence 
of  the  injury;  the  trial  court  permitted  a  recovery  for  the 
shock  if  it  resulted  from  a  jar  to  the  nervous  system  which  ac- 
companied the  personal  injury,  both  being  due  to  the  same 
cause  and  to  the  fault  of  the  defendant.  Such  action  was  sus- 
tained, the  supreme  court  using  this  language:  We  are  of  opin- 
ion that  the  judge  was  right,  and  that  further  refining  would 
be  wrong.  As  has  been  explained  repeatedly,  it  is  an  arbi- 
trary exception,  based  upon  a  notion  of  what  is  practicable, 
that  prevents  a  recovery  for  visible  illness  resulting  from  nerv- 
ous shock  alone.  But  when  there  has  been  a  battery  and  the 
nervous  shock  results  ft-om  the  same  wrongful  management 
as  the  battery,  it  is  at  least  equally  impracticable  to  go  further 
and  to  inquire  whether  the  shock  comes  through  the  battery 
or  along  with  it.  Even  were  it  otherwise,  recognizing  as  we 
must  the  logic  in  favor  of  the  plaintiff  when  a  remedy  is  denied 
because  the  only  immediate  wrong  was  a  shock  to  the  nerves, 
we  think  that  when  the  reality  of  the  cause  is  guaranteed  by 
proof  of  a  substantial  battery  of  the  person  there  is  no  occasion 
to  press  further  the  exception  to  general  rules.* 

1  Sloane  v.  Southern  California  R.  sickness  resulting  from  nervousness 

Co.,  Ill  Cal.  668,  680,  44  Pac.  Rep.  320,  occasioned  by  the  verbal  abuse  of  her 

32  L.  R.  A.  193.     To  the  same  effect,  bj'  her  husband   while  intoxicated, 

Rea  V.  Balmain  New  Ferry  Co.,  17  the  liquor  which  caused  him  to  be  so 

N.  S.  W.  (law)  92;  Hickey  v.  Welch,  having  been  sold  him  by  the  defend- 

91  Mo.  App.  4, 10;  Watkins  v.  Kaolin,  ant  in  violation  of  law.  Kear  v,  Gar- 

Manuf.  Co.,  131  N.  C.  586, 42  S.  E.  Rep.  rison,  13  Ohio  Ct.  Ct.  447. 

983;  Mack  v.  South  Bound  R.  Co.,  53  2g  21,  note. 

S.  C.  323,  29  S.  E.  Rep.  905,  40  L.  R.  A.  SHomaus  v.  Boston  E.  R.  Co.,  180 

679.    See  1  Beveo  on  Neg.  (2d  ed.),  Mass.  456,  57  L.  R,  A.  291,  62  N.  E. 

p.  76  et  seq.  Rep.  737. 

A  wife  may  recover  damages  for 


§  23.]  CONSEQUENTIAL    DAMAGES    FOR   TOKTS.  69 

§  '23.  Same  subject;  an  earlier  ruling.  Continuing  the 
discussion  in  the  case  in  the  Irish  court,  the  chief  baron  said: 
"  Possibly,  were  there  no  decision  the  other  way,  I  should  from 
courtesy  defer  my  opinion  to  that  of  the  privy  council,  and 
leave  it  to  the  plaintiff  to  test  our  decision  upon  appeal.  The 
very  point,  however,  had  been,  four  3'^ears  before  the  decision  of 
the  privy  council  in  the  Yictorian  Eailway  Commissioners  v. 
Coultas,  decided  in  this  country,  first  in  the  common  pleas 
division,  then  presided  over  by  the  present  Lord  Morris,  and 
afterwards  in  the  court  of  appeal,  in  the  judgment  delivered 
by  the  late  Sir  Edward  Sullivan;  and  it  is  a  sad  commentary 
upon  our  present  system  of  reporting  that  a  decision  so  im- 
portant and  so  novel  has  never  found  its  way  into  our  law 
reports.  The  case  I  refer  to  is  Byrne  v.  Great  Southern  and 
Western  Eailway  Company.  It  was  tried  before  me  on  the 
6th  and  6th  of  December,  1882;  and  a  motion  to  enter  a  ver- 
dict for  the  defendants  was  heard  in  1883  by  the  common 
pleas  division;  and  by  the  court  of  appeal  in  February,  1884. 
It  was  an  action  by  the  superintendent  of  the  telegraph  office 
at  the  Limerick  Junction  station  of  the  defendant's  railway. 
His  office  consisted  of  a  small  building  at  the  end  of  one  of 
the  defendant's  sidings,  between  which  and  the  office  there 
was  a  permanent  buffer  strongly  fixed.  On  the  7th  December, 
1881,  through  some  railway  points  having  been  negligently 
left  open,  a  train  entered  this  siding,  broke  down  the  perma- 
nent buffer  and  the  wall  of  the  telegraph  office.  The  plaint- 
iff's case  was  that  by  hearing  the  noise,  and  seeing  the  wall 
falling,  he  sustained  a  nervous  shock  which  resulted  in  certain 
injuries  to  his  health.  ...  A  verdict  having  been  found 
for  the  plaintiff  with  £325  damages,  a  motion  to  set  it  aside, 
and  enter  a  verdict  for  the  defendant,  on  the  ground  that 
there  was  no  evidence  of  injury  sufficient  to  sustain  the  action, 
was  refused  by  the  common  pleas  division ;  and  this  refusal 
was  aflBrmed  by  the  court  of  appeal.  That  case  goes  much 
further  than  is  necessary  to  sustain  the  direction  here,  as  in 
it  there  was  nothing  in  the  nature  of  impact.  As  between  it, 
by  which  we  are  bound,  and  the  decision  of  the  privy  council, 
by  which  we  are  not,  I  must  prefer  the  former.  I  desire, 
however,  to  add  that  I  entirely  concur  in  the  decision  in 
Eryne  v.  Great  Southern  and  Western  Eailway,  and  that  I 


70  COMPENSATION.  [§  23«. 

should  have  been  prepared  to  have  arrived  at  the  same  con- 
clusion, even  without  its  high  authority,  ...  In  conclu- 
sion, then,  I  am  of  opinion  that,  as  the  relation  between  fright 
and  injury  to  the  nerve  and  brain  structures  of  the  body  is  a 
matter  which  depends  entirely  upon  scientific  and  medical 
testimony,  it  is  impossible  for  any  court  to  lay  down,  as  a 
matter  of  law,  that  if  negligence  cause  fright,  and  such  fright, 
in  its  turn,  so  affects  such  structures  as  to  cause  injury  ta 
health,  such  injury  cannot  be  a  consequence  which,  in  the 
ordinary  course  of  things,  would  flow  from  the  negligence, 
unless  such  injury  'accompany  such  negligence  in  point  of 
time.' " ' 

§  23a.  Same  subject ;  Dulien  v.  White.  In  1901  practically 
the  same  question  came  before  Kennedy  and  Phillimore,  justices 
of  the  king's  bench  division,  and  was  decided  in  accordance 
with  the  rule  of  the  Irish  case.  The  plaintiff's  case  was  that 
when  she  was  behind  the  bar  of  her  husband's  publichouse, 
being  then  pregnant,  the  defendant's  servant  negligently  drove 
a  van  into  the  publichouse;  that  plaintiff  in  consequence  sus- 
tained a  severe  shock  and  was  seriously  ill,  and  at  a  later  time 
gave  premature  birth  to  a  child,  which,  in  consequence  of  the 
shock  sustained  by  plaintiff,  was  born  an  idiot.  This  last  claim 
was  abandoned  as  a  ground  for  damages  because  untenable. 
The  action  was  held  sustainable,  the  result  being  reached  by 
somewhat  different  courses  of  reasoning.  Kennedy  said,  in 
part:  This  is  an  action  on  the  case  for  negligence,  that  is  to 
say,  for  a  breach  on  the  part  of  defendant's  servant  of  the  duty 
to  use  reasonable  and  proper  care  and  skill.  In  order  to  suc- 
ceed the  plaintiff  has  to  prove  resulting  damage  to  herself,  and 
a  natural  and  continuous  sequence  uninterruptedly  connecting 
the  breach  of  duty  with  the  damage  as  cause  and  effect.     In  re- 

1  Bell  V.  Great  Northern  E,  Co.,  26  patrick  v.  Great  Western  R  Co.,  12 

L.  R  Ire.  428  (1890).     The  opinion  of  Up.  Can.  Q.  B.  645;  Sloane  v.  Soutl>- 

the  chief  baron  was  concurred  in  by  ern  California  R  Co.,  Ill  Cal.  668,  32 

Andrews  and  Murpliy,  JJ.  L.  R  A.  193,  44  Pac.  Rep.  320;  Hickey 

The  general  doctrine  of  the  Irish  v.  Welch,  91  Mo.  App.  4,  10;  Wat- 
court  is  recognized  in  Mack  v.  South  kins  v.  Kaolin  Manuf.  Co.,  131  N.  C. 
Bound  R  Co.,  52  S.  C.  323,  29  S.  E.  536,  42  S.  E.  Rep.  083;  Cooper  v.  Cal- 
Rep.  905,  40  L.  R  A.  679;  Purcell  v.  edonian  R  Co.,  9  Scotch  L.  T.  Rep. 
St.  Paul  City  R  Co.,  48  Minn.  134,  50  S73,  10  id.  104. 
N.  W.  Rep.  1034,  16  L.  R  A.  203    Fitz- 


§  23«.]  CONSEQUENTIAL   DAMAGES    FOR   TORTS.  71 

gard  to  the  existence  of  the  duty  here,  there  can,  I  think,  be  no 
question.  The  driver  of  a  van  and  horses  in  a  highway  owes 
a  duty  to  use  reasonable  and  proper  care  and  skill  so  as  not  to 
injure  persons  lawfully  using  the  highway,  or  property  adjoin- 
ing the  highway,  or  persons  who,  like  the  plaintiff,  are  law- 
fully occupying  that  property.  .  .  .  Theonly  question  here 
is  whether  there  is  an  actionable  breach  of  those  obligations 
if  the  man  in  either  case  is  made  ill  in  body  by  negligent  driv- 
ing which  does  not  break  his  ribs,  but  shocks  his  nerves.  As 
•regards  the  facts  we  must,  for  the  purposes  of  this  argument, 
assume  all  that,  consistentlv  with  the  allegations  of  the  state- 
ment  of  claim,  can  be  assumed  in  plaintiff's  favor.  Now,  what 
are  defendant's  arguments  against  her  right  to  recover  dam- 
ages in  this  action?  First  of  all,  it  is  argued,  fright  caused  by 
negligence  is  not  itself  a  cause  of  action;  ergo^  none  of  its  con- 
sequences can  give  a  cause  of  action  -^  Mitchell  v.  Rochester  R. 
Co.^  With  all  respect  to  the  learned  judges  who  decided  that 
case,  I  feel  a  difficulty  in  following  their  reasoning.  No  doubt 
damage  is  an  essential  element  in  a  right  of  action  for  negli- 
gence.  "Fear  taken  alone"  —  as  Sir  Frederick  Pollock  has 
stated  in  his  work  on  Torts  -  —  "  falls  short  of  being  actual  dam- 
age, not  because  it  is  a  remote  or  unlikely  consequence,  but 
because  it  can  be  proved  and  measured  only  by  physical  effects." 
That  fright,  where  physical  injury  is  directly  produced  by  it, 
cannot  be  a  ground  of  action  merely  because  of  the  absence  of 
any  accompanying  impact  appears  to  me  to  be  unreasonable 
and  contrary  to  the  authorities.  We  have,  as  reported,  decis- 
ions which  go  far,  at  any  rate  in  my  judgment,  to  negative  the 
correctness  of  any  such  contentions.^    Further,  we  have  directly 

1151  N.  Y.  107,45  N.  E.  Rep.  354,  turned  over.    Also  to  Harris  v.  Mobbs 

34  L.  R.  A.  781,  56  Am.  St.  604.  3  Ex.  Div.  268.     The  facts  were  that 

^  6th  ed.,  p.  51.  a  house-van  attached  to  a  steam-plow 

*  Referring  to  Jones  v.    Boyce,    1  was  left  for  the  night  on  the  side  of 

Stark.  493,  where  it  was  ruled  that  a  highway,  four  or  five  feet  from  the 

if  through  the  fault  of  a  coach  pro-  metaled  part.     During  the   evening 

prietor    in    neglecting    to    provide  plaintiff's  testator  drove  his   horse 

proper  means  of  conveyance,  a  pas-  attached  to  a  cart  along  the  metaled 

senger  be  placed  in  so  perilous  a  situ-  road;  the  horse  was  a  kicker,  but  he 

ation   as  to    render   it  prudent  for  did  not  know  it.     Passing  the  van 

him  to  leap  from  the  coach,  whereby  he  shied  at  it,  kicked,  and  galloped 

his  leg  is  broken,  the  proprietor  will  kicking   for   140  yards,  got  one  leg 

be  liable  although  the  coach  was  not  over  the  shaft,  fell  and  kicked  the 


72  COMPENSATION.  [§  23a. 

in  point  the  decision  of  the  court  of  appeal  and  common  pleas 
division  in  Ireland  in  the  unreported  case  of  Byrne  v.  Great 
Southern  &  "Western  E..  Co.,^  approved  of  in  Bell  v.  Great 
]N"orthern  R.  Co.^  In  Yictorian  By.  Commissioners  v.  Coultas,' 
which  was  much  relied  upon  by  defendants  in  the  argument 
before  us,  the  privy  council  expressly  declined  to  decide  that 
"  impact "  was  necessary.  It  is  not  to  be  taken  that,  in  my 
view,  every  nervous  shock  occasioned  by  negligence  and  pro- 
ducing physical  injury  to  the  sufferer  gives  a  cause  of  action. 
There  is,  I  think,  one  important  limitation.  The  shock,  in  order 
to  give  a  cause  of  action,  must  be  one  which  arises  from  a  rea- 
sonable fear  of  immediate  personal  injuries  to  the  plaintiff. 
This  limitation  was  applied  by  Bruce  and  Wright,  JJ.,  in  the 
unreported  case  of  Smith  v.  Johnson  &  Co.,  where  a  man  was 
killed  negligently  by  the  defendant  in  the  sight  of  the  plaint- 
iff, and  the  plaintiff  became  ill,  not  from  the  shock  produced 
by  fear  of  harm  to  himself,  but  from  the  shock  of  seeing  an- 
other person  killed.  The  court  held  that  this  harm  was  too 
remote  a  consequence  of  the  negligence.*  ...  It  remains 
to  consider  the  second  form  in  which  defendant's  counsel  put 
his  objection  to  the  right  of  the  plaintiff  to  maintain  this  ac- 
tion. He  contends  that  the  damages  are  too  remote,  and  relies 
upon  the  decision  of  the  privy  council  in  Yictorian  Ry.  Com- 
missioners v.  Coultas.  The  principal  ground  of  their  judgment 
is  formulated  in  the  following  sentence:  " Damages  arising 


driver  as  he  rolled  out  of  the  cart;  are  to  be  explained  on  a  different 

he  died  from  the  effects  of  the  kick,  ground,   namely,  that  the    damage 

A  verdict  having  been  found  in  favor  which  immediately  resulted  from  the 

of  the  executor  of  the  deceased  on  act  of  the  passenger  or  of  the  horse 

the    question   of  defendant's  negli-  was  really  the  result,  not  of  that  act, 

gence,  it  was  ruled  that  such  use  of  but  of  a  fright  which  rendered  that 

the  highway  was  the  proximate  cause  act  involuntary,  and  which  therefore 

of  the  injury.  The  third  case  referred  ought  to  be  regarded  as  itself  the  di- 

to  is  Wilkinsv.  Day,  12  Q.  B.  Div.  110,  rect  and    immediate    cause  of  the 

the  facts  being  quite  similar  to  those  damage, 

in  Harris  v.  Mobbs,  and  the  ruling  in  '  §  23. 

accordance  with  that  therein.  ^  ^g  21,  23. 

These  cases  are  referred  to  in  Wil-  ^  ggg  g  21. 

kinson  v.  Downton,  [1897]  2  Q.  B.  6,  by  *  To  the  same  effect,  Cleveland,  etc. 

Wright,  J.,  in  respect  to  their  being  R.  Co.  v.  Stewart,  24  Ind.  App.  374 

inconsistent  with  the  Coultas  case.  56  N.  K  Rep.  917, 
He  said :  But  I  think  that  those  cases 


§  23a.]  Ct)NSEQUE]SITIAL    DAMAGES    FOR    TOKTS.  73 

from  mere  sudden  terror,  unaccompanied  by  any  actual  physical 
in  jur3%  but  occasioning  a  mental  or  nervous  shock,  cannot  under 
such  circumstances,  their  lordships  think,  be  considered  a  con- 
sequence which  in  the  ordinary  course  of  things  would  flow 
from  the  negligence  of  the  gatekeeper."  A  judgment  of  the 
privy  council  ought,  of  course,  to  be  treated  by  this  court  as 
entitled  to  very  great  weight  indeed ;  but  it  is  not  binding 
upon  us;  and  in  venturing,  most  respectfully,  not  to  follow  it 
in  the  present  case  I  am  fortified  by  the  fact  that  its  correct- 
ness was  treated  by  Lord  Esher,  M.  E.,  in  his  judgment  in 
Pugh  V.  London,  etc.  R.  Co.^  as  open  to  question ;  that  it  was 
disapproved  of  in  Bell  v.  Great  Northern  R.  Co.  ...  I 
prefer  the  decisions  of  the  Irish  courts;  they  seem  to  me  strong 
and  clear  authorities  for  the  plaintiff's  contention.  It  is  sug- 
gested on  the  part  of  the  defendants  that  the  applicability  of 
the  judgment  in  Bell  v.  Great  Northern  E..  Co.  is  impaired  by 
the  fact  that  the  female  plaintiff  in  that  action  was  a  passenger 
on  the  defendants'  railway  and  as  such  had  contractual  rights. 
It  appears  to  me  that  this  fact  makes  no  practical  difference 
whatever.  There  was  no  special  contract;  no  notice  to  the 
railway  when  they  accepted  her  as  a  passenger  that  she  was 
particularly  delicate  or  liable  to  fright.' 

Before  Dulien  v.  White  was  decided  a  different  conclusion 
from  that  reached  therein  was  arrived  at  in  Massachusetts 
upon  a  state  of  facts  less  favorable  to  the  defendant  than  ex- 
isted in  the  English  case.  The  declared  purpose  of  the  defend- 
ant was  to  damage  a  house  in  which  the  plaintiff  was,  though 
it  was  not  her  house.  In  her  presence  he  threw  a  large  stone 
against  the  house,  after  which  the  plaintiff  went  into  the  front 
room  of  the  house  with  her  little  child,  and  thereafter  the  de- 
fendant wilfully  threw  a  large  stone  at  the  house  which  passed 
throush  one  of  the  blinds  coverins:  a  window  in  that  room  and 


A  [1896]  2  Q.  B.  248.     In   this  case  ous  shock  which  incapacitated  him 

the  plaintiff,  while  discharging  his  from  employment.     It  was  held  that 

duty  as  a  signalman  in  the  defend-  he  had  been  incapacitated  by"acci- 

aot's    employment,     endeavored    to  dent  "  within  the  meaning  of  a  policy 

prevent  an   accident  to  a  train   by  of  accident  insurance, 

signaling  to  the  driver,  and  the  ex-  -  Dulien  v.   White,  [1901]   2KB. 

citement  and  fright  arising  from  the  669. 
danger  to  the  train  produced  a  nerv- 


74  COMPENSATION.  [§  24 

greatly  friglitenod  the  plaintiff,  who  was  not  touched  or  struck. 
The  defendant  was  not  liable  for  the  fright  or  the  consequent 
injury  to  the  plaintiff's  health  because  he  had  no  intention  to- 
injure  her  or  her  property,  did  not  know  of  her  delicate  con- 
dition, or  that  she  was  in  that  room.'  As  between  these  cases 
the  better  reason  lies  with  the  English  case.  The  Massachu- 
setts case  seems  a  departure  from  the  established  principle  re- 
specting remote  and  proximate  cause.  A  later  case  favors  the 
right  of  a  pupil  unlawfully  excluded  from  the  public  schools 
to  recover  for  his  suffering  from  the  disgrace  inflicted  upon 
him.^ 

§  24.  Same  subject;  miseellaiieous  cases.  Though  deny- 
ing the  right  of  recovery  for  mere  fright,  neither  attended  nor 
followed  by  any  other  injury,^  the  supreme  court  of  Texas  has 
sustained  a  recovery  where  a  miscarriage  was  caused  by  a 
mental  shock  unaccompanied  by  any  physical  violence  what 
ever  to  the  person  of  the  injured  woman.^  In  a  later  case  it 
was  alleged  by  the  plaintiff  that  as  the  result  of  a  nervous 
shock  or  physical  injury,  or  both,  caused  by  the  collision  of 
two  trains  there  was  developed  a  nervous  affection  known  as 
traumatic  neurasthenia;  as  a  matter  of  fact  plaintiff  was  not 
physically  damaged  by  the  collision  in  the  sense  that  he  sus- 
tained visible  bodily  injury.  The  conclusion  reached  was  that 
where  a  physical  injury  results  from  a  fright  or  other  mental 
shock,  caused  by  the  wrongful  act  or  omission  of  another, 
the  injured  party  is  entitled  to  recover  his  damages,  provided 
the  act  or  omission  is  the  proximate  cause  of  the  injury  in  the 
light  of  all  the  circumstances,  to  have  been  foreseen  as  a  nat- 
ural and  probable  consequence  thereof,  which  questions  are  for 
the  jury.'^  Proof  that  a  woman  was  negligently  carried  be- 
yond her  destination  and  thereby  suffered  from  fright  and 
want  of  food  warrants  a  finding  that  the  occurrence  was  the 
proximate  cause  of  a  sickness  which  immediately  followed.^ 

1  White  V.  Sander,  168  Mass.  296,  47  Corley,  87  Tpx.  432,  29  S.  W.  Rep. 
N.  E.  Rep.  90.  281. 

2  Morrison  v.  Lawrence,  181  Mass.  *  Hill  v.  Kimball,  76  Tex.  210,  13 
127,  63  N.  E.  Rep.  400.     See  the  last  S.  W.  Rep.  59,  7  L.  R  A,  618. 
paragraph  of  §  22.  5  Gulf,  etc.  R.  Co.  v.  Hayter,  93  Tex. 

3  Gulf,  etc.  Co.  V.  Trott,  86  Tex.  239,  54  S.  W.  Rep.  944,  47  L.  R.  A.  325. 
412,  25  S.  W.  Rep.  419,  40  Am.  St.  « Texas  &  Pacific  R.  v.  Gott,  20- 
806;    San     Antonio,    etc.   R.   Co.    v.  Tex.  Civ.  App.  335,  50  S.  W.  Rep.  193.. 


§  21.]  CONSEQUENTIAL    DAMAGES    FOK    TORTS.  75 

Where  the  defendant,  executing  what  he  thought  was  a  prac- 
tical joke,  said  to  the  plaintiff  that  her  husband  had  met  with 
an  accident,  and  that  his  legs  were  broken,  such  statement 
being  made  with  intent  that  it  should  be  believed,  and  it  was 
believed,  and  the  plaintiff  became  ill  in  consequence  of  the  re- 
sulting nervous  shock,  and  not  because  of  previous  ill-health, 
weakness  of  constitution,  predisposition  to  nervous  shock  or 
any  other  idiosyncrasy,  the  injury  was  not  too  remote.^  The 
rule  of  the  New  York  court  of  appeals  that  no  recovery  can  be 
had  for  injuries  due  solely  to  fright  and  excitement,  unaccom- 
panied by  actual,  immediate,  personal  injury,  does  not  apply 
to  cases  of  wilful  tort.-  If  the  act  or  default  which  causes  a 
nervous  shock  produces  physical  injuries,  and  other  such  in- 
juries result  from  the  nervous  shock,  there  ma}'  be  a  recovery 
for  the  latter  injuries  as  well  as  the  others.'  In  Massachusetts 
a  different  view  was  taken  where  a  passenger  upon  a  street  car 
suffered  physical  injury  from  fright  caused  by  the  removal  of 
a  drunken  man,  and  a  slight,  unintentional  battery  of  the  per- 
son resulted.  The  court  said  of  an  instruction  to  the  effect  that 
if  there  was  a  fright  which  operated  to  the  injury  of  the  plaint- 
iff in  body  or  mind  and  also  a  ph3'sical  injury,  the  jury 
might  take  all  that  happened  as  one  whole,  that  the  defend- 
ant was  not  liable  for  all  the  consequences,  but  only  for  those 
of  its  wrong,  which  began  with  the  battery,  and  the  conse- 
quences thereof  were  all  for  which  a  recovery  could  be  had. 
This  was  said  with  recognition  of  the  difficulty  of  discriminat- 
iniT.'*  A  miscarriage  resultino;  from  threats  to  arrest  a  debtor 
husband,*  b}'  the  unlawful  imprisonment  of  a  husband,^  or  by 
wrongfully  procuring  him  to  be  indicted,  is  not  the  reason- 

1  Wilkinson   v.  Downton,  [1S97]  2  3  Rea  v.  Balmain  New  Ferry  Co., 

Q.  B.  57.     The  case  was  admitted  to  17  N.  S.  W.  (law)  9:3. 

be  without  precedent,  and  was  dis-  *  Spade  v.  Lynn  &  B.  R  Co.,  172 

tinguished  from  Victorian  Ry.  Com-  Mass.  488,  52  N.  E.  Rep.  747,  43  L.  R. 

missioners  v.  Coultas  on  the  ground  A.  833.     See  Gatzovv^  v.  Buening.  lOG 

that  therein  was  no  element  of  wil-  AVi.s.  1,  81  N.  W.  Rep.  1003,  49  L.  R. 

ful  wrong,  "nor  perhaps  was  the  ill-  A.  475,  80  Am.  St.  17. 

ness  so  direct  and  natural  a  conse-  *  Wulstein  v.  Wohlman,  57  N,  Y. 

quence  of  the  defendant's  conduct  Super.  Ct.  50,  5  N.  Y.  Supp.  569. 

as  in  this  case."  *>E[iis  v.  Cleveland,  55  Vt  358.  See 

-  Preiser  v.  Wielandt,  48  App.  Div.  Huxley  v.  Berg,  1  Starkie,  98. 
569,  62  N.  Y.  Supp.  890.     See  ^  43. 


Y6  COMPENSATION.  [§  24. 

able  or  natural  result  of  such  acts.^  One  who  en2:ao^es  in  a 
quarrel  with  the  husband  of  a  woman  who  \se7iciente,  the  quar- 
rel being  carried  on  in  her  hearing  without  knowledge  of  her 
presence  or  condition,  is  not  liable  for  a  miscarriage.^  It  has 
recently  been  ruled  in  Pennsylvania  that  a  complaint  which 
alleges  that  in  a  collision  on  the  defendant's  railroad  the  cars 
were  thrown  off  the  track  and  fell  on  plaintiff's  premises  and 
against  her  dwelling,  whereby  plaintiff  was  subjected  to  great 
fright,  nervous  excitement  and  distress,  and  her  life  endan- 
gered, does  not  state  a  cause  of  action.'  An  inexperienced 
youth,  without  money  through  defendant's  neglect  to  deliver 
a  message,  and  compelled  to  remain  penniless  among  stran- 
gers for  a  week,  cannot  recover  for  the  anxiety  and  mortifica- 
tion endured  because  of  his  belief  that  he  was  looked  upon 
with  suspicion.'' 

In  a  recent  Xorth  Carolina  case*  it  was  ruled:  We  are  of 
the  opinion  that  an  action  will  lie  iov physical  injury  or  dis- 
ease resulting  from  fright  or  nervous  shocks  caused  by  negli- 
gent acts.  From  common  experience  we  know  that  serious 
consequences  frequently  follow  violent  nervous  shocks  caused 
by  fright,  often  resulting  in  spells  of  sickness,  and  sometimes 
in  sudden  death.  Whether  the  physical  injury  was  the  natural 
and  proximate  result  of  the  fright  or  shock  is  a  question  to  be 
determined  by  the  jury  upon  the  evidence,  showing  the  con- 
ditions, circumstances,  occurrences,  etc.  But  it  must  also  ap- 
pear that  the  defendant  could  or  should  have  known  that  such 
negligent  acts  would,  with  reasonable  certainty,  cause  such  re- 
sult, or  that  the  injury  resulted  from  gross  carelessness  or  reck- 
lessness, showing  utter  indifference  to  the  consequences  when 
they  should  have  been  contemplated  by  the  party  doing  such 
acts.  As  a  condition  precedent  to  recovery  in  such  cases  it 
must  appear  that  the  defendant  must  or  ought  to  have  known 

'  Hampton  v.  Jones,  58  Iowa,  817,        ^  Ewing  v.  Pittsburgh,  etc,  R.  Co., 

12  N.  W.  Rep.  276.  147  Pa.  40,  14  L.  R  A.  666,  23  AtL 

2  Phillips  V.  Dickerson,  So  111.  11,  Rep.  340. 
2S  Am.  Rep.  607;  Gaskins  v.  Runkle,        *  Voegler  v.  Western  U.  TeL  Co.,  10 

25  Ind.  A  pp.  584,  58  N.  E.  Rep.  740  Tex.  Civ.  App.  229,  30  S.   W.  Rep. 

(though   defendant    knew    plaintiff  1107. 

was  in  delicate   health  and  easily        ^Watkins  v.  Kaolin   Manuf.   Co., 

excited).    See  Cliicago  &  N.  Pu  Co.  131  N.  C.  536,  540,  42  S.  K  Rep.  983. 
V.  Hunerberg.  IG  III.  App.  387. 


§  25.]  CONSEQUENTIAL   DAMAGES    FOR   TORTS.  77 

of  the  plaintiff's  perilous  position  or  condition  against  which 
he  should  have  to  exercise  care.  It  has  been  ruled  in  a  Texas 
case  that  a  mother  who  has  been  separated  from  her  children 
because  not  allowed  time  to  board  a  train  on  which  they  were 
placed  may  recover  for  her  mental  anguish,  and  that  such  lia- 
bility was  not  dependent  upon  the  knowledge  of  the  defend- 
ant's agent  as  to  the  degree  of  relationship  existing  between 
the  plaintiff  and  the  children,  he  knowing  that  they  were  in 
her  custody  and  that  she  had  bought  tickets  for  thera.^ 

§25.  Anticipation  of  injury  as  to  persons;  illustrations. 
It  has  alread}^  been  stated  that  though  consequential  damages 
to  be  recovered  must  be  the  natural  and  probable  effect  of  the 
act  complained  of,  yet  it  is  not  requisite  that  the  wrong-doer 
should  be  able  to  anticipate  who  the  sufferer  will  be.  If  his 
act  has  a  tendency  to  injure  some  person,  or  many  persons, 
and  finally  does  in  the  manner  which  was  beforehand  probable 
cause  such  injury,  it  is  proximate.  This  is  cogently  illustrated 
by  the  case  of  a  spring  gun  set  so  as  to  be  unwittingly  dis- 
charged by  the  first  comer.-  A  dealer  in  drugs,  for  negli- 
gently bottling  a  poisonous  drug  and  putting  it  in  market  la- 
beled as  a  harmless  medicine,  is  liable  to  all  persons  who,  with- 
out their  fault,  are  injured  by  using  it,  though  it  may  have  been 
the  subject  of  many  intermediate  sales.^  So  a  person  who, 
knowing  another  to  be  a  retailer  of  illuminating  fluids,  and  that 
naphtha  is  explosive  and  dangerous  to  life  for  such  use,  sells 
that  article  to  him  to  be  retailed  to  his  customers,  he  being 
ignorant  of  its  dangerous  properties,  is  liable  to  any  person 
buying  it  of  such  retailer  if  injured  by  its  explosion  or  ignition.* 

•  International,  etc.  R.  Co.  v.  An-     Carter  v.  Towne,  98  Mass.  567,  9G  Am. 
chonda,  68  S.  \V.  Rep.  743  (Texas  Ct.     Dec.  683.  103  Mass.  507. 

of  Civil  Appeals).  The   sale    of  an   article    in   itself 

^  Jay  V.  Whitfield,  4  Bing.  644;  Bird  harmless,  and  which  becomes  dan- 

V.  Holbrook.  4  Bing,  628;  Forney  v.  gerous  only  by  being  used  in  combi- 

Gel'imacher,  75  Mo.  113.     See  §  17.  nation  with  some  other  substance, 

3  Thomas  v.  Winchester,  6  N.  Y.  withoutanyknowledgebythe  vendoi 

397;  Langridge  v.  Levy,  3  M.  &  W.  that  it  is  to  be  used  in  such  combi- 

519;  Levy   v.  Langridge,  4  id.  337;  nation,  does  not  render  him  liable  to 

Norton    v.    Sewall,    106    Mass,    143;  an  action  by  one  who  pui'chases  the 

George  v.  Skivington,  L.  R.  5  Ex.  1.  article  from  the  original  vendee,  and 

*  Wellington  v.  Downer  K.  O.  Co.,  who  is  injured  while  using  it  in  a 
104  Mass.  64,  8  Am.  Rep.  298.     See  dangerous  combination  with  another 


78  COMPENSATION.  [§  25, 

[:?0]  One  who  knowingly  delivers  an  apparently  harmless  pack- 
age containing  a  dangerous  and  explosive  substance  to  a  com- 
mon carrier  for  transportation  without  giving  him  notice  of  its 
contents  is  liable  for  damages  caused  by  its  explosion  while  the 
carrier  is  transporting  it  without  knowledge  thereof,  with 
such  care  as  is  adapted  to  its  apparent  nature.^  The  act  of 
keeping  a  large  quantity  of  gunpowder  in  a  wooden  building 
insufficiently  secured,  and  situate  near  other  buildings,  thereby 
endangering  the  lives  of  persons  in  the  vicinity,  will  subject 
the  person  so  doing  to  damages  for  injuries  suffered  by  any 
person  from  its  explosion  though  the  fire  which  causes  the  ex- 
[30]  plosion  is  accidental  or  results  from  the  negligence  of  a 
third  person."  So  a  person  who  by  public  false  representations 
causes  another  reasonably  to  act  upon  them  as  true  in  a  mat- 
ter of  business  is  liable  to  make  good  any  loss  the  latter  may 
sustain  from  their  falsity.^  The  servants  of  a  railroad  com- 
pany ran  its  cars,  after  due  warning,  over  a  hose  being  used  to 
convey  water  to  a  burning  building,  thereby  severing  it  and 
preventing  the  extinguishment  of  the  fire.  It  was  held  that 
the  company  was  liable  though  the  hose  did  not  belong  to  the 
plaintiffs,  and  the  men  in  charge  of  it  were  not  their  servants  — 
that  the  severing  of  the  hose  was  the  proximate  cause  of  the 
loss.*     The  plaintiff  engaged  with  the  defendant  to  serve  on 

article,  although  by  mistake  the  ar-  hill  v.  Walter,  3  B.  &  Ad.  114.     See 

tide  actually  sold  is  different  from  Chester  v.  Dickerson,  52  Barb.  349. 

that  which  was  intended  to  be  sold.  *  Metallic,  etc.  Co.  v.  Fitchburg  R. 

Davidson  v,  Nichols,  11  Allen,  514  Co..  109  Mass.  277,  12  Am.  Rep.  689; 

See  Loop  v.  Litchfield,  42  N.  Y.  351,  Atkinson  v.  Newcastle,  etc.   Co.,  L. 

1   Am.  Rep.  543;  Longmeid  V,  HoUi-  R.  6  Ex.  404.     But  .see  Mott  v.  Hudson 

day,  6  Ex.  761;  Langridge  v.  Levy,  2  River  R.  Co.,  1  Robert.  593. 

M.  &  W.  519;  Levy  v.  Langridge,  4  There  is  no  connection  betw^een  the 

id.  337.  wrongful  occupation  of  the  bank  of 

1  Boston,  etc.  R.  Co.  v.  Shanly,  107  a  river  and  a  fire,  although  such  oc- 
Mass.  568;  Farrant  v.  Barnes,  11  C.  B.  cupation  may  render  it  impossible 
(N.  S.)  553.  for   the   fire   department   to   obtain 

2  Myers  v.  Malcolm,  6  Hill,  292;  water  with  which  to  subdue  the  fire. 
Kinney  v.  Koopman,  116  Ala.  310,  37  Bosch  v.  Burlington,  etc.  R.  Co.,  44 
L,  R.  A.  497,  22  So.  Rep.  593;  Rudder  Iowa,  402,  25  Am.  Rep.  754.  See 
V.  Koopman,  116  Ala.  332,  22  So.  Rep.  Brown  v.  Wabash,  etc.  R.  Co.,  20  Mo. 
601,  37  L.  R.  A.  489.  App.  222;  Jackson  v.  Nashville,  etc. 

3  Morse  v.  Swits,  19  How.  Pr,  275;  R  Co.,  13  Lea,  491,  49  Am.  Rep.  663; 
Gerhard  v.  Bates,  2  El.  &  B.  476;  Pol-  Railway  Co.  v.  Staley,  41  Ohio  St. 

118,  52  Am.  Rep.  754. 


§  25.]  CONSEQUENTIAL    DAMAGES    FOR    TORTS.  79 

board  the  hitter's  vessel  as  a  common  seaman  on  a  specified 
voyage;  breach,  that  defendant  neglected  to  suppl}'  and  keep 
on  board  a  proper  supply  of  medicines  as  required  by  a  statute, 
whereby  plaintiff's  health  suffered ;  held  a  good  cause  of  action.^ 
The  sale  of  a  saltpetre  cave  was  rescinded  on  the  ground  of  the 
vendor's  fraud;  the  vendee  claimed  compensation  for  erections 
•on  the  premises,  for  their  improvement  and  use  made  prior  to 
the  discovery  of  the^fraud.  The  court  held  that  these  expendi- 
tures were  not  a  loss  naturally  and  proximately  resulting  from 
the  fraud;  that  they  were  not  j)art  of  the  contract,  but  were 
made  by  the  complainant  of  his  own  choice  in  consequence 
of  the  bargain;  that  damages  could  not  be  given  upon  the 
first  consequence,  and  then  upon  successive  subsequent  conse- 
quences.^ But  it  is  obvious  that  the  expenditures  were  a  [31] 
proper  item  of  damages  for  the  fraud,  if,  as  a  fact,  they  were 
expenditures  likely  to  be  made  by  a  purchaser;  for  then  they 
were  a  loss  which  was  the  natural  and  proximate  consequence 
of  the  wrong  done.*  In  a  late  case  in  Illinois  the  defendant 
contracted,  without  authority  as  agent,  to  sell  land  belonging 
to  the  plaintiff,  and  the  latter  had  been  put  to  the  expense  of 
defending  an  unsuccessful  suit  on  that  contract  for  specific  per- 

1  Couch  V.  steel,  3  El.  &  B.  403.  In  ware  peddler  wlio  intended  by  the 
this  case  it  was  contended  that  as  sale  and  profits  to  become  a  merchant 
the  act  of  parliament  imposing  the  and  then  a  nobleman  of  the  first 
duly  to  keep  a  proper  supply  of  med-  order,  and  afterwards  to  marry  the 
ioine  provided  a  penalty  for  neglect  princess."  SeeBishop  v.  Williamson, 
of  that  duty,  and  that  it  might  be  11  Me.  495,  where  it  was  held  that  a 
sued  for  arid  collected  by  a  common  postmaster  was  liable  to  an  action 
informer,  no  action  at  common  law  for  refusing  to  deliver  a  letter  ao 
would  lie  for  damages  resulting  from  cording  to  its  address,  but  delivering 
the  breach  of  the  statutory  duty;  but  it  to  another,  it  containing  a  list  of 
the  court  sustained  the  action,  lottery  prizes  or  statement  of  the 
Rowning  v.  Goodchild,  2  W.  Bl.  906.  drawing;  and  it  appearing  that  the 

2  Peyton  v.  Butler,  3  Haywood,  141.  person  receiving  the  letter,  availing 

3  In  Peyton  v.  Butler,  supra,  the  himself  of  the  information  contained 
court  say:  "The  failui'e  of  a  post-  therein,  purchased  of  the  plaintiff, 
master  to  deliver  a  letter  giving  lib-  who  was  a  vendor  of  lottery  tickets,  a 
erty  by  a  certain  day  to  pay  for  a  ticket  that  had  drawn  a  prize;  the 
lottery  ticket,  price  one  dollar,  would  injury  was  held  to  be  the  immediate 
make  him  liable  for  $20,000  should  consequence  of  the  unlawful  with- 
the  ticket  afterward  turn  out  to  be  holding  of  the  letter,  and  the  proper 
a  prize  of  $20,000.  In  short,  the  ab-  measure  of  damages  the  net  amount 
surdity  of  such  damages  is  well  elu-  of  the  priza 

■cidaled  by  the  story  of  the  crockery- 


80  COMPENSATION.  [§   26. 

formance.  It  was  held  that  he  was  entitled  to  recover  as  dam- 
ages for  his  trouble  and  the  expense  in  making  such  defense.^ 
Where  a  horse  was  driven  from  the  stable  of  its  owner  and 
passed  from  a  highway  to  a  vacant  lot  adjoining  the  premises 
of  its  owner,  and  there  killed  one  of  a  number  of  children  at 
play,  the  owner  of  the  horse  was  liable.^ 

§  26.  Consequential  damages  in  highway  cases.  The  gen- 
eral rule  is  that  municipal  corporations  are  bound  to  keep 
their  streets  in  a  reasonably  safe  condition  for  travel.  But 
^■^^a.sz-municipal  corporations,  such  as  counties,  townships  and 
JSTew  England  tow^ns,  are  not  under  such  obligation  unless  it  is 
imposed  b}^  statute,^  and  clearly  expressed  therein.*  Such  stat- 
utes are  strictly  construed  in  some  states  and  the  right  of  re- 
covery is  denied,  especially  in  Maine  and  Massachusetts,  under 
circumstances  which  do  not  prevent  a  recovery  in  other  juris- 
dictions.^ This,  it  is  probable,  has  been  the  result  of  the  lan- 
guage employed  in  the  statutes  of  those  states,  which  are 
construed  to  relieve  from  liability  if  the  accident  was  not 
directly  and  solely  the  effect  of  the  insufficiency  of  the  high- 
way.**  It  is  said "  that  "some  portion  of  the  harness  or  carriage 
may  be  defective  and  unsafe,  and  the  accident  may  be  the 

iPhilpot  V.  Taylor,  75  111.  309,  20  ^  jTarble  v.  Worcester,  4  Gray,  395; 

Am.  Rep.  241.  Aldrich  v.  Gorham,77  Me.  287;Moul- 

2  Mills  V.  Bunke,  59  App.  Div.  39,  ton  v.  Sanford,  51  Me.  127;  Davis  v. 
69  N.  Y.  Supp.  96.  Dudley,  4  Allen,  557. 

3  2  Dillon,  Mun.  Corp.,  §996.  Liability  is  limited  to  the  direct 
*  Barnett  v.  Contra  Costa  County,     and  immediate  results  of  the  injury, 

67  Cal.  77,  7  Pac.  Rep.  177.  and  the  common-law  rule  that  a  re- 

5  The  construction  given  the  stat-  covery  may  be  had  for  the  natural 

utes  in  those  states  is  approved  in  a  and  proximate  result  does  not  apply, 

recent  Connecticut    case,   it    being  Hence  where  an  injury  resulted  from 

held   that  the  consequence  of  the  a  defect  in  a  highway,  and  the  per- 

failure  of  a  town  to  keep  its  highway  son  injured  sustained  a  subsequent 

in   repair  is   to  impose  upon   it  the  injury   by   undertaking  to   use   the 

statutory  penalty,  and  that  the  right  limb  injured  on  the  highwa)',  such 

to  recover  it  may  be  defeated  by  any  later  injury  could  not  be  recovered 

concurring  wrong  of  a  third  person  for.      Raymond    v.    Haverhill,    168 

and  a  defect  in  the  way.     In  such  a  Mass.  382,  47  N.  E.  Rep.  101.     The 

case  the  injury  is  not  caused  by  the  contrary  has  been  held  in  Wiscon- 

defect.     Bartram  V.  Sharon,  71  Conn.  sin.    Wieting  v.  Millston,  77  Wis.  523, 

686. 13  Atl.  Rep.  143, 71  Am.  St.  225,  46  N.  W.  Rep.  879.     The  Massachu- 

46  L.  R-  A  144.  Contra,  Ouverson  v.  setts  court  refused  to  follow    this 

Grafton,    5  N.    D.    281,   65     N.    W.  case. 

Rep.  676.  "  Aldrich  v.  Gorham,  77  Me.  287. 


§  20.]  CONSEQUENTIAL   DAMAGES    FOR   TOKTS.  81 

combined  result  of  the  defect  in  the  harness  or  carriage  and 
the  defect  in  the  way;  in  such  case  there  is  an  efficient  co- 
operating cause,  in  connection  with  the  defect  in  the  way,  that 
produces  the  injury,  and  the  town  is  not  liable.^  The  same 
principle  applies  where  a  horse,  becoming  frightened  at  an 
object  for  which  the  town  is  not  responsible,  breaks  away 
from  his  driver  and  escapes  from  all  control,  while  traveling 
on  the  way,  and  afterwards,  while  thus  free  from  the  man- 
agement and  control  of  the  driver,  meets  with  an  injury 
through  a  defect  in  the  way.^  .  .  .  But  whether  the  fright 
or  misconduct  of  the  horse  is  such  as  to  be  regarded  as  the 
true  and  proximate  cause  of  the  injury,  in  any  given  case,  is 
to  be  governed  by  the  extent  of  such  misconduct.  It  may  in 
some  remote  degree  even  bear  upon  or  influence,  though  not 
in  any  legal  sense  be  said  to  cause  it.  '  Everything  which  in- 
duces or  influences  an  accident  does  not  necessarily  and  legally 
cause  it."  And  not  only  is  it  the  doctrine  of  the  court  in  our 
own  state,  but  also  in  Massachusetts,  that  if  a  horse,  well 
broken  and  adapted  to  the  road,  while  being  properly  driven, 
suddenly  swerves  or  shies  from  the  direct  course,  he  is  not  in 
any  just  sense  to  be  considered  as  escaping  from  the  control 
of  the  driver  or  becoming  unmanageable,  if  he  is  in  fact  only 
momentarily  not  controlled;  and  that  if,  while  thus  momen- 
tarily swerving  or  shying,  he  is  brought  in  contact  with  a  de- 
fect in  the  road  and  an  injury  is  thereby  sustained,  such  conduct 
of  the  horse  will  not  be  considered  as  the  proximate  cause  of 
the  accident,  though  it  may  be  one  of  the  agencies  or  mediums 
through  which  it  was  produced,  and  a  recovery  may  be  had 
for  such  injury."*  This  is  also  the  rule  in  Wisconsin  ^  and  in 
other  states.^    The  Wisconsin  case  first  cited  appears  to  go 

1  Contra,  Vogel  v.  West  Plains,  73  ston,  100  Mass.  55;  Bemis  v.  Ailing- 
Mo.  A  pp.  5H8,  citing  Bassett  v.  St.  ton,  114  Mass.  508;  Wright  v.  Tern- 
Joseph,  53  Mo.  300;  Brennan  v.  St.  pleton,  133  Mass.  50;  Morsman  v. 
Louis,  92  Mo.  483;  Vogelgesang  V.St.  Rockland,  91  Me.  264,39  AtL  Rep. 
Louis,  40  S.  W.  Rep.  653,  139  Mo.  127.  995. 

2  Davis  V.  Dudley,  4  Allen,  557;  &  Olson  v.  Chippewa  Falls,  71  Wis. 
Moulton  v.  Sanford,  51  Me.  127;  Mar-  558.  37  N.  W.  Rep.  575;  Houfe  v.  Ful- 
ble  V.  Worcester,  4  Gray,  395.  ton,  29  Wis.  296,  9  Am.  Rep.  568, 

3  Spaulding  v.  Winslow,  74  Me.  534.        «  Rockford  v.  Russell,  9  111.  App.  229 ; 
<  Id.;  Titus V.  Northbridge,  97  Masa     Joliet  v.  Verley,  35  111.  58;  Denver  v. 

258, 93  Am.  Dec.  91;  Stone  V.Hubbard-    Johnson,  8  Colo.    App.  384,  46  Paa 
Vol.  1  —  6 


82 


COMPENSATION. 


[§26. 


beyond  the  cases  in  Maine  and  Massachusetts.  The  fright  of 
the  horses  was  caused  by  something  not  in  the  highway,  and 
for  Avhicli  the  city  autliorities  were  not  responsible.  Never- 
theless the  absence  of  a  railing  to  a  bridge  was  held  the  prox- 
imate cause  of  the  accident.  The  distinction  made  in  Maine 
and  Massaclmsetts  as  to  the  duration  of  the  loss  of  control  of 
a  horse  by  its  driver  does  not  appear  to  be  taken  in  many 
states,'  nor  in  Ontario.^  The  rule  in  these  jurisdictions  is  that 
when  an  accident  happens  from  a  defect  existing  in  a  highway 
as  the  result  of  negligence,  the  fact  that  the  horse  was  at  the 
time  uncontrollable  or  running  away  is  not  a  defense  to  an 
action  to  recover  for  the  injury.  The  Connecticut  court  say : 
"  The  failure  of  a  traveler  to  be  continually  present  with  his 
team  up  to  the  time  and  place  of  injury,  when  that  failure 
proceeds  from  some  cause  entirely  beyond  his  control,  and  not 
from  any  negligence  on  his  part,  ought  not  to  impose  upon 
him  the  loss  from  such  injury,  particularly  when  the  direct 
cause  of  the  same  is  the  negligence  of  some  other  party;  the 
loss  should  be  charged  upon  the  party  guilty  of  the  first  and 


Rep.  621;  Kennedy  v.  New  York,  73 
N.  Y.  365,  29  Am.  Rep.  169;  Burns  v. 
Yonkers,  83  Hun,  211,  31  N.  Y.  Supp. 
757  (the  horse  balked  and  backed 
the  vehicle  off  the  highway  down  a 
steep  and  unguarded  bank);  Dillon 
V.  Raleigh.  124  N.  C.  184,  32  S.  E. 
Rep.  548;  Chacey  v.  Fargo,  5  N.  D. 
173.  64  N.  W.  Rep.  932;  Ouverson  v. 
Grafton,  5  N.  D.  281,  65  N.  W.  Rep. 
676;  Cage  v.  Franklin,  8  Pa.  Super. 
Ct.  89;  Yoders  v.  Amwell,  172  Pa.  447, 
51  Am.  St.  750,  33  Atl.  Rep.  1017; 
Davis  V.  Snyder,  196  Pa.  273,  46  Atl. 
Rep.  301;  Stone  v.  Pendleton,  21  R. 
I.  332,  43  Atl.  Rep.  643;  Rohrbough 
V.  Barbour  County  Court,  39  W.  Va. 
472,  20  S.  E.  Rep.  565,  45  Am.  St.  925; 
Knouff  V.  Logansport,  26  Ind.  App. 
202,  59  N.  E.  Rep.  347.  Contra,  Brown 
V.  Laurens  County,  38  S.  C.  282,  17  S. 
E.  Rep.  21. 

Where  the  plaintiff  was  driving 
over  a  defective  bridge  and,  without 
his  fault,  his  horse  broke  through  the 
bridge,  and  plaintitf,  in  trying  to  ex- 


tricate him,  was  injured  by  a  blow 
from  the  horse,  the  defect  was  the 
proximate  cause  of  the  injury.  Page 
V.  Bucksport,  64  Me.  51.  18  Am.  Rep. 
239;  Stickney  v.  Maidstone,  30  Vt. 
378,  73  Am.  Dec.  312;  McKelvin  v. 
Loudon,  22  Ont.  70. 

1  Baltimore  &  H.  Turnpike  Co.  v. 
Bateman,  68  Md.  389,  13  AtL  Rep.  54, 
6  Am.  St.  449;  Ring  v.  Cohoes,  77  N. 
Y.  83,  33  Am.  Rep.  574;  Putman  v. 
New  York,  etc.  R  Co.,  47  Hun.  439, 
442;  Baldwin  v.  Greenwoods  Turn- 
pike Co.,  40  Conn.  238,  16  Am.  Rep. 
33;  Hull  V.  Kansas,  54  Mo.  598,  14 
Am.  Rep.  487;  Hunt  v.  Pownal,  9  Vt. 
411;  Winship  v.  Enfield,  42  N.  H.  197; 
Hey  V.  Philadelphia.  81  Pa.  44,  22 
Am.  Rep.  733;  Byerly  v.  Anamosa, 
79  Iowa,  204,  44  N,  W.  Rep.  359;  Man- 
derschid  v.  Dubuque,  25  Iowa,  108; 
Ward  V.  North  Haven,  43  Conn.  148; 
Campbell  v.  Stillwater,  32  Minn.  308, 
20  N.  W.  Rep.  320. 

2  Sherwood  v.  Hamilton,  37  Up. 
Can.  Q.  B.  410. 


§  26.]  CONSEQUENTIAL   DAMAGES    FOR   TORTS.  83 

only  negligence.  If  the  plaintiff  is  in  the  exercise  of  ordinarj'- 
care  and  prudence  and  the  injury  is  attributable  to  the  negli- 
gence of  the  defendants,  combined  with  some  accidental  cause 
to  which  the  plaintiff  has  not  negligently  contributed,  the  de- 
fendants are  liable."  Kor  will  the  fact  that  the  horse  of  the 
plaintiff  Avas  uncontrollable  for  some  distance  before  arriving 
at  the  place  of  injury  affect  the  liability  of  the  defendant.^ 
But  this  principle  is  not  to  be  extended  to  a  case  in  which  the 
horse  is  left  tied  to  a  post,  breaks  away  therefrom  and  goes 
over  an  unguarded  bank,  where  he  would  not  have  been  driven 
by  a  prudent  driver.^  It  ma}',  however,  apply  where  the 
first  cause  leading  to  the  injury  happened  outside  of  the  de- 
fendant's road,  as  where  the  horse  became  uncontrollable 
through  fright  upon  a  road  for  which  the  defendants  were  not 
responsible  and  ran  from  there  upon  private  property,  thence 
to  the  original  road,  and  finally  and  without  a  driver  upon  the 
defendants'  turnpike.*  In  a  Wisconsin  case*  the  injured  horse 
took  fright  and  escaped  from  his  driver  while  in  a  field  and 
ran  from  thence  to  the  highway,  which  was  out  of  repair. 
The  court  very  properly  held  that  towns  are  not  bound  to  pro- 
vide roads  for  runaway  horses;  but  if  the  highway  is  so  de- 
fective as  to  cause  a  team  to  become  frightened  the  town  is 
liable.'  If  a  traveler,  while  using  due  care,  is  exposed  to  im- 
minent danger  by  a  defect  in  the  highway,  and  to  avoid  the 
probable  consequences  of  coming  in  contact  with  the  defect 
and  as  a  reasonable  precaution  turns  his  horse,  whereby  his 
vehicle-  is  brought  into  collision  with  another  vehicle,  which 
would  not  have  happened  if  the  horse  had  not  been  turned, 
the  defect  may  be  regarded  as  the  sole  cause  of  the  injury.^ 

1  Baldwin  V.  Greenwoods  Turnpike  ^Kelleyv.  Fond  du  Lac,  31  Wis. 

Co.,  40  Conn.  238,  16  Am.   Rep.   33,  179;  Hodge  v.  Bennington,  43  Vt.  451. 

approved  in  Ring  v.  Cohoes,  77  N.  Y.  «  Flagg  v.  Hudson,  143  Mass.  280,  56 

83,  88,  33  Am.  Rep.  574;  Joliet  v.  Shu-  Am.  Rep.  674,  8  N.  E.  Rep.  42. 

feldt,  144  111.  403,  33  N.  E.  Rep.  969,  18  It   is   difficult  to   harmonize   the 

Lfc  R.  A.  750.  Massachusetts  cases  on  the  question 

-  Moss  V.  Burlington,  60  Iowa,  438,  of  consequential  damages  for  inju- 

46  Am.  Rep.  83,  15  N.  W.  Rep.  267.  ries  on  highways.     It  was  ruled   in 

3  Baldwin  v.  Greenwoods  Turnpike  Palmer  v.  Andover,  2  Cush.  600.  that 

Co.,  supra.  a  town  was  liable  where  the  primary 

*  Jackson  v.  Bellevieu,  30  Wis.  350;  cause  of  the  injury  was  a  pure  acci- 

Schillinger  v.  Verona,  96  Wis.  456,71  dent:  a  nut  getting  loose  and  drop- 

N.  W.  Rep.  8S8.  ping  from  a  bolt,  the  horses  were 


84: 


COMPENSATION. 


26. 


If  there  is  negligence  in  failing  to  erect  a  barrier  for  the  pro- 
tection of  pedestrians,  one  injured  may  recover  though  the 
primary  cause  of  his  injury  was  the  sudden  going  out  of  the 


detached  from  a  carriage  while  de- 
scending a  hill,  at  the  foot  of  which 
the  road  abruptly  turned  to  the  right 
on  the  bank  of  a  mill  pond,  into 
w'hich,  by  going  straight  on,  the  car- 
riage plunged,  on  account  of  the 
absence  of  any  railing.  The  court 
say:  "The  .  .  question  .  .  . 
whether,  in  case  of  an  injury  re- 
ceived while  traveling  upon  a  public 
way.  shown  to  be  detective,  but 
where  the  accident  or  injury  is  at- 
tributable in  part  to  a  defect  in  the 
carriage  or  harness,  but  occurring 
under  such  circumstances  as  show 
that  the  plaintiff  was  chargeable 
with  no  fault  or  negligence  in  the 
matter,  the  town  is  liable  for  the 
damage,  is  one  not  free  from  diffi- 
culty. Against  maintaining  such 
action,  it  is  strongly  urged  that  the 
injury  is  not  fairly  imputable  to  the 
defect  in  the  highway;  and  inas- 
much as  it  resulted,  at  least  in  part, 
from  causes  for  which  the  town  was 
not  responsible,  and  over  which  it 
had  no  control,  the  town  should  not 
be  chargeable  with  damages  there- 
for. If  the  objection  was  that  the 
injury  was  caused  by  the  combined 
effect  of  an  obstruction  or  want  of 
repair  in  the  road,  and  the  want  of 
ordinary  care,  diligence  or  skill  on 
the  part  of  the  plaintiff  in  reference 
to  his  harness,  his  horses  or  his  car- 
riage, or  the  use  of  the  road,  it 
would  be  very  clear  that  the  plaint- 
iff could  not  recover.  He  must  be 
without  fault  in  this  respect;  and  if 
not  so,  although  the  highway  be  out 
of  repair,  the  town  is  not  liable.  But 
is  the  like  effect  to  follow  when  there 
is  a  defect  in  the  road,  but  the  ac- 
cident or  injury  is  attributable  in 
part  to  a  defect  in  the  carriage  or 
harness,  which  defect  was  unknown 


to  the  plaintiff,  and  which  was  of 
such  a  character  that  it  might  have 
existed,  and  yet  no  fault  or  negli- 
gence be  chargeable  by  reason  thereof 
to  the  plaintiff?  We  should  be  slow 
to  adopt  or  sanction  any  principles 
in  reference  to  this  class  of  actions 
that  would  in  so  many  cases  render 
the  statute  nugatory.  If  the  circum- 
stance that  some  accident  or  casu- 
alty occurred,  as  the  primaiy  cause, 
and  which  by  reason  of  a  defect  in  the 
road,  and  through  their  combined 
operation,  caused  the  damage  to  the 
plaintiff,  would  deprive  the  party  of 
recovering  damages,  the  protection 
to  the  traveler  would  be  very  much 
restricted.  It  is  the  ordinary  course 
of  events,  and  consistent  with  a  rea- 
sonable degree  of  prudence  on  the 
part  of  the  traveler,  that  accidents 
will  occur;  horses  maybe  frightened, 
the  harness  may  break,  a  bolt  or 
screw  may  be  dropped.  To  guard 
against  damage  by  such  accidents  the 
law  requires  suitable  railings  and 
barriers,  a  proper  width  of  the  road, 
and  whatever  may  be  reasonably  re- 
quired for  the  safety  of  the  traveler. 
It  seems  to  us  that  when  the  loss  is 
the  combined  result  of  an  accident 
and  of  a  defect  in  the  road,  and  the 
damage  would  not  have  been  sus- 
tained but  for  the  defect,  although  the 
primary  cause  be  a  pure  accident, 
yet,  if  there  be  no  fault  or  negligence 
on  the  part  of  the  plaintiff,  if  the  acci- 
dent be  one  which  common  prudence 
and  sagacity  could  not  have  fore- 
seen and  provided  against,  the  town 
is  liable."  In  Davis  v.  Dudley,  4 
Allen,  557  (decided  seven  years  after 
Palmer  v.  Andover,  supra),  a  town 
was  held  not  to  be  responsible  in 
damages  if  a  horse  on  becoming  ac- 
cidentally frightened    breaks  away 


'li. 


CONSEQUENTAL    DAMAGES    FOK    TORTS. 


85 


lights  in  the  street  lamps.'  It  is  not  a  defense  to  a  city  that 
another  contributed,  either  before  or  after  its  default,  or  con- 
currently therewith,  in  producing  the  damage.^ 

§  27.  Imputed  negligence.  It  was  formerly  judicially  de- 
clared to  be  the  law  in  England  that  the  negligence  of  the 
driver  of  a  public  conveyance  was  imputable  to  a  passenger 
therein,  although  the  latter  exercised  no  control  over  the 
former,*  This  doctrine  was  not  authoritatively  disapproved 
of,  although  it  was  much  commented  on  and  shaken,  until 
1SS8,  when  it  came  before  the  house  of  lords  in  Mills  v.  Arm- 
strong,'* with  the  result  that  the  whole  foundation  on  which 
it  rested  was  removed.  The  theory  has  but  little  support  in 
the  American  cases:  except  in  Wisconsin  ^  all  the  recent  ad- 


from  his  driver,  and  afterwards, 
while  running  at  large,  meets  with 
an  injury  through  a  defect  in  the 
highway.  It  is  declared  that  this 
case  does  not  conflict  with  the  other, 
Merrick,  J.,  saying:  "The  facts  in 
the  present  case  are  widely  difl'erent, 
and  afford  no  occasion  for  the  appli- 
cation of  the  doctrine  by  which,  in 
the  decision  of  that  case,  the  court 
were  influenced  and  controlled. 
Here  the  accident  and  injury  were 
not  coincident,  but  were  separate 
and  produced  by  separate  causes. 
The  effect  of  the  accident  as  procur- 
ing cause  was  complete  when  the 
horse,  frightened  by  the  falling  of 
the  cross-bar  and  thills  upon  his 
heels,  became  detached  from  the 
sleigh  and  had  escaped  from  the  con- 
trol of  the  driver.  The  blind  violence 
of  the  animal,  acting  without  guid- 
ance or  direction,  became,  in  the 
course  and  order  of  incidents  which 
ensued,  the  supervening  and  prox- 
imate cause  of  the  injury  inflicted 
by  his  running  against  a  wood-pile, 
which  constituted  an  unlawful  ob- 
struction and  defect  in  the  highway. 
In  this  succession  of  events,  it  hap- 
pens that  the  accident  placed  the 
owner  in  a  situation  where  it  was 
out  of  his  power  to  exercise  due  care 
over  the  horse  while  this  new  cause 


was  in  operation,  and  until  it  had 
contributed  to  produce  the  disaster 
by  which  his  leg  was  broken."  These 
cases  and  others  in  Massachusetts 
are  criticised  and  contrasted  in  an  in- 
teresting manner  in  Toms  v.  Whitby, 
35  Up.  Can.  Q.  B.  195,  where  a  differ- 
ent rule  prevailed.  The  substance 
of  the  opinion  in  the  case  referred 
to  is  given  in  the  first  edition  of  this 
woi-k,  vol.  1,  pp.  38-47. 

iClay  Centre  v.  Jevons,  2  Kan. 
App.  568,  44  Pac.  Rep.  745. 

Where  a  team  was  being  driven 
along  a  road  and  the  tugs  became 
loosened  and  fell  from  the  whiffle- 
trees,  the  pole  fell  to  the  ground, 
the  horses  ran  away,  and  the  wagon 
went  down  an  unguarded  slope,  the 
primary  cause  of  the  resulting  in- 
jury was  the  detaching  of  the  tugs, 
and  not  the  absence  of  a  barrier. 
Card  V.  Columbia,  191  Pa.  254,  43 
Atl.  Rep.  217. 

2  McClure  v.  Sparta,  84  Wis.  269,  54 
N.  W.  Rep.  387,  36  Am.  St.  924.  See 
Hayes  v.  Hyde  Park,  153  Mass.  514, 
27  N.  E.  Rep.  522,  12  L.  R.  A.  249. 

3  Thorogood  v.  Bryan,  8  G  B.  115 
(1849). 

4  13  App.  Cas.  1. 

sPrideaux  v.  Mineral  Point,  43 
Wis.  513;  Otis  v.  Janesville,  47  id. 
422,  2  N.  W.  Rep.  783. 


SG 


COMPENSATION. 


[§27 


judications  arc  hostile  to  it.^  The- principle  dedacible  from 
these  decisions,  say  the  supreme  court  of  Indiana,  is  that  one 
who  sustains  an  injury  without  any  fault  or  negligence  of  his 
own,  or  of  some  one  subject  to  his  control  or  direction,  or  with 
whom  he  is  so  identified  in  a  common  enterprise  as  to  become 
responsible  for  the  consequences  of  his  negligent  conduct,  may 
look  to  any  other  person  for  compensation  whose  neglect  of 
duty  occasioned  the  injury,  even  though  the  negligence  of 
some  third  person  with  whom  the  injured  person  was  not 
identified  may  have  contributed  thereto.'  But  this  is  not  the 
rule  if  the  person  who  is  riding  with  another  knows  of  and  ac- 
quiesces in  the  other's  purpose  to  commit  a  wrong  against  a 
third  party.  In  such  a  case,  in  the  absence  of  exculpatory 
evidence,  the  passenger  will  be  presumed  to  be  co-operating 
with  the  driver.'  It  is  said,  arguendo^  in  Vermont,  and  is  held 
in  some  states  that  the  rule  does  not  apply  to  an  action  for  the 
benefit  of  a  parent,  to  recover  for  the  death  of  a  child,  the 


1  Little  V.  Hackett,  116  U.  S.  mQ,  6 
Slip.  Ct.  Rep.  891:  Wabash,  etc.  R 
Co.  V.  Shacklet,  105  111.  364,  44  Am. 
Rep.  791;  Carlisle  v.  Brisbane,  113 
Pa.  544,  6  At).  Rep.  372;  Railway  Co. 
V.  Eadie,  43  Ohio  St.  91,  54  Am.  Rep, 
803,  1  N.  E,  Rep.  519;  Philadelphia, 
etc.  R.  Co.  V.  Hogeland,  66  Md.  149, 
59  Am.  Rep.  159,  7  Atl.  Rep.  105; 
Cuddy  V.  Horn,  46  Mich.  596,  10  N. 
W.  Rep.  32,  41  Am.  Rep.  178;  New 
York,  etc  R.  Co.  v.  Steinbrenner,  47 
N.  J.  L.  161;  Nesbit  v.  Garner,  75 
Iowa,  314,  9  Am.  St.  486,  39  N.  W. 
Rep.  516;  Masterson  v.  New  York  C. 
etc.  R.  Co.,  84  N.  Y.  247;  Knights- 
town  V.  Musgrove,  116  Ind.  121,  9 
Am.  St.  827,  18  N.  E.  Rep.  452,  1  L.  R. 
A.  152;  Sheffield  v.  Central  U.  Tele- 
phone Co.,  36  Fed.  Rep.  164;  Strauss 
V.  Newburgh  Electric  R.  Co.,  6  A  pp. 
Div.  264,  39  N.  Y.  Supp.  998;  Hennes- 
sey V.  Brooklyn  City  R  Co..  6  App. 
Div.  206,  39  N.  Y.  Supp.  805;  Zimmer- 
man V.  Union  R  Co.,  28  Api'.  Div.  445, 
51 N.  Y.  Supp.  1;  Ouverson  v.  Grafton, 
5  N.  D.  281.  65  N.  W.  Rep.  676;  Faust 
v.Philadelphia&R.  RCo.,19lPa.420, 


43  Atl.  Rep.  329;  Bamberger  v.  Citi- 
zens' Street  R  Co.,  95  Tenn.  18,  28  L, 
R  A.  486,  49  Am.  St.  909.  31  S.  W. 
Rep.  163;  Missouri,  etc.  R.  Co.  v. 
Rogers,  91  Tex.  52,  40  S.  W.  Rep.  956: 
Ploof  V,  Burlington  Traction  Co.,  70 
Vt.  509,  41  Atl.  Rep.  1017,  43  L.  R  A. 
108;  Norfolk  &  W.  R  Co.  v.  Grose- 
close,  88  Va.  267,  29  Am.  St.  718,  13 
S.  K  Rep.  454;  Atlantic  &  D.  R  Co. 
V.  Ironmonger,  95  Va.  625,  29  S.  E, 
Rep.  319;  Roth  v.  Union  Depot  Co., 
13  Wash.  525,  31  L.  R.  A.  855,  43  Pac. 
Rep.  641,  44  id.  253;  Turnpike  Co.  v. 
Yates,  108  Tenn.  428,  438,  67  S.  W. 
Rep.  69;  Union  Pacific  R.  Co.  v.  Lap 
sley,  51  Fed.  Rep.  174,  2  C.  C.  A.  149, 
16  L.  R  A.  800.  See  Jones  v.  Scul- 
lard,  [1898]  2  Q.  B.  565,  for  the  rule 
where  the  servant  of  one  person  is 
hired  by  another. 

2  Knightstovvn  v.  Musgrove,  116 
Ind.  121,  9  Am.  St.  827,  18  N.  E.  Rep. 
452. 

3Brannen  v.  Kokomo,  etc.  Co.,  115 
Ind.  115,  7  Am.  St.  411.  17  N.  K  Rep 
202. 


§  28.]  CONSEQUENTAL   DAMAGES   FOK   TORTS.  87 

statute  providing  for  the*  recovery  of  such  damages  as  are 
just.^  Other  courts  hold  the  contrary  view  where  the  action 
for  the  death  of  the  child  is  brought  by  his  personal  representa- 
tive.^ The  Connecticut  court  has  refused  to  apply  the  rule  in 
an  action  to  recover  for  injuries  sustained  by  a  defective  high- 
w^ay,  the  statute  authorizing  a  recovery  in  such  a  case  by  any 
person  injured  by  means  of  a  defect  in  the  highway.  It  is 
said  that  the  liability  is  penal  in  its  nature,  and  does  not  ex- 
tend to  a  case  in  which  the  injuries  resulted  to  a  traveler  from 
the  defect  and  the  culpable  negligence  of  a  fellow  traveler.' 
There  is  probably  no  dissent  from  the  doctrine  that  one  who 
is  bound  to  care  for  and  protect  a  child  cannot  profit  because 
of  the  neglect  of  his  duty.* 

§  28,  Particular  injury  need  not  1)6  foreseen.  It  will  [47] 
appear  from  a  perusal  of  the  cases  in  which  consequential 
damages  have  been  allowed  and  from  the  principle  on  which 
they  are  recovered,  that  at  the  time  the  wrongful  act  is  done 
it  need  not  be  certain  that  such  damages  will  ensue.  It  is 
only  essential  that  the  act  have  a  tendency  and  be  likely  to 
cause  such  damages,  not  that  they  be  certain  to  follow;  in  this 
respect  they  are  generally  contingent,  and  by  possibility  may 
not  happen.^    If  one  remove  or  destroy  a  fence  inclosing  a 

J  Ploof  V.  Burlington  Traction  Co.,  N.  E.  Rep.  391:  Brown  v.  Chicago, 

70  Vt.  509,  41  Atl.  Rep.  1017,  43  L.  R.  etc.  R.  Co.,  54  Wis.  342,  11  N.  W.  Rep. 
A.  108;  Tucker  V.  Draper,  62  Neb.  66,  356,  911;  Hill  v.  Winsor,  118  Mass. 
d6  N.  W.  Rep.  917;  Atlanta  &  C.  Air  251;  Barbee  v.  Reese,  60  Miss.  906; 
Line  R.  Co.  v.  Gravitt,  93  Ga.  369,  Christiansen  v.  Chicago,  etc.  R.  Co., 
20  S.  E.  Rep.  550.  26  L.  R.  A.  553.  67  Minn.  94,  69  N.  W.  Rep.  640;  Rea 

2 Norfolk  &  W.  R.  Co.    v.  Grose-  v.  Bailmain  New  Ferry  Co.,  17  N.  S. 

close,  88  Va.  267.  13  S.  E.  Rep.  454,  29  W.  (law)  92;  Henderson  v.  O'Halo- 

Am.  St.  718;    Wymore  v.  Mahaska  ran, Ky.  — ,  24  Ky.  L.  Rep.  995, 

County,  78  Iowa,  396.  16  Am.  St.  449,  20  S.  W.  Rep.  662. 

43  N.  W.  Rep.  264.  In  Sneesby  v.  Lancashire  &  Y.  R. 

3  Bartram  v.  Sharon,  71  Conn.  686,  Co.,  1  Q.  B.  Div.  42,  a  herd  of  plaint- 

71  Am.  St.  225,  46  L.  R.  A.  144,  43  ifl's  cattle  were  being  driven  along 
Atl.  Rep.  143.  See  Ouverson  v.  Graf-  an  occupation  road  to  some  fields, 
ton,  5  N.  D.  281,  65  N.  W.  Rep.  676.  The  road  crossed  a  siding  of  defend- 

*  xltlanta  &  C.  Air  Line  R.  Co.  v.  ant's  railway  on  a  level,  and  when 
Gravitt,  supra,  and  cases  cited.  the  cattle  were  crossing  the  siding 

*  Louisville,  etc.  R.  Co.  v.  VV^ood,  the  defendant's  servants  negligently 
113  lud.  544,  565,  14  N.  E.  Rep.  572,  sent  some  trucks  down  the  siding 
16  id.  197;  Wabash,  etc.  R.  Co.  v.  amongst  them,  which  separated 
Locke,  112  Ind.  404,  2  Am.  St.  193,  14  them  from  the  drovers  and  so  fright- 


CIMPENSATION. 


[§28. 


field,  or  open  a  gap  in  it,  there  is  a  possibility  that  animals 
confined  there  may  not  escape  so  as  to  encounter  danger  out- 
side ^  or  subject  the  owner  to  expense  in  recovering  them;* 
and  it  is  possible  that  other  cattle  will  not  trespass  upon  such 
field  to  destroy  a  crop  there,'  or  to  do  injury  to  an  animal 
there,*  or  to  receive  injury;^  but  the  wrong  done  in  opening 
such  inclosure  is  so  likely  to  lead  to  these  injurious  results 
that  they  are  proximate  if  they  occur.  Opening  the  fence 
does  not  cause  an  animal  to  pass  through  it;  it  offers  the  op- 
portunity, exposes  to  injury  property  within  or  property  out- 
side of  it,  or  both.  It  is  in  this  manner  that  the  primary  and 
efficient  cause  generally  produces  consequential  damages. 
The  party  injured  in  his  person  or  property  is  by  the  wrong- 
ful act  of  another  or  his  culpable  negligence  exposed  or  left  in 
exposure  from  some  cause  imminent  and  fairly  obvious  in  ex- 


ened  them  that  a  few  rushed  away 
from  the  control  of  the  drovers,  fled 
along  the  occupation  road  to  a  gar- 
den some  distance  off,  got  into  the 
garden  through  a  defective  fence, 
and  thence  on  to  another  track  of 
the  defendant's  railway  and  were 
killed.  The  result  was  not  too  re- 
mote. The  court  said  that  the  re- 
sult of  the  negligence  was  twofold: 
first,  that  the  trucks  separated  the 
cattle,  and  second,  that  the  cattle 
were  frightened  and  became  infuri- 
ated and  were  driven  to  act  as  they 
would  not  have  done  in  their  natu- 
ral state:  that  everything  that  oc- 
curred or  was  done  after  that  must 
be  taken  to  have  occurred  or  been 
done  continuously;  and  that  it  was 
no  answer  to  say  that  the  fence  was 
Imperfect,  for  the  question  would 
have  been  the  same  had  there  been 
no  fence  there.  Compare  West  Ma- 
hanoy  v.  Watson,  116  Pa.  344,  9  Atl. 
Rep.  430,  2  Am.  St.  804.  See  Rucker 
V.  Freeman,  50  N.  H.  420,  9  Am.  Rep. 
207;  Alabama,  etc.  R.  Co.  v.  Chap- 
man, 80  Ala.  615,  2  So.  Rep.  738; 
Isham  V.  Dow's  Estate,  70  Vt.  588,  41 
Atl.  Rep.  585,  45  L.  11.  A.  87. 


1  Powell  V.  Salisbury,  2  Y.  &  J.  391; 
White  V.  McNett,  33  N.  Y.  371 ;  Welch 
V.  Piercy,  7  Ired.  365;  Halestrap  v. 
Gregory,  [1895]  1  Q.  B.  501. 

The  act  of  opening  a  fence  which 
incloses  a  pasture  in  which  horses 
are  kept  is  tlie  proximate  cause  of 
injury  to  them,  if  they  escape  and 
come  in  contact  with  a  barbed- 
wire  fence,  such  material  being 
largely  used  for  fencing  in  the  ad- 
jacent country.  West  v.  Ward,  77 
Iowa.  323,  14  Am,  St.  284,  43  N.  W. 
Rep.  309. 

2  Bennett  v.  Lockwood,  20  Wend. 
223.  32  Am.  Dec.  532. 

3  Scott  V.  Kenton,  81  111.  96. 

Injury  done  by  trespassing  ani- 
mals owned  by  a  third  person  is  not 
the  direct  result  of  the  destruction 
of  the  fence  which  inclosed  the 
crops  damaged.  Berry  v.  San  Fran- 
cisco, etc.  R.  Co.,  50  Cal.  435,  ap- 
proved in  Durgin  v,  Neal,  82  CaL  595, 
23  Pac.  Rep.  133. 

4  Lee  V.  Riley,  18  C.  B.  (N.  S.) 
722. 

°  Lawrence  v.  Jenkins,  L.  R.  8  Q. 
B.  274. 


§  20.]  CONSEQUENTAL   DAMAGES    FOE   TOKTS.  89 

isting  circumstances  or  otlierwise,  and  through  such  exposure 
the  injury  ultimately  and  proximately  reaches  him.  The  [48] 
wrongful  act  is  the  cause  of  the  injury  in  the  natural  and 
probable  course  of  events  by  subjecting  the  party  injured  un- 
lawfully to  other  and  dependent  causes  from  which  the  injury 
directly  proceeds.  In  this  way  at  least  the  relation  of  cause 
and  effect  must  be  established  between  the  wrongful  act  and 
the  injurious  consequence.^  The  owner  of  a  vessel  employed 
in  building  a  sea  wall  was  given  by  the  owner  of  the  wall  the 
exclusive  right  to  its  use  as  a  place  of  safety  for  his  vessel. 
The  master  of  another  vessel,  without  permission,  placed  her 
behind  the  wall  and  refused  to  move  her  when  requested,  the 
former  desiring  to  put  his  there  as  a  place  of  safety  against  a 
storm.  This  vessel  was  sunk  by  the  storm  while  thus  excluded 
from  that  position.  The  sinking  was  held  to  be  the  proximate 
consequence  of  being  denied  the  shelter  of  the  wall.-  It  is  not 
required  that  the  damages  be  foreseen,  as  consequential  dam- 
ages from  a  breach  of  contract  must  be  contemplated  by  the 
parties  when  they  enter  into  it.*  Nor,  on  the  other  hand,  will 
the  wrong-doer  be  liable  for  every  possible  damage  which 
may  indirectly  ensue  from  his  misconduct.* 

§  29.  The  act  complained  of  must  be  the  efficient  cause. 
The  defendant's  misconduct  must  be  the  efficient  cause  and 
the  injury  which  follows  must  be  such  as  ought  to  have  been 
foreseen  as  a  probable  consequence  in  the  light  of  surrounding 
circumstances.  There  is  generally  another  and  more  imme- 
diate cause  of  the  injury;  the  primary  cause,  to  be  deemed  re- 
sponsible and  efficient  for  the  purpose  of  recovering  damages, 

'Olmsted  v.  Brown,  12  Barb.  657;  over  a    platform    upon   which   the 

Schumaker  v.  St.  Paul  &  D.  R.  Co.,  goods  he  was  inspecting  were  dis- 

46  Minn.  39,  48  N.  W.  Rep.  559,  12  L.  played,  they  being  near  the  shaft. 

R.  A.  257;  Christianson  v.   Chicago,  Rosenbaum    v.   Shoffner,   98    Tenn, 

etc.  R.  Co.,  67  Minn.  94, 69  N.  W.  Rep.  624,  40  S.  W.  Rep.  1086. 

640;  Beopple  v.  Railroad,  104  Tenn.  2  Derry  v.  Flitner,  118  Mass.   131; 

420,  58    S.  W.  Rep.  231;  Gilman   v.  Tinsman   v.  Belvidere  D.  R.  Co.,  26 

Noyes,  57  N.  H.  627.  N.  J.  L.  148,  69  Am.  Dec.  565. 

The  negligence  of  the  proprietor  3  Bowas   v.    Pioneer  Tow   Line,  2 

of  a  store  in  failing  to  guard  an  ele-  Sawyer,  21. 

vator  shaft,  and  not  the  stumbling  *  Beach    v.   Ranney.    2    Hill,  314; 

of  a    customer,    is    the    proximate  Central  R.  Co.  v.  Dorsey, — Ga. — , 

cause  of  the  latter's  death  from  fall-  42  S.  E.  Rep.  1024. 
ing  into  the  shaft  after  stumbling 


90  COMPENSATION.  [§  29: 

must  have  directly  set  in  motion  an  intervening  and  more  im- 
mediate agency  or  be  directly  in  fault  for  the  exposure  of  the 
injured  party  to  its  injurious  influence.  The  wrongful  refusal 
of  a  corporation  to  register  among  its  members  one  who  has 
purchased  shares  of  its  stock  on  the  ground  that  there  was  a 
debt  due  it  from  the  original  owner  does  not  make  it  liable  to 
such  owner  for  a  decline  in  their  value  occurring  between  the 
times  when  the  transfer  oucrht  to  have  been  registered  and 
when  in  fact  it  was  reo:istered,  such  decline  damag'ino:  the 
transferror  because  of  the  terms  of  the  contract  between  him 
and  the  transferee,  of  which  the  company  had  no  notice. 
There  is  no  connection  between  the  market  price  of  the  shares 
and  the  act  of  the  corporation.^  A  bridge  erected  over  a 
slough  of  a  river  and  a  part  of  the  highway  from  the  business 
part  of  a  citj'-  to  a  levee  on  the  river  became  impassable  for 
[19]  want  of  repairs,  by  reason  of  which  the  owner  of  a  lot  of 
wood  which  had  been  collected  at  the  levee  for  transportation 
over  the  bridge  was  unable  to  so  transport  it.  While  l3'ing 
there  under  these  circumstances  it  was  washed  away  by  a 
freshet.  The  damages  were  held  too  remote  to  be  the  conse- 
quence of  the  neglect  to  repair  the  bridge.^  The  defendant's- 
negligence  did  not  consequentially  cause  the  loss  of  the  wood, 
if  it  could  be  moved  to  a  place  of  safety  in  another  direction; 
nor  was  the  loss  by  freshet  proximate  unless,  according  to  the 
general  experience,  it  was  a  probable  occurrence.  The  loss  of 
an  office  as  the  result  of  an  assault  and  battery  has  been  held 
too  remote,  and  too  much  the  result  of  other  and  independent 
causes  to  be  taken  into  consideration.'  So  where  the  de- 
fendant libeled  a  concert  singer  who,  in  consequence,  refused 
to  sing  at  the  plaintiff's  oratorio  for  fear  of  being  badly  re- 
ceived, it  was  held  that  this  damage  to  the  plaintiff  was  not 
sufficiently  connected  with  the  act  of  the  defendant.     The  re- 

1  Skinner  v.  London  Marine  Ins.  3  gj-own  v.  Cumraings,  7  Allen,  507; 
Co..  14  Q.  B,  Div.  883.  See  Bourdette  Boyce  v.  Bayliffe,  1  Camp.  58;  Hoey 
V.  Sieward,  107 La,  258, 31  So.  Rep.  630,  v.  Felton,  11  C.  B.  (N.  S.)  142;  Burton 
holding  a  similar  rule  where  inspec-  v.  Pinkerton,  L.  R.  2  Ex.  340;  Smitha 
tion  of  corporate  books  was  denied  v.  Gentry,  20  Ky.  L.  Rep.  171,  45  S. 
a  stockholder.  W.  Rep.  515,  42  L.  R.  A.  302,  citing 

2  Dubuque,  etc.  Ass'n  v.  Dubuque,  the  text. 
30  Iowa,  17& 


§20.] 


CONSEQUENTIAL   DAMAGES   FOE   TORTS. 


91 


fusal  to  sing  might  have  proceeded  from  groundless  apprehen- 
sion or  caprice,  or  some  other  cause  altogether  different  than 
that  alleged.' 

It  is  not  the  natural  result  of  enticing  a  minor  daughter 


1  Ashley  v.  Harrison,  1  Esp.  48.  In 
Taylor  v.  Neri,  id.  386,  it  appeared 
that  the  defendant  beat  an  actorand 
thereby  disabled  and  prevented  him 
from  performing  his  engagement 
with  the  plaintiff.  It  was  held  that 
the  injury  to  the  manager  was  too 
remote. 

These  two  cases  came  under  criti- 
cism in  Lumley  v.  Gye.  2  El.  &  B.  21G, 
which  was  an  action  by  the  manager 
of  a  theatre  against  the  manager  of 
a  rival  theatre  for  procuring  a  singer 
to  break  her  engagement.  The  cir- 
cumstance that  the  plaintiff  had  an 
action  against  the  singer  herself 
upon  her  agreement  was  overruled, 
and  the  plaintiff  recovered  on  the 
principle  that  the  defendant  incurred 
tiie  same  liability  for  interfering 
with  such  a  servant  as  anj-  other. 
Wightman,  J.,  said:  "  In  the  present 
case  there  is  the  malicious  procure- 
ment of  Miss  W.  to  break  her  con- 
tra't,  and  the  consequent  loss  to  the 
plaintiff.  Why,  then,  may  not  the 
plaintiff  maintain  an  action  on  the 
case?  Because,  as  it  is  said,  the  loss 
or  damage  is  not  the  natural  or  legal 
consequence  of  the  acts  of  the  de- 
fendant. There  is  the  injuria  and 
the  damnum;  but  it  is  contended 
that  the  damnum  is  neither  the  nat- 
ural nor  legal  consequence  of  the  in- 
juria, and  that,  consequently,  the 
action  is  not  maintainable,  as  the 
breaking  of  her  contract  was  the 
spontaneous  act  of  Miss  W.  herself, 
who  was  under  no  obligation  to  yield 
to  the  persuasion  or  procurement  of 
the  defendant.  Another  case  of  Vi- 
cars v.  Wilcocks,  8  East,  1,  which, 
though  it  has  been  brought  into  ques- 
tion, has  never  been  directly  over- 


ruled, was  relied  upon  as  an  author- 
ity upon  this  point  for  the  defendant. 
That  case,  however,  is  clearly  dis- 
tinguishable from  the  present  upon 
the  ground  suggested  by  Lord  Chief 
Justice  Tindal  in  Ward  v.  Weeks,  7 
Bing.  211,  215,  that  the  damage  in 
that  case,  as  well  as  in  Vicars  v.  Wil- 
cocks, was  not  the  necessary  conse- 
quence of  the  original  slander  ut- 
tered by  the  defendants,  but  the 
result  of  spontaneous  and  unauthor- 
ized communications  made  by  those 
to  whom  the  words  were  uttered  by 
the  defendants.  The  distinction  is 
taken  in  Green  v.  Button.  2  Cr..  M.  & 
R  707,  in  which  it  was  held  the  ac- 
tion was  maintainable  against  the 
defendant  for  maliciously  and  wrong- 
fully causing  certain  persons  to  re- 
fuse to  deliver  goods  to  the  plaintiff 
by  asserting  that  he  had  a  lien  upon 
then\  and  ordering  these  persons  to 
retain  the  goods  until  further  orders 
from  him.  It  was  urged  for  the  de- 
fendant in  that  case  that  as  the  per- 
sons in  whose  custody  the  goods  were, 
were  under  no  legal  oWigation  ta 
obey  the  orders  of  the  defendant,  it 
was  a  mere  spontaneous  act  of  these 
persons  which  occasioned  the  dam- 
age to  the  plaintitf:  but  the  court 
held  the  notion  maintainable  tiiough 
the  defendant  did  make  the  claim 
as  of  right,  he  having  done  so  mali- 
ciously, and  without  any  reasonable 
cause,  and  the  damage  accruing 
thereby." 

The  doctrine  of  Vicars  v,  Wilcocks 
and  cases  of  that  class  does  not  ex- 
clude responsibility  when  the  dam- 
age results  to  the  party  injured 
through  the  intervention  of  the  legal 
and  innocent  acts  of  third  parties,  for 


92  COMPENSATION.  [§  29. 

from  her  home,  against  her  father's  objections,  and  employing 
lier  to  work  in  defendant's  home,  that  she  should  be  seduced 
by  the  latter's  son.^  The  killing  of  plaintiff's  son,  without 
wilful  intent  to  injure  plaintiff,  does  not  give  the  latter  a  cause 
of  action  for  the  breach  of  a  contract  on  the  son's  part  to  sup- 
port his  father.^  There  is  no  connection  between  defamatory 
statements  made  respecting  one  who  desires  employment  and 
is  required  to  give  a  bond  to  his  employer  and  the  refusal  of  a 
company  to  give  such  bond  because  of  such  statements;  be- 
tween defendant's  wrong  and  plaintiff's  damage  the  voluntary 
act  of  a  third  party  intervened,  and  such  act  was  the  proxi- 
mate cause  of  the  loss  of  employment.'  A  claim  of  damages 
for  goods  frozen  because  defendant  had  taken  a  false  and 
spurious  deed  of  land,  thereby  preventing  the  digging  of  a 
cellar  in  which  to  put  the  goods,  cannot  be  allowed.*  Defend- 
ant negligently  stored  oil  on  a  wooden  platform  of  its  freight 
house  in  a  town,  and  had  done  so  for  such  a  length  of  time 
that  the  platform  and  the  ground  beneath  it  had  become  satu- 
rated with  oil.  A  fire  was  caused  by  throwing  a  match  upon 
the  ground  under  the  platform  by  a  person  not  connected 
with  the  defendant,  but  who  was  rightfully  on  the  premises. 
It  was  ruled  that  the  defendant  was  not  liable  for  the  loss  of 
buildings  near  the  freight  house  as  the  result  of  the  fire.^  But 
the  rule  is  otherwise  if  the  substance  negligently  exposed  is 
liable  to  ignite  spontaneously  and  produce  damage.^ 

in  such  instances  damage  is  regarded  87,  60  S.  W.  Rep.  105S,  83  Am.  St  459; 

as  occasioned  by  the  wrongful  cause  Gregory  v.  Brooks,  35  Conn.  437,  95 

and   not    by   those  which  ai'e    not  Am.  Dec.  278;  Connecticut  Mut.  L. 

wrongful;  as  where  one  who  desires  Ins.  Co.  v.  New  York,  etc.  R.  Co.,  25 

to  make  the  customer  of  another  be-  Conn.  265,  65  Am.  Dec.  571. 

lieve  that  the  work  done  for  him  is  3  McDonald  v.   Edwards,  20  N.  Y. 

badly  done,  and  to  accomplish  that  Misc.  523.  46  N.  Y.  Supp.  672;  Pickett 

end  loosens  a  shoe  put  on  the  custom-  v.  Wilmington  &  W.  R  Co.,  117  N.  C. 

er's  horse.     In  such  case  the  person  616.  23  S.  E.  Rep.  264,  53  Am.  St.  611, 

who  defames  the  horseshoer  is  re-  30  L.  R.  A.  257. 

sponsible  to  him  for  the  loss  of  the  ^  Cormier  v.  Bourque,  32  N.  B.  283. 

patronage   which   may  result  from  ^ Stone  v.  Boston  &  A.  R.  Co.,  171 

his  act.     Hughes  v.  McDonough,  43  Mass.  536,  51  N.  E.  Rep.  1,  41  L.  R  A. 

N.  J.  L.  459,  39  Am.  Rep.  603.  794. 

1  Stewart  v.  Strong,  20  Ind.  App.  ^  Vaughan  v.  Menlove,  8  Bing.  N.  CL 
44,  50  N.  E.  Rep.  95.  468. 

2  Brink  v.  Wabash  R  Co.,  160  Mo. 


§  30.]  CONSEQUENTIAL   DAMAGES   FOR   TORTS.  93 

§  30.  Same  subject,  A  lease  of  a  canal  was  made  by  [50] 
commissioners  of  navigation  under  a  statute  providing  that  if 
the  lessee  should  permit  the  work  to  be  out  of  repair  the  com- 
missioners should  give  him  notice  to  repair,  and  on  his  neglect- 
ing to  make  the  repairs  they  might  make  them  and  pay  the 
expenses  out  of  the  tolls.  A  lock  forming  part  of  the  canal 
fell  and  detained  a  barge.  In  an  action  for  that  detention 
against  the  commissioners  for  neglecting  to  give  notice  to  the 
lessee  to  repair,  it  was  held  that  the  action  would  not  lie  be- 
cause the  detention  was  not  a  damage  naturally  flowing  from 
the  alleged  neglect,  it  not  being  shown  that  if  such  notice  had 
been  given  the  lessee  would  have  repaired  or  that  the  commis- 
sioners would  have  done  so.  Pollock,  C.  B. :  "To  say  that 
the  damage  could  be  the  consequence  of  the  wrongful  act  or 
omission  is,  in  our  judgment,  to  assert  a  false  proposition  of 
law.  The  surmise  is, —  if  the  notice  had  been  given  the  repairs 
would  have  been  done  and  the  lock  would  not  have  fallen  in, 
and  so  not  giving  notice  caused  the  lock  to  fall  in.  As  we 
have  said,  this  is  not  proved ;  but  it  is  not  the  proximate,  nec- 
essary or  natural  result  of  not  giving  notice.  The  not  giving 
notice  is  not  sufficient  to  bring  about  the  result;  the  giving  of 
it  would  not  be  sufficient  to  hinder  it.'"  Here  the  immediate 
cause  of  the  detention  was  the  obstruction  and  want  of  repair 
of  the  canal ;  the  alleged  wrong  of  the  defendant  did  not  [51] 
put  the  canal  out  of  repair,  and  as  the  commissioners  were  not 
absolutely  required  to  do  anything  but  give  notice,  as  a  step 
towards  repair,  it  could  not  be  assumed  as  matter  of  law  that 
doing  so  would  have  caused  the  repair  to  be  made.  The  rela- 
tion of  cause  and  effect  between  the  wrongful  act  and  the 
alleged  injurious  consequence  was  not  established.  It  is  indis- 
pensable that  the  plaintiff  should  show  not  only  that  he  has 
sustained ^amftf/e,  and  that  the  defendant  has  committed  ?itort, 
but  that  the  damage  is  the  clear  and  necessary  consequence  of 
the  tort,  and  that  it  can  be  clearly  defined  and  ascertained.^ 

1  Walker  v.  Goe,  3  H.  &  N.  395.  20  Ky.  L.  Rep.  171,  45  S.  W.  Rep.  515, 

2  Lamb  V.  Stone,  11  Pick.  527;  Ver-  43  L.  R.  A.  302,  citing  the  text; 
non  V,  Keys,  12  East,  632;  Morgan  v.  Johnson  v.  Western  U.  Tel.  Co.,  79 
Bliss,  2  Mass.  Ill;  Harrison  v.  Red-  Miss.  58,  29 So.  Rep.  787.  See  Mitch- 
den,  53  Kan.  265,  30  Pac.  Rep.  325,  ell  v.  Western  U.  Tel.  Co.,  12  Tex. 
citing  the  text;  Smitha  v.  Gentry,  Civ.  App.  262,  33  S.  W.  Rep.  1016. 


94  COMPENSATION.  [§30. 

An  action  on  the  case  was  brought  by  a  creditor  against  his 
debtor  and  another  for  confederating  together  to  prevent  the 
plaintiff  from  obtaining  security  for  the  payment  of  his  debt; 
they  were  charged  with  having  accomplished  that  wrong  by 
removing  the  debtor's  propert}^  from  his  possession  to  that  of 
his  confederate,  who  secured  it  or  its  proceeds,  and  thus  pre- 
vented its  attachment.  The  plaintiff  had  obtained  judgment, 
and  the  debtor  had  relieved  himself  from  the  execution  against 
his  body  by  taking  the  poor  debtor's  oath,  and  the  debt  re- 
mained wholly  unpaid.  The  case  was  proved  except  the  con- 
spiracy. It  was  held  that  the  action  could  not  be  maintained. 
Among  other  reasons  for  this  conclusion  was  the  uncertainty 
of  the  plaintiff's  damage.  Metcalf,  J.,  said :  "  How  could  this 
plaintiff  prove  that  he  suffered  any  damage  from  the  acts  of 
the  defendant  which  are  averred  in  the  declaration?  How 
could  he  prove  that  he  would  have  secured  his  debt  by  attach- 
ing the  property  of  his  debtor  if  the  defendant  had  not  inter- 
meddled with  it?  Other  creditors  might  have  attached  it  be- 
fore him,  or  it  might  have  been  stolen  or  destroyed  while  in 
the  debtor's  possession.  The  fact  that  the  plaintiff  has  suffered 
actual  damage  from  the  defendant's  conduct  is  not  capable  of 
legal  proof,  because  it  is  not  within  the  compass  of  human 
knowledge,  and  therefore  cannot  be  shown  by  human  testi- 
mony. It  depends  on  numberless  unknown  contingencies 
and  can  be  nothing  more  than  a  matter  of  conjecture."  ^ 

The  causation  between  a  fire  neg-  a  power  of  sale  contained  in  a  mort- 
ligently  started  and  which  is  sup-  gage  without  a  notice  to  him;  he 
posed  to  have  been  extinguished,  but  was  afterwards  induced  by  the  false- 
which  starts  up  again,  is  not  severed  hood  of  tlie  defendants  to  assign  the 
by  the  non-action  of  a  third  person  mortgage  to  one  M.  for  tlieir  bene- 
af ter  the  second  fire  starts.  Although  fit,  and  then  caused  such  foreclosure 
such  failure  to  act  is  culpable,  it  to  take  place  in  a  manner  to  avoid 
neither  adds  to  the  original  force  notice  reaching  the  plaintiff,  who 
nor  gives  it  new  direction,  and  hence  was  compelled  to  pay  $500  to  get  a 
in  tracing  back  the  line  of  causa-  deed  of  the  property.  The  case  was 
tion  it  will  not  be  noticed  as  a  potent  determined  on  demurrer  against  the 
agency.  Wiley  v.  West  Jersey  E.  plaintiff.  The  promise  of  the  mort- 
Co.,  44  N.  J.  L.  247.  ga-gee  was  gratuitous,  and  therefore 
1  Wellington  v.  Small.  3  Cush.  145.  neither  he  nor  an  assignee  would  do 
In  Randall  v.  Hazelton,  12  Allen,  any  legal  wrong  by  foreclosing  ac- 
412,  a  mortgagee  voluntarily  prom-  cording  to  the  power  in  the  mort- 
ised the  mortgagor  not  to  act  under  gage.    The  damage  was  held  to  re- 


§31.] 


CONSEQUENTIAL   DAMAGES    FOK   TORTS. 


95 


§  31.  Same  subject.  A  demurrer  was  sustained  to  a  [52] 
declaration  which  stated  that  the  defendant  and  a  confederate 
conspired  to  and  did  obtain  possession  of  a  portion  of  the 
plaintiff's  premises  by  falsely  pretending  that  it  was  wanted 


suit  from  the  foreclosure  and  not 
from  the  alleged  wrong.  "  Damages," 
say  the  court,  '"can  never  be  recov- 
ered where  they  result  from  the 
lawful  act  of  the  defendant."  The 
benefit  of  that  gratuitous  promise 
was  not  a  matter  of  legal  right,  and 
though  it  would  have  been  kept  but 
for  the  defendant's  fraudulent  con- 
tract, and  the  plaintiff  saved  from 
the  loss  which  resulted  from  the 
sale,  yet  that  fraud  was  not  action- 
able because  it  did  not  affect  any 
legal  right;  it  could  not  be  said  to 
be  an  invasion  of  such  a  right  "  to 
deprive  the  plaintiff  even  by  false- 
hood of  the  benefit  of  this  gratuitous 
undertaking."  The  court  say:  "In 
theTunbridge-Wells  Dippers'  case.  3 
Wils.  414,  while  the  court  remark 
that  there  was  a  real  damage  in  de- 
priving the  plaintiff  of  some  gratuity, 
they  also  say  in  the  same  sentence 
that  the  injury  was  by  disturbing 
the  dippers  in  the  exercise  of  their 
right  or  employment,  which  it  seems 
by  some  statutes  they  were  entitled 
to."  Hutchins  v.  Hutchins,  7  Hill, 
104;  Burton  v.  Henry,  90  Ala.  281, 
7  So.  Rep.  925. 

In  Bradley  v.  Fuller,  118  Mass. 
239,  the  court  stated  the  material 
allegations  of  the  declaration,  which 
was  held,  on  demurrer,  not  to  state 
a  cause  of  action,  to  be  that  the  de- 
fendant orally  represented  to  the 
plamtiff  that  a  corporation  of  which 
he  was  treasurer,  and  whose  overdue 
note  the  plaintiff  then  held,  owed  no 
other  debts,  and  had  no  attachments 
upon  its  property;  that  the  represen- 
tation was  fraudulently  and  falsely 
made  for  the  purpose  of  inducing 
the  plaintiff  not  to  commence  suit 
■upon  his  note   until   the  corporate 


property  could  be  placed  beyond  the 
reach  of  attachment  by  the  plaintiff; 
that  all  the  property  of  the  company 
was  afterwards  attached  and  sold  on 
execution  upon  another  debt;  and 
that  the  plaintiff,  induced  by  the 
representations  not  to  enforce  his 
claim  by  suit,  lost  his  debt  against 
the  company.  In  one  count  the 
plaintiff  .stated  that  he  "  was  induced 
to  forbear  securing  payment  of  his 
note  by  an  attachmant  of  said  prop- 
erty, as  he  might  and  would  have 
done  but  for  said  false  representa- 
tion." The  court  say:  "Under  the 
law  as  laid  down  by  this  court,  the 
facts  stated  in  these  counts  do  not 
show  a  legal  cause  of  action,  or  that 
the  plaintiff  has  suffered  any  legal 
damage.  There  is  no  attachment  or 
attempt  to  attach,  on  the  part  of  the 
plaintiff,  alleged;  it  does  not  appear 
that  by  reason  of  the  alleged  repre- 
sentation he  lost  anything  which  he 
ever  had.  Taking  these  counts  in 
the  most  favorable  sense  for  the 
plaintiff,  they  simply  charge  that  the 
plaintiff,  induced  by  the  falsehood 
alleged,  refrained  from  carrying  into 
effect  an  intention  to  attach;  and 
that  another  creditor  did  attach  and 
apply  the  company's  property  to  the 
payment  of  his  debt.  It  must  neces- 
sarily be  uncertain  whether  the 
plaintiff  would  have  attached  the 
property  and  applied  it  to  the  pay- 
ment of  his  debt  if  the  alleged  rep- 
resentation had   not  been  made." 

It  seemed  to  the  author  of  this 
work  that  this  case  was  erroneously 
decided.  The  law  recognizes  the 
value  of  the  preference  which  one 
creditor  by  diligence  may  obtain  by 
a  first  attachment  of  the  property 
of  an  insolvent  debtor.   Its  practical 


96  COMPENSATION.  [§  31. 

for  a  lawful  trade,  and  tlien  set  up  an  illicit  still  there;  that  by 
falsely  pretending,  and  by  divers  false  and  fraudulent  means 
and  devices,  they  made  it  appear  and  be  believed  that  it  was 
[53]  the  plaintiff  who  set  up  such  still  and  was  the  proprietor 
thereof;  that  thereby  he  was  convicted  of  keeping  illicit  stills. 
It  was  held  that  the  damage  was  not  the  natural  and  proximate 
consequence  of  the  defendant's  act.^  "Where  a  trespassing 
horse  kicked  a  child,  it  was  held  that  the  injury  was  not  the 
natural  consequence  of  the  trespass  in  the  absence  of  evidence 
that  the  defendant  knew  that  the  horse  was  vicious.  The 
court  said  to  entitle  the  plaintiff  to  maintain  an  action  it  is 
necessary  to  show  a  breach  of  some  legal  duty  due  from  the 
defendant  to  the  plaintiff.  And  if  there  was  negligence  on 
the  part  of  the  owner  of  the  horse  in  permitting  him  to  be  at 
large,  it  did  not  appear  to  be  connected  with  the  damage  of 
which  the  plaintiff  complains.  "  The  owner  of  a  horse  must  be 
taken  to  know  that  the  animal  will  stray  if  not  properly  se- 
cured, and  may  find  its  way  into  his  neighbor's  corn  or  pasture. 
For  a  trespass  of  that  kind  the  owner  is,  of  course,  responsible. 
[51]  But  if  the  horse  does  something  which  is  quite  contrary 
to  his  ordinary  nature,  something  which  his  owner  had  no 
reason  to  expect  him  to  do,  he  has  the  same  sort  of  protection 
that  the  owner  of  a  dog  has,  and  everybody  knows  that  it  is 
not  at  all  the  ordinary  habit  of  a  horse  to  kick  a  child  on  a 
highway.  It  was  assumed  that  the  injury  to  the  plaintiff  was 
caused  by  the  horse  having  viciously  kicked  him,  as  a  horse  of 
ordinary  temper  would  not  have  done;  therefore  the  plaintiff 
was  bound  to  show,  and  did  not,  that  the  defendant  knew  that 

value  was  illustrated  by  that  case,  of  law,  that  no  damages  can  be  re- 

The  debtor  was  liable  to  attachment,  covered  on  the  basis  of  frustrating 

and  had  property.    The  plaintiff  al-  an  intention,   the    carrying   out  of 

leged  that  he  might  and  would  have  which,  in  the  future,  is  lawful,  and 

attached  it  but  for  the  fraudulent  rep-  would  secure  an  advantage  or  pre- 

resentations.  Thecourt,  on  demurrer,  vent  a  loss.     That  it  maybe  proved 

held  it  "necessarily  uncertain"  that  that  an  intention  will  be  carried  out 

this  purpose  would  be  executed;  and  where  the  party  has  the  ability,  and 

so  much  so,  that  the  law  will  not  his  interest  requires  it  to  be  executed, 

accept  the   allegation  as  stating  a  is  legally  assumed  in  a  multitude  of 

provable  fact,  and  it  is  therefore  not  cases. 

admitted  by  a  demurrer.  It  certainly        i  Barber  v.  Lesiter,  7  C.  B.  (N.  S.) 

cannot   be  maintained,  as  a  matter  175. 


§31.] 


CONSEQUENTIAL   DAMAGES    FOR   TORTS. 


97 


the  horse  was  subject  to  that  infirmity  of  temper." '  In  a  sub- 
sequent case  a  mare  strayed  into  the  plaintiff's  pasture  and 
there,  from  some  unexplained  cause,  kicked  the  plaintilFs 
horse  and  broke  his  leg,  and  he  was  necessarily  killed.  Erie, 
C.  J.:  "The  contest  at  the  trial  seems  to  have  been  whether  or 
not  the  mare  was  of  a  ferocious  or  vicious  disposition,  and 
whether  the  defendant  knew  it.  But  I  think  it  was  not  neces- 
sarj'  to  go  into  that  question,  because  the  act,  which  upon  the 
evidence  must  be  presumed  to  have  caused  the  injury,  was  not 
one  which  was  characteristic  of  vice  or  ferocity  in  the  mare  in 
the  ordinary  sense.  The  animal  had  strayed  from  its  own 
pasture,  and  it  was  impossible  that  her  owner  could  know  how 
she  would  act  when  coming  suddenly  in  the  night-time  into  a 
field  among  strange  horses.  That  constitutes  the  difference 
between  this  case  and  those  relied  on  by  the  defendant,  and 
supports  the  summing  up  of  the  judge  when  he  said  it  was  not 
a  question  of  vice  or  scienter  in  the  ordinary  sense."     The  de- 


Expenses  incurred  by  one  whose 
property  has  been  wrongfully  levied 
on  in  trying  to  find  buyers  for  it  are 
too  remote.  Fatheree  v.  Williams, 
13  Tex.  Civ.  App.  430,  35  S.  W.  Rep. 
324. 

1  Cox  V.  Burbridge,  13  C.  B.  (N.  S.) 
480;  Jackson  v,  Smithson,  15  M.  &  W. 
563;  Hudson  v.  Roberts,  6  Ex.  697. 

In  Dickson  v.  McCoy,  39  N.  Y.  400. 
a  child  of  ten  years  was  passing  de- 
fendant's stable  upon  the  sidewalk 
of  a  populous  street,  when  the  de- 
fendant's horse  came  out  of  the 
stable,  being  loose  and  unattended, 
and,  in  passing,  kicked  the  boy.  The 
complaint  alleged  that  the  horse  was 
of  a  malicious  and  mischievous  dis- 
position, and  accustomed  to  attack 
and  injure  mankind,  but  of  this  no 
proof  was  made.  It  was  held  that 
this  was  not  material,  that  "  it  is  not 
necessary  that  a  horse  should  be 
vicious  to  make  the  owner  respon- 
sible for  injury  done  by  him  through 
the  owner's  negligence.  The  vice  of 
Vou  1  —  7 


the  animal  is  an  essential  fact  only 
when,  but  for  it,  the  conduct  of  the 
owner  would  be  free  from  fault,"  as, 
for  instance,  in  the  case  of  a  horse, 
properly  fastened  in  the  highway, 
which  should  kick  or  bite  a  passer-by. 
In  such  a  case  the  owner  would  be 
liable  only  if  he  had  knowledge  of 
the  vicious  disposition  of  the  animal, 
but  where  a  horse  is  allowed  to  run 
in  the  streets  of  a  populous  city  it  is 
obviously  dangerous  to  the  public, 
and  the  danger  is  none  the  less  be- 
cause the  running  and  kickmg  of 
the  horse  are  done  in  a  playful  mood, 
than  if  prompted  by  a  vicious  dis- 
position. Mills  V.  Bunke,  59  App. 
Div.  39,  69  N.  Y.  Supp.  96. 

In  the  absence  of  the  owner  of 
land  his  wife  directed  her  child  to 
drive  off  a  horse  trespassing  thereon ; 
while  domg  so  the  hoi"se  kicked  the 
child.  The  court  distinguisiied  Cox 
V.  Burbridge,  supra,  and  sustained  a 
recovery.  Waugh  v.  Montgomery,  8 
Vict.  L.  R.  (law)  290. 


98  COMPENSATION.  [§  32. 

fendant  was  held  responsible  for  the  mare's  trespass,  the  dam- 
asfe  not  beinij:  remote.^ 

Upon  the  trial  of  an  action  for  the  enticement  of  servants 
from  the  employment  of  another,  it  was  held  erroneous  to 
permit  evidence  of  consequential  damages  to  the  effect  that 
the  servants  plaintiff  first  employed  had  provisions  and  those 
he  subso(juently  employed  to  take  their  places  had  not,  by 
which  he  was  compelled  to  furnish  provisions,  and,  making  a 
poor  crop,  such  persons  were  unable  to  pay  him  for  the  pro- 
visions furnished  out  of  their  share  of  the  crop,  by  which  he 
was  damaged.^ 

[55]  §  32.  Breach  of  statutory  duties.  Whenever  an  ac- 
tion is  brought  for  breach  of  duty  imposed  by  statute  the 
party  bringing  it  must  show  that  he  had  an  interest  in  the 
performance  of  the  duty  and  that  the  duty  was  imposed  for 
his  benefit.  But  where  the  duty  was  created  or  imposed  for 
the  benefit  of  another  and  the  advantage  to  be  derived  to  the 
party  complaining  of  its  breach  from  its  performance  is  merely 
incidental  and  no  part  of  the  design  of  the  statute,  no  such 
right  is  created  as  forms  the  subject  of  an  action.  A  private 
pei'son  might  make  a  profit  by  the  performance  of  the  duty, 
but  the  breach  of  that  duty,  while  it  would  naturally  deprive 
him  of  that  benefit,  is  not  a  wrong  to  him.  The  loss  of  such 
a  benefit  is  not  in  a  legal  sense  an  injury.  Though  actual, 
it  is  not  a  legal  consequence  of  the  delinquency.  Thus,  a  post- 
master bound  by  an  act  of  congress  to  advertise  uncalled-for 

1  Lee  V.  Riley,  18  C.  B.  (N.  S.)  722;  curing  otlier  labor,  the  damages  re- 
Barnes  V.  Chapin,  4  Allen,  444,  81  suiting  to  crops  from  delay  in  plant- 
Am.  Dec.  710;  Dunckle  v.  Kocker.  ing,  or,  if  planted,  from  failure  to 
11  Barb.  387;  Lyons  v.  Merrick,  105  work  them,  and  such  kindred  dam- 
Mass.  71.  ages  as  plaintiff  could  not  have  pre- 

2  Salter  v.  Howard,  43  Ga.  601.  vented  by  reasonable  diligence  and 
Under  a  statute  which  makes  the  which   are  attributable  to   the   de- 
person  who   contracts  with,  decoys  fendant's  act.     McCutchin  v.  Taylor, 
or  entices  away  any  person  in  the  11  Lea,  259. 

employ  of  another  who  was  entitled  The  damages  which  may  be  recov- 

to  the  services  of  the  person  enticed  ered  for  enticing  away  the  servant 

liable  for  all  such  damages  as  the  of  another  include  the  profits  of  the 

original   employer    may  reasonably  servant'slabor.  and  the  loss  sustained 

sustain  by  the  loss  of  the  labor  of  by  the  plaintiff's  inability  to  improve 

such  employee,  it  is  competent  to  his  property  in  consequence.    Smith 

consider  the  reasonable  cost  of  pro-  v.  Goodman,  75  Ga.  198. 


^§  33.]  CONSEQUENTIAL    DAMAGES    FOR   TOKTS,  99 

letters  in  a  newspaper  of  a  particular  description  commits  no 
legal  wrong-  to  the  proprietor  of  such  a  paper  when  he  omits 
such  publication  or  gives  the  business  to  a  paper  of  a  different 
description.^  If  the  non- performance  of  a  duty  results  in 
injury  to  a  third  person  the  delinquent  party  is  responsible  to 
him.  Thus,  where  the  owner  of  a  water  channel  or  cut,  made 
pursuant  to  authority  of  the  state  and  open  for  the  use  of  all 
vessels  whose  owners  complied  with  the  prescribed  conditions, 
refused  to  allow  to  a  tug,  necessarily  employed  to  tow  a  vessel 
through  it,  access  to  the  vessel,  he  was  responsible  to  her  owner 
for  damage  resulting  from  the  discharge  of  her  cargo  by  light- 
ers.- It  is  the  natural  result  of  locating  a  pest-house  within  a 
forbidden  distance  of  a  residence  that  the  disease  affecting 
patients  in  the  pest-house  will  be  communicated  to  persons  liv- 
inof  or  visiting  in  the  neighborhood.^  "  Whenever  an  act  is  en- 
joined  or  prohibited  by  law,  and  the  violation  of  the  statute  is 
made  a  misdemeanor,  any  injury  to  the  person  of  another, 
caused  by  such  violation,  is  the  subject  of  an  action;  and  it  is 
sufficient  to  allege  the  violation  of  the  law  as  the  basis  of  the 
right  to  recover,  and  as  constituting  the  negligence  complained 
of,"^  One  who  violates  a  statute  by  carrying  a  revolver  is  lia- 
ble to  any  person  injured  by  him  therewith,  though  such  per- 
son consented  to  the  other's  carrying  and  use  of  the  revolver.* 
The  defendant  while  violently  beating  a  horse  slipped  and  un- 
intentionally injured  the  plaintiff.  Because  the  beating  was 
■contrary  to  a  statute  forbidding  cruelty  to  animals,  there  was 
liabilitj''  to  the  plaintiff.^ 

§  33.  Injury  through  third  person.  "Where  the  plaintiff 
is  injured  by  the  defendant's  conduct  to  a  third  person  it  is 
too  remote,  if  he  sustains  no  other  than  a  contract  relation  to 
such  third  person,  oris  under  contract  obligation  on  his  account, 
and  the  injury  consists  only  in  impairing  the  ability  or  incli- 

1  Strong    V.    Campbell,    11    Barb.  145  (Ky.).    See  McKay  v.  Henderson, 
135.  71  S.  W.  Rep.  625  (Ky.). 

2  Buffalo  Bayou  Ship  Canal  Co.  v.  ^  Messenger  v.  Pate,  43  Iowa,  443. 
Mil  by,  63  Tex.  492,  51  Am,  Rep.  608.  See  §  4. 

3  Henderson  v.  O'Haloran,  —  Ky.  5  Evans  v.  Waite,  83  Wis.  286,  53 
.  24  Ky.  L.  Rep.  995,  20  S.  W.  Rep.  N.  W.  Rep.  445. 

662;  Clayton  v.  Henderson,  44  S.  W.  6  Qsborne  v.  Van  Dyke,  IIB  Iowa, 
Rep.  667,  44  L.  R  A.  474;  Henderson  557,  85  N.  W.  Rep.  784,  54  L.  R.  A. 
V.  Clayton,  57  S.  W.  Rep.  1,  53  L.  R.  A.     367. 


100  COMPENSATION.  [§  33. 

nation  of  such  third  person  to  perform  his  part,  or  in  increas- 
ing the  plaintiff's  expense  or  labor  of  fulfilling  such  contract, 
unless  the  wrongful  act  is  wilful  for  that  purpose.^  A.,  who 
had  ao-reed  with  a  town  to  support  for  a  specific  time  and  for 
a  fixed  sum  all  the  town  paupers,  in  sickness  and  in  health, 
was  held  to  have  no  cause  of  action  against  S.  for  assaulting 
and  beating  one  of  the  paupers,  whereby  A.  was  put  to  in- 
creased expense.  The  damage  was  too  remote  and  indirect.- 
A  stockholder  in  a  bank  cannot  maintain  an  action  against  its 
directors  for  their  negligence  in  so  conducting  its  affairs  that 
its  whole  capital  stock  is  lost  and  the  shares  therein  rendered 
worthless,  nor  for  the  malfeasance  of  the  directors  in  delegat- 
ing the  whole  control  of  the  affairs  of  the  bank  to  the  presi- 
dent and  cashier,  who  wasted  and  lost  the  whole  capital.^  The 
[56]  direct  injury  is  to  the  corporation,  and  only  remotely  to 
the  stockholders.  The  latter  have  a  remedy,  in  theory,  though 
often  inadequate,  in  the  power  of  the  corporation  as  such  to 
obtain  redress  for  injuries  done  to  the  common  property  by 
the  recovery  of  damages.*  A  party  who  by  contract  was,  he 
furnishing  the  raw  material,  to  have  all  the  articles  to  be 
manufactured  by  an  incorporated  company,  was  held  not  en- 
titled to  maintain  an  action  against  a  wrong-doer  who  by  tres- 
pass stoi)ped  the  company's  machinery  so  that  it  was  prevented 
from  furnishing,  under  that  contract,  manufactured  goods  to 
so  great  an  extent  as  it  otherwise  would  have  done.^  A  cred- 
itor can  maintain  no  action  against  one  who  has  forged  a  note 
by  which  the  dividends  from  an  estate  were  diminished.^  An 
insurance  company  cannot  recover  from  a  wrong-doer  who 
causes  the  loss  insured  against  the  money  paid  to  satisfy  such 
loss.'     A  man  drafted  into  the  military  service  deserted,  and 

1  Brink  v.  Wabash  R.  Co.,  160  Mo.        <  Id. 

87,  60  S.  W.  Rep.  1058, 83  Am.  St.  459;  5  Dale  v.  Grant,  34  N.  J.  L.  143. 

Gregory  v.  Brooks,  35  Conn.  437,  95  *•  Cunningham   v.    Brown,    18  Vt. 

Am.  Dec.  278;  Lumley  v.  Gye,  2  EI.  &  123,  46  Am.  Dec.  140. 

Bl.  216;  McKay  v.  Henderson,   71  S.  "^  Rockingham  Ins.  Co.   v.  Bosher, 

W.  Rep.  625  (Ky.).  39  Me.  253,  63  Am.  Dec.  618:  Connec- 

2  Anthony  v.  Slaid,  11  Met.  290.  ticut,  etc.  Ins.  Co.  v.  New  York,  etc. 

3  Smith  V.  Hurd,  12  Met.  371,  46  R.  Co..  25  Conn.  26.5,  65  Am.  Dec.  571. 
Am.  Dec.  690.  See  Bloom  v.  National  See  PacificPine  Lumber  Co.  v.  West- 
United  Benefit  Savings  &  L.  Co.,  ern  U.  Tel.  Co.,  123  Cal.  428,  56  Paa 
152  N.  Y.  114,  46  N.  E.  Rep.  166.  Rep.  103. 


§  34.]  CONSEQUENTIAL   DAMAGES   FOK   TORTS.  101 

another  who  had  been  drawn  as  an  alternate  to  serve  in  such 
a  contingency,  and  was  consequently  obliged  to  and  did  serve, 
was  held  to  have  no  legal  claim  against  the  deserter  for  the 
loss  and  injury  of  doing  so.'  But  where  a  tradesman  or  me- 
chanic is  defamed  in  his  business  or  avocation  by  a  false  and 
fraudulent  device  practiced  upon  one  of  his  customers,  the  per- 
son who  is  guilty  of  such  fraud  is  responsible  for  a  loss  of 
patronage  flowing  therefrom,  although  the  customer  was  also 
wronged.^  The  exception  indicated  in  the  opening  sentence  of 
the  section  is  illustrated  by  a  case  in  which  the  defendant 
falsely  claimed  and  represented  himself  to  be  a  superintendent 
of  wharves  and  harbor-master,  and  as  such  to  have  issued  an 
order  directing  the  captain  of  a  vessel  moored  at  the  plaintiff's 
wharf  to  remove  therefrom.  At  the  time  the  order  was  given 
the  captain  was  discharging,  and  the  plaintiff  was  receiving,  a 
cargo  from  the  vessel.  The  plaintiff  owned  and  kept  such 
wharf  for  the  purpose  of  letting  it  for  hire.  By  means  of 
such  acts  the  captain  w^as  induced  to  remove  from  the  plaint- 
iff's wharf  and  discharge  his  cargo  at  another  wharf.  The 
right  to  recover  was  adjudged  if  the  defendant  acted  with  a 
malicious  and  fraudulent  design  to  injure  the  plaintiff.^ 

§  31.  Liability  as  affected  by  extraordinary  circumstances. 
There  must  not  only  be  a  legal  connection  between  the  injury 
and  the  act  complained  of,  but  such  nearness  in  the  order  of 
events  and  closeness  in  the  relation  of  cause  and  effect  that  the 
influence  oi  the  injurious  act  may  predominate  over  that  of 
other  causes,  and  concur  to  produce  the  consequence  or  be 
traced  to  thotje  causes.*  To  a  sound  judgment  must  be  left 
each  particular  case.  The  connection  is  usually,  but  not  always, 
enfeebled  and  the  influence  of  the  injurious  act  controlled,  where 
the  wrongful  act  of  a  third  person  intervenes,  or  where  any 
new  agent,  introduced  by  accident  or  design,  becomes  more 
powerful  in  producing  the  consequence  than  the  first  injurious 
act.  The  requirement  that  the  consequences  to  be  answered 
for  should  be  natural  and  proximate  is  not  that  they  should  [57] 

1  Jemmison  v.  Gray,  29  Iowa,  o37.        3  Gregory  v.  Brooks,  35  Conn.  437, 

2  Hughes   V.  McDonough,  43  N.  J.     95  Am.  Dec.  278. 

L.  459,  39  Am.  Rep.  603.  ^Coyle  v.  Baum,  3  Okla.  695,  716, 

41  Pac.  Rep.  389,  quoting  the  text. 


102  COMPENSATION".  [§  35. 

be  such  as  upon  a  calculation  of  chances  would  be  found  likely 
to  occur,  nor  such  as  extreme  prudence  would  anticipate,  but 
only  that  they  should  be  such  as  have  actually  ensued  one  from 
another,  without  the  occurrence  of  any  such  extraordinary  con- 
juncture of  circumstances,  or  the  intervention  of  such  an  extraor- 
dinary result  as  that  the  usual  course  of  nature  should  seem 
to  have  been  departed  frora.^  The  general  rule  is  that  a  de- 
fendant is  not  answerable  for  anything  beyond  the  natural, 
ordinary  and  reasonable  consequences  of  his  conduct.^  We  are 
not  to  link  together  as  cause  and  effect  events  having  no  prob- 
able connection  in  the  mind,  and  which  could  not,  by  prudent 
circumspection  and  ordinary  thoughtfulness,  be  foreseen  a& 
likely  to  happen  in  consequence  of  the  act  in  which  we  are  en- 
gaged. It  may  be  true  that  the  injury  would  not  have  occurred 
without  the  concurrence  of  our  act  with  the  event  which  im- 
mediately caused  the  injury,  but  we  are  not  justly  called  to 
suffer  for  it  unless  the  other  event  was  the  effect  of  our  act,  or 
was  within  the  probable  range  of  ordinary  circumspection.  If 
one's  fault  happens  to  concur  with  something  extraordinary 
and  therefore  not  likely  to  be  foreseen  he  will  not  be  answer- 
able for  such  unexpected  result.'' 

§35.  Illustrations  of  tlie  doctrine  of  the  preceding  sec- 
tion. An  injury  by  negligence  was  done  to  wool  by  wetting 
it,  rendering  it  necessary  to  take  it  out  of  the  original  packages 

1  Harrison  v,  Berkley,  1  Strobh.  525,  Grew  v.  Stone,  s^ipra;  Fairbanks  v. 

549,  47  Am.  Dec.  578.    This  case  is  Kerr,  70   Pa.  86,  10  Am.  Rep.  664; 

criticised  in  a  note  on  p.  830,  36  Am.  People  v.  Mayor,  5  Lans.  524;  Lee  v. 

St.,  which  criticism  is  approved  in  Burlington,  113  Iowa,  356,  86  Am.  St. 

Meyer  v.  King,  72  Miss.  1,  12,  16  So.  379,    85  N.  W.  Rep.   618;  Nelson  v. 

Rep.  245,  35  L.  R  A.  474.  Crawford,  122  Mich.  466,  81  N.  W. 

2 Bennett  v.  Lockwood.  20  Wend.  Rep.  335,  80  Am.  St.  577;  Deisenrieter 

223,  32  Am.  Dec.  532;  Grain  v.  Petrie,  v.  Kraus-Merkel  Malting  Co.,  97  Wis. 

6  Hill,  523,  41  Am.  Dec.  765;  McGrew  279,   286,  72   N.   W.    Rep.   735;   Mil- 

V.  Stone,  53  Pa.  436;  Big  Goose  &  waukee.  etc.  R  Co.  v.  Kellogg,  94 

Beaver  Ditch  Co.  v.  Morrow,  8  Wyo.  U.  S.  469.  475:  Consolidated  Electric 

537,  547,  59  Paa  Rep.  159,  80  Am.  St  Light  &  P.  Co.  v.  Koepp,  64  Kan.  735, 

955,  citing  the  text.  67  Pac.  Rep.  608. 

'Stone  V.  Boston  &  A.  R  Co.,  171  Some  of  the  cases  which  deny  the 

Mass.  536,  51  N.  E.  Repu  1,  41  L.  R.  A.  right  to  recover  for  mental  suflfering 

7)4;  Meyer  v.  King,  72  Miss.  1,  8,  16  or  nervous  shock  do  so  on  the  ground 

So.  Rep.  245,  35  L.  R.  A.  474,  citing  that  the  injury  is  too  remote.    See 

the  text;  Roach  v.  Kelly,  194  Pa.  24,  §  21  et  seq. 
44  AtL  Rep.  1090.  75  Am.  St.  685;  Mc- 


§  o5.]  CONSEQUENTIAL    DAMAGES    FOR    TOKTS.  103 

in  which  it  had  been  imported.  A  few  weeks  afterwards  an 
act  of  congress  was  passed  under  which,  if  the  wool  had  re- 
mained in  the  original  packages,  the  plaintiff  would  have  been 
entitled  to  a  return  of  duties.  It  was  held  that  the  loss  of  the 
right  to  claim  a  return  thereof  was  not  recoverable  as  a  proxi- 
mate consequence  of  the  negligence.  It  was  remarked  that  if 
the  market  value  of  the  wool  in  the  original  packages  had  been 
higher  by  reason  of  its  being  entitled  to  debenture  under  the 
laws  existing  at  the  time  when  the  injury  was  done,  the  plaintiff 
would  have  had  a  right  to  an  increase  of  damages  in  con-  [58] 
sequence  of  being  obliged  to  break  the  packages;  so  if  the 
market  value  had  been  enhanced  at  that  time  by  reason  of  a 
general  expectation  that  an  act  of  congress  would  be  passed 
allowing  a  return  of  duties.'  In  trespass  for  taking  two 
horses,  a  wagon  and  double  harness,  the  declaration  stated  as 
special  damage  occasioned  thereby  that  when  it  occurred  the 
plaintiff  was  moving  with  his  family  and  household  goods  to 
another  state,  and  was  employing  his  horses,  wagon  and  har- 
ness for  that  purpose;  that  he  was  thereby  prevented  from 
pursuing  his  journey,  and  put  to  great  expense  for  the  support 
of  himself  and  family;  that  when  the  property  was  taken  the 
roads  were  frozen  and  the  traveling  good ;  but  while  it  was 
detained  the  frost  left  the  ground  and  the  roads  became  so 
muddy  that  it  was  quite  impossible  for  the  plaintiff  to  prose- 
cute his  journey,  by  reason  whereof  he  was  detained  with  his 
family  and  prevented  from  putting  in  his  crops  in  the  state  to 
which  he  was  moving.  It  was  held  erroneous  to  admit  evi- 
dence of  these  various  circumstances.  The  court  recognized 
the  rule  that  to  be  recovered  the  damages  must  be  the  natural 
and  proximate  consequence  of  the  act  complained  of;  but  it 
was  said  "  no  case  can  be  found  where  a  mere  accident  or  event 
not  resulting  naturally  from  the  act  done  by  the  defendant  has 
been  held  sufficient  to  constitute  a  valid  claim  for  damages."^ 
The  law  is  correctly  stated,  but  in  other  cases  there  has  been 
recovery  for  some  of  the  damages  here  denied.  In  the  plaintiff's 

1  Stone  V.  Coflman,  15  Pick.  297.         consequence  it  is  damaged  in  excess 

2  Vedder  v.  Hildreth,  2  Wis.  4'27.        of  the  value  of  the  horses,  he  may 
If  the  owner  of  horses  illegally    recover  for  the  injury  to  the  crop. 

seized   is  unable    to  procure  other    Steel  v.  Metcalf.  4Tex.  Civ.  App.  813, 
means  to  cultivate  his  crop,  and  in    23  S.  W.  Rep.  474. 


104  COMPENSATION,  [§  35. 

predicament  increased  expenses  and  loss  of  time  were  necessary 
r(.>sults  of  the  taking  of  the  property.  In  an  English  case  ^  the 
plaintiff  took  passage  to  Australia  in  the  defendant's  vessel, 
but  he  was  not  allowed  to  sail  on  account  of  a  mistaken  belief 
that  he  had  not  paid  his  entire  fare.  The  error  was  found  out 
immediately  and  he  was  offered  a  passage  in  a  ship  which  sailed 
in  a  week  after  the  first.  Instead  of  going  by  it,  however,  he 
remained  in  England  to  a  later  time  to  sue  the  defendant.  It 
was  held  that  the  expense  of  his  keep  till  trial  could  not  be 
allowed  as  damages,  since  he  might  have  gone  earlier  if  he  had 
wished.  The  suicide  of  one  who  was  injured  on  a  railway 
train  eight  months  after  the  injuries  were  sustained,  though 
they  disordered  his  mind  and  body,  is  not  a  result  which  might 
naturally  and  reasonably  be  expected  to  follow.  The  court  say: 
"  The  argument  is  not  sound  which  seeks  to  trace  this  imme- 
diate cause  of  the  death  through  the  previous  stages  of  mental 
aberration,  physical  suffering  and  eight  months'  disease  and 
medical  treatment  to  the  original  accident  on  the  railroad. 
Such  a  course  of  possible  or  even  logical  argument  would  lead 
back  to  that  '  great  first  cause  least  understood  '  in  which  the 
train  of  all  causation  ends."  ^  The  fact  that  a  passenger  train 
three-fourths  of  an  hour  behind  its  schedule  time  was  blown 
over  by  a  windstorm  which  struck  a  portion  of  the  track  on 
which  the  train  would  not  have  been  but  for  the  delay,  does 
not  make  the  company  liable  for  an  injury  thereby  sustained 
by  a  passe  nger.'* 

A  convict,  aged  thirty-seven  years,  had  been  in  the  peniten- 
tiary twelve  years,  and  had  escaped  therefrom  five  times.  lie 
was  in  vigorous  health,  immoral,  of  vicious  habits,  violent 
passions  and  prone  to  desire  for  sexual  intercourse,  all  of 
which  facts  his  custodians  knew.  While  at  large,  through 
their  fault,  the  convict  committed  rape.  Such  act,  it  was 
ruled,  was  not  one  which  the  custodians  ought  to  have  fore- 

1  An.sett  V.  Marshall,  22  L.  J.  (Q.  B.)  the  wrong  done  him,  the  jury  may 
118.  determine  whether  the   injury  w-as 

2  Scheffer  V.  Railroad  Co.,  105  TJ.  S.  the  proximate  cause  of  death.     Tur- 
249.     See  §  36.  ner  v.  Nassau  Electric  R.  Co.,  41  App. 

If  the  injury  which  a  deceased  per-     Div.  218,  58  N.  Y.  Supp.  490. 
son  received  precipitated  a  malady         ^  ]\icClary  v.  Sioux  City  &  P.  R.  Ca, 
and  he  would  not  have  had  it  but  for    3  Neb.  44,  19  Am.  Rep.  631. 


§  36.]  CONSEQUENTIAL   DAMAGES    FOR   TORTS.  105 

seen  as  reasonably  probable,  and  they  were  not  liable  for  it.^ 
Because  of  the  icy  condition  of  a  chute  used  for  loading  stock 
an  animal  thereon  slipped  and  fell,  knocking  down  a  second, 
which  fell  upon  and  injured  plaintiff.  It  was  no  defense  that 
this  connected  series  of  causes  produced  the  injury.-  Though 
a  snow  storm  causes  animals  to  travel  toward  and  into  a  dan- 
gerous excavation,  the  existence  of  the  latter  and  the  neglect 
of  the  person  responsible  therefor  are  the  proximate  cause  of 
the  loss  of  the  animals.'  Making  an  assault  on  a  woman  wait- 
ing in  a  railroad  station  at  night  in  consequence  of  which  her 
child  of  seven  years  becomes  frightened,  runs  out  on  the 
tracks,  and  is  killed  by  a  train,  is  the  proximate  cause  of  the 
death.*  While  standing  on  a  platform  waiting  for  a  train,  the 
plaintiff  was  injured  by  being  struck  by  the  dead  body  of  a 
person  who  was  killed  while  attempting  to  cross  the  tracks  of 
the  railroad  near  where  the  plaintiff  was.  Assuming  that  neg- 
ligence on  the  part  of  the  railroad  company  was  shown,  there 
was  no  liability.^  The  Georgia  court  reached  a  different  con- 
clusion where  the  company's  engineer  acted  recklessly  and 
wantonly.® 

§  36.  Liability  of  carriers  for  consequential  damages; 
extraordinary  circumstances.  The  recent  leading  Ameri- 
can case  on  the  liability  of  carriers  of  passengers  for  conse- 
quential damages  was  decided  in  1882.^  Although  the  de- 
cision was  not  unanimous  it  has  had  a  noticeable  influence  in 
courts  which  have  since  been  called  upon  to  consider  similar 
questions.  The  principal  facts  involved  are  not  essentiall}'' 
different  from  those  in  an  English  case  decided  in  1875;^  but 
the  rules  of  law  applied  are  in  strong  contrast.  This  is  in  part 
accounted  for  by  the  fact  that  in  the  Wisconsin  case  the  action 

1  Henderson  v.  Dade  Coal  Co.,  100  5  Wood  v.  Pennsylvania  R.  Co.,  177 

Ga.  568,  28  S.  E.  Rep.  251.  40  L.  R.  A.  Pa.  806,  35  Atl.  Rep.  699,  35  L.  R.  A. 

95:  Hullinger  v.  Worrell,  83  111.  220.  199,  55  Am.  St.  728,  followed  in  Ev- 

2Kincaid  v.  Kansas  City,  etc.  R.  ansville.  etc.  R,  Co.  v.  Welch,  25  Ind. 

Co.,  62  Mo.  App.  365.  App.  308,  58  N.  E.  Rep.  88. 

»  Big  Goose  &  Beaver  Ditch  Co.  v.  «  Western  &  R.  Co.  v.  Bailey,  105  Ga. 

Morrow,  8  Wyo.  537,  59  Pac.  Rep.  159,  100,  31  S.  E.  Rep.  547. 

80  Am.  St.  955.  "  Brown  v.  Chicago,  etc.  R.  Co.,  54 

*McGehee  v.  McCarley,  33  C.  C.  A.  Wis.  342,  11  N.  W.  Rep.  356,  911. 

29,  91  Fed.  Rep.  462.  8Hobbs  v.  London,  eta  R.  Co.,  L. 

R  10  Q.  B.  la 


lOG 


COMPENSATION. 


[§36. 


was  held  to  be  in  tort,  while  the  English  case  was  considered 
as  one  for  broach  of  the  contract.  In  the  former  the  plaintiffs 
were  husband  and  wife.  They  had  been  the  defendant's  pas- 
sengers, and  were  directed  to  leave  its  train  at  a  point  three 
miles  from  M.,  their  destination,  being  told  that  that  place 
was  reached.  When  they  disembarked  it  was  dark;  a  freight 
train  stood  on  a  side-track;  there  were  no  lights  visible,  and  no 
platform  on  which  to  alight.  There  was  a  station-house  near, 
but  it  was  hid  from  their  view  by  the  freight  train.  The 
plaintiffs  did  not  know  their  location,  but  supposed  that  they 
were  one  mile  nearer  M.  than  the}''  were;  they  started  thither 
expecting  to  find  a  house  in  which  they  might  remain,  but  did 
not  find  one  until  they  were  within  one  mile  of  M.,  when  they 
concluded  to  go  on  rather  than  to  seek  shelter  at  the  house,  it 
being  a  considerable  distance  from  the  track.  It  was  late  at 
night  when  they  reached  M.  and  Mrs.  B.  was  quite  exhausted. 
She  was  pregnant  at  the  time,  and  during  that  night  suffered 
severe  pains  which  continued  for  more  than  two  months,  when 
a  miscarriage  resulted  and  inflammation  set  in.  The  jury 
found  that  her  sickness  was  caused  by  the  walk,  that  the 
plaintiffs  were  not  negligent  in  taking  that  walk,  but  were 
compelled  to  take  it  as  the  result  of  the  defendant's  wrongful 
act.  The  first  question  determined  was  that  the  action  was  in 
tort  for  the  negligence  and  not  upon  the  contract  to  carry, 
notwithstanding  the  complaint  recited  that  the  relation  be- 
tween the  parties  was  a  contract  relation,  and  that  the  defend- 
ant "  wholly  disregarded  its  duty  in  the  premises,  and  its  con- 
tract and  obligations  to  and  with  the  plaintiffs."  ^     The  court, 


1  This  view  of  the  nature  of  the  ac- 
tion is  different  from  that  entertained 
in  Hobbs  v.  London,  etc.  R.  Co.,  L.  R. 
10  Q.  B.  Ill  (compare  McMahon  v. 
Field,  7  Q.  B.  Div.  591),  where  it  was 
held  that  an  action  resting  on  facts 
■which  are  quite  like  those  in  the 
principal  case  was  upon  contract,  and 
that  damages  resulting  from  the 
walk  taken  by  the  plaintiff  to  reach 
his  home  and  .sickness  consequent 
thereupon  could  not  be  reco%ered. 
Tlie  ca.se  referred  to  is  disapproved 
in  Evans  v.  St.  Louis,  etc.  R  Co.,  11 


Mo.  App.  463,  472;  Cincinnati,  etc.  R. 
Co.  V.  Eaton,  94  Ind.  474,  48  Am.  Rep. 
179. 

The  rule  declared  in  the  Wisconsin 
case  as  to  the  form  of  the  action  is 
in  harmony  with  Sloane  v.  Southern 
California  R.  Co.,  Ill  Cal.  668,  '62  L. 
R  A.  193,  44  Pac.  Rep.  320;  Head  v. 
Georgia,  etc.  R.  Co.,  79  Ga.  538.  11 
Am.  St.  454,  7  S.  E.  Rep.  217;  Seals  v. 
Augusta  Southern  R  Co.,  102  Ga,  817. 
29  S.  E.  Rep.  116;  Carsten  v.  Northern 
Pacific  R  Co.,  44  Minn.  454.  20  Am.- 
St.  589,  47  N.  W.  Rep.  49.  9  L.  R  A.. 


§  30.]  CONSEQUENTIAL    DAMAGES    FOR    TOETS.  107 

Taylor,  J.,  writing  the  opinion,  said  that  the  doctrine  is  clearly 
established  that  one  who  commits  a  trespass  or  other  wrong  i& 
liable  for  all  the  damage  which  legitimately  flows  directly 
therefrom,  whether  such  damages  might  have  been  foreseen 
by  the  wrong-doer  or  not.  Had  the  defendant  wrongfully 
placed  the  plaintiffs  off  the  train  in  the  open  country,  where 
there  was  no  shelter,  in  a  cold  and  stormy  night,  and  on  ac- 
count of  the  state  of  health  of  the  parties,  in  their  attempts  ta 
find  shelter,  they  had  become  exhausted  and  perished,  it  would 
seem  quite  clear  that  the  defendant  ought  to  be  liable.  Its 
wrongful  act  would  be  the  natural  and  direct  cause  of  their 
deaths,  and  it  would  be  a  lame  excuse  for  the  defendant  that 
if  the  plaintiffs  had  been  of  more  robust  health  they  would  not 
have  perished  or  have  suffered  any  material  injury.  It  was 
no  excuse  that  the  female  plaintiff's  condition  was  not  known 
to  the  railroad  employees.^  By  wrongfully  placing  the  parties 
in  the  position  in  which  they  were  the  defendant  was  also 
liable  for  the  resulting  injury,  whether  it  was  the  immediate 
result  of  its  act  or  of  theirs  in  endeavoring  to  escape  there- 
from. The  case  was  within  the  rule  that  where  an  efficient 
adequate  cause  is  found  it  must  be  considered  the  true  cause 
unless  some  other  cause  independent  of  it  is  shown  to  have  in- 
tervened between  it  and  the  result.^     In  strong  contrast  with 

688;  Coy  v.  Indianapolis  Gas  Co.,  146  Cincinnati,  etc.  R.  Co.  v.  Eaton,  94 

Ind.  655,  46  N.  E.  Rep.  17,  36  L.  R.  A.  Ind.  474,  48  Am.  Rep.  179.     To  the 

535;  Chicago,  etc.  R.  Co.  v.  Spirk,  51  same  effect  are  Winkler  v.  St.  Louis. 

Neb.  167,  70  N.  W.  Rep.  926;  L.  &  N.  etc.  R.  Co.,  21  Mo.  A  pp.  99;  Augusta 

R.  Co.  V.  Storms,  15  Ky.  L.  Rep.  333  &  S.  R.  Co.  v.  Randall,  79  Ga.  304,  4 

(Ky.  Super.  Ct.);  Alabama  &  V.  R,  S.   E.  Rep.  764;  Evans  v.  St.  Louis, 

Co.  V.   Hanes,  69  Miss.    160,    13   So.  etc.   R.  Co.,  11  Mo.   App.  463;  Fitz 

Rep.  246;  Toronto  R.  Co.  v.  Grinsted,  patrick  v.  Great  Western  R.  Co.,  12 

24  Can.  Sup.  Ct.  570.  Up.  Can.  Q.  B.  645;  Baltimore  City 

1  Sloans  V.  Southern  California  R.  P.  R.  v.  Kemp,  61  Md.  74;  Davis  v. 
Co.,  supra;  Mann  v.  Boudoir  Car  Co.,  Standard  Nat.  Bank,  50  App.  Div. 
4  C.  C.  A.  540,  54  Fed.  Rep.  646,  21  L.  210,  63  N.  Y.  Supp.  764;  Ehrgott  v. 
R.  A.  289;  East  Tennessee,  etc.  R.  Co.  Mayor,  96  N.  Y.  264,  48  Am.  Rep.  622; 
V.  Lockhart,  79  Ala.  315.  Toronto  R.  Co.  v.  Grinsted,  24  Can. 

2  Brown  v.  R.  Co.,  supra,  has  been  Sup.  Ct.  570;  Yazoo,  etc.  R.  Co.  v. 
approved,  as  to  the  substantial  point  Aden,  77  Miss.  382,  27  So.  Rep.  385. 
in  it,  in  Sloane  v.  R.  Co.;  Coy  v.  Gas  See  Smith  v.  British,  etc.  Co.,  86  N.  Y. 
Co.;  Chicago,  etc.  R.  Co.  v.  Spirk,  408;  Putnam  v.  Nevp^  York,  etc.  R. 
supra;  Terre  Haute  &  I.  R.   Co.  v.  Co.,  47  Hun,  439;  g?<  48.  49. 

Buck,  96  Ind.  346,  49  Am.  Rep.  168;        An  agent  viho  wrongly  informs  a 


108 


COMPENSATION. 


[§36. 


the  case  stated  is  one  decided  in  1873/  in  which  it  is  held  that 
a  female  passenger  who  suffers  injuries  through  a  carrier's 
neo'lio'ence  cannot  recover  for  such  as  are  the  result  of  the 
plij^sical  condition  she  is  in,  as  where  illness  follows  arrested 
menstruation,  although  the  negligence  produces  that  con- 
dition. It  is  well  observed  concerning  this  case  that  it  is  un- 
sustained  by  authority  and  is  supported  by  neither  the  prin- 
ciples of  law  nor  humanity .^  If  a  passenger  wrongfully  put 
off  a  train  at  a  flag-station,  when  it  is  dark  and  a  storm  is 
raging,  and  at  a  great  distance  from  his  starting  point  and 
destination,  is  injured  by  falling  through  a  cattle-guard  while 
on  his  way  to  the  nearest  station,  the  jury  may  decide  whether 
the  result  is  attributable  to  such  wrong.^ 

If  a  shock  or  injury  to  the  nervous  system  is  occasioned  by 
the  wrongful  ejection  of  a  passenger  from  a  car  it  will  be  re- 
garded as  a  physical  injury,  and  the  act  which  caused  the 
shock  will  be  taken  to  be  the  proximate  cause  of  the  injury  if 
bodily  suffering  is  the  result  of  the  shock.*  If  a  passenger  who 
informs  a  conductor  when  she  boards  his  train  that  friends  will 
meet  her  at  her  destination  is  carried  beyond  it  and  obliged  to 
sit  up  all  night  in  a  car  into  which  cold  is  admitted,  and  to 
change  cars  during  the  night  and  leave  the  train  at  an  early 
hour  in  the  morning,  the  jury  may  well  find  that  the  carrier 
is  responsible  for  her  subsequent  sickness.'^  One  who  has 
bought  a  ticket  and  is  waiting  in  a  station  to  take  a  train  is  a 
passenger,^  and  if  the  carrier's  gateman,  knowing  that  such 


passenger  that  a  train  she  is  about  to 
take  will  make  close  connections 
with  the  train  of  another  road  at  a 
designated  place  is  not  bound  to 
foresee  that  she  would  procure  a  con- 
veyance, and,  in  the  face  of  a  storm, 
in  a  delicate  state  of  health,  drive 
over  a  rough  road  to  her  father's 
house,  and  that  a  miscarriage  would 
result.  Fowlkes  v.  Southern  R  Co., 
96  Va.  743,  33  S.  E.  Rep.  464. 

1  Pullman  Palace  Car  Co.  v.  Barker, 
4  Colo.  344,  34  Am.  Rep.  89. 

-  Brown  v.  Chicago,  etc.  R.  Co., 
Terre  Haute  &  I.  R.  Co.  v.  Buck, 
Ehrgott  v.  Mayor,  siipra. 


3  Evans  V.  St.  Louis,  etc.  R.  Co.,  11 
Mo.  App.  463;  Winkler  v.  Same,  21 
id.  99.  See  Patten  v.  Chicago  &  N. 
R.  Co.,  32  Wis.  524;  and  compare 
Lewis  V.  Flint,  etc.  R.  Co.,  54  Mich. 
55,  19  N.  W.  Rep.  744. 

*Sloane  v.  California  Southern  R 
Co.,  Ill  Cal.  668,  33  L.  R.  A.  193,  44 
Pac.  Rep.  330. 

5  Missouri,  etc.  R.  Co.  v.  Hennesey, 
20  Tex.  Civ.  App.  316,  49  S.  W.  Rep. 
917;  Grimsted  v.  Toronto  R.  Co.,  21 
Ont.  App.  578. 

•'Grimes  v.  Pennsylvania  Co.,  36 
Fed.  Rep.  73;  Warren  v.  Fitchburg 
R.  Co.,  8  Allen,  227;  Wells  v.  New 


§  3G.]  CONSEQUENTIAL   DAMAGES    FOR   TOETS.  109 

person  is  ill,  is  so  waiting,  and  has  bought  his  ticket,  fails  to 
comply  with  his  request  to  notify  him  of  the  arrival  of  his 
train,  and  after  the  train  has  gone  directs  a  policeman  to  eject 
such  person  from  the  station,  saying  that "  he  was  not  in  a  con- 
dition of  mind  to  go  on  any  train,"  and  such  person,  after  being 
ejected,  and  while  wandering  about  the  tracks  near  the  station, 
is  run  over  by  a  train  and  killed,  the  carrier  is  responsible,'  If 
the  agent  of  an  express  company  receives  a  package  for  trans- 
portation with  notice  that  it  contains  medicine  for  a  sick  per- 
son, and  that  it  is  important  that  it  be  sent  at  once,  the  carrier 
is  liable  for  the  physical  and  mental  injury  which  its  delay  in 
forwarding  the  medicine  may  occasion  to  the  sick  person;  but 
not  for  the  mental  suffering  of  the  husband  on  account  of  his 
wife's  condition. 2  Where  a  carrier  had  left  a  locked  car 
marked  "powder"  near  its  warehouse,  in  which  a  fire  broke 
out,  and  the  cit}''  fire  department  refrained  from  making  efforts 
to  put  out  the  fire  through  reasonable  fear  of  the  explosion  of 
the  powder  supposed  to  be  in  the  car,  notwithstanding  the  car 
was  empty,  the  negligence  in  so  leaving  the  car  is  the  proxi- 
mate cause  of  the  loss  of  property  in  the  warehouse,  it  being 
reasonably  certain  that  the  fire  would  have  been  controlled 
but  for  the  apprehension  of  the  firemen.^  On  the  other  hand, 
a  carrier  is  not  presumed  to  contemplate  that  an  accident  may 
produce  insanity  in  one  of  its  passengers,  no  bodily  harm  being 
sustained.*  To  recover  consequential  damages,  resulting  from 
being  ejected  from  a  train,  the  plaintiff  must  show  that  his 
subsequent  conduct  in  attempting  to  reach  his  destination  was 
reasonable.*  The  failure  to  stop  a  train  at  a  proper  place  does 
not  justify  a  passenger  in  leaping  off,  unless  he  is  invited  to  do 
so  by  the  carrier's  agent  and  the  attempt  was  not  obviously 
dangerous.^  In  the  absence  of  notice  that  a  passenger  whom 
a  conductor  has  promised  to  awaken  was  to  be  met  at  a  sta- 

York   Central,   etc.  R.   Co.,  25  App.  L.  R.  A.  774;  Scheffer  v.  Railroad  Co., 

Div.  365,  49  N.  Y.  Supp.  510.  105  U.  S.  249;  St.  Louis,  etc.  R.  Co.  v. 

1  Wells  V.  R.  Co.,  supra.  Bragg,  69  Ark.  402,  86  Am.  St.  206, 

2  Pacific  Exp.  Co.  v.  Black,  8  Tex.  64  S.  W.  Rep.  226. 

Civ.  App.  363,  27  S.  W.  Rep.  830.  5  Chicago,  etc.  R.  Co.  v.  Spirk,  51 

SHardman   v.  Montana  Union  R.  Neb.  167,  70  N.  W.  Rep.  926. 

Co ,  27  C.  C.  A.  407,  83  Fed.  Rep.  88.  «  Burgin  v.  Richmond  &  D.  R.  Co., 

*  Haile  v.  Texas  &  Pacific  R.  Co..  115  N.  C.  673,  20  S.  E.  Rep.  473. 

9  C,  C.  A.  134,  60  Fed.  Rep.  557,  23 


110 


COMPENSATION. 


[§37. 


tion  on  another  road  by  her  father  and  carried  thence  to  her 
sister's,  where  her  sick  child  would  receive  medical  treatment, 
there  is  no  liability  for  her  mental  suffering  caused  by  failure 
to  meet  her  father  and  anxiety  respecting  the  child  though  the 
^conductor  failed  to  keep  his  promise.^ 

If  the  negligence  of  a  carrier  results  in  an  injury  to  a  pas- 
senger by  which  his  system  is  rendered  susceptible  to  disease 
and  less  able  to  resist  it  when  he  is  attacked  by  it,  and  death 
results,  the  injury  is  the  proximate  cause  thereof,  although  the 
disease  is  to  be  regarded  as  an  intervening  agency,  and  the 
malady  which  attacked  him  was  prevalent  in  the  community.^ 
The  court  observe  that  if  it "  were  to  undertake  to  declare  any 
other  rule  we  should  be  involved  in  inextricable  confusion,  for 
it  is  clear  that  the  passenger  who  suffers  injuries  of  a  serious 
character  is  entitled  to  some  damages,  and  it  is  impossible  for 
any  one  to  pronounce,  as  a  matter  of  law,  at  what  point  the 
injury  flowing  from  the  wrong  terminated.  The  only  possible 
practicable  rule  is  that  the  wrongdoer  whose  act  is  the  mediate 
cause  of  the  injury  shall  be  held  liable  for  all  the  resulting 
damages,  and  that  the  question  of  whether  his  wrong  was  the 
mediate  cause  is  one  for  the  jury."^ 

[50]  §  37.  Intervening  cause.  Goods  carried  in  a  canal 
boat  were  injured  by  the  wrecking  of  the  boat,  caused  by  an 
extraordinary  flood  which  would  not  have  been  encountered 


1  Chicago,  etc.  R.  Co.  v.  Boyles,  11 
Tex.  Civ.  A  pp.  522,  33  S.  W.  Rep.  247. 
This  case  is  of  doubtful  authority. 
Compare  it  with  Missouri,  etc.  R.  Co. 
V.  Hennesey.  20  Tex.  Civ.  App.  316, 
49  S.  W.  Rep.  917. 

2  McCoy  V.  Indianapolis  Gas  Co., 
146  Ind.  655,  667,  46  N.  E.  Rep.  17,  36 
L.  R  A.  535,  quoting  the  text. 

3  Bradshaw  v.  Lancashire,  etc.  R. 
Co.,  L.  R.  10  C.  P.  109:  Baltimore 
Passenger  R.  Co.  v.  Kemp,  61  Md.  619, 
48  Am.  Rep.  134:  Oliver  v.  La  Valle, 
36  Wis.  592;  Sloan  v.  Edwards,  61 
Md.  89;  Delie  v.  Chicago,  etc.  R.  Co., 
51  Wis.  400,  8  N.  W.  Rep.  265:  Beau- 
champ  v.  Saginaw  Mining  Co.,  50 
Mich.  163,  45  Am.  Rep.  30,  15  N.  W. 
Rep.   65;   Baltimore  &  P.  R.  Co.  v. 


Reaney,  42  Md.  117;  Lyons  v.  Second 
Avenue  R.  Co.,  89  Hun,  374.  35  N.  Y. 
Supp.  372,  affirmed  without  opinion, 
115  N.  Y.  654;  Purcell  v.  Lauer,  14 
App.  Div.  33,  43  N.  Y.  Supp.  988; 
Keegan  v.  Minneapolis,  etc.  R.  Co., 
76  Minn.  90,  78  N.  W.  Rep.  965;  Terra 
Haute  &;  L  R.  Co.  v.  Buck,  96  Ind. 
346,  49  Am.  Rep.  168.  The  opinion  in 
the  last  case  reviews  a  large  number 
of  cases,  including  Ginna  v.  Second 
Avenue  R.  Co.,  8  Hun,  494.  affirmed 
67  N.  Y.  596;  Brown  v.  Chicago,  etc. 
R.  Co.,  54  Wis.  342,  11  N.  W.  Rep. 
356,  911:  Sauter  v.  New  York,  etc.  R. 
Co.,  66  N.  Y.  50,  23  Am.  Rep.  18. 
Compare  Scheffer  v.  Railroad  Co., 
105  U.  S.  249,  and  other  cases  cited 
in  n.  4,  p.  109. 


§  37.]  CONSEQUENTIAL    DAMAGES    FOK    TOKTS.  Ill 

bat  for  a  retarded  passaf^e  in  consequence  of  the  carrier  em- 
ploying a  lame  horse.  This  fact  was  so  unlikely  to  conduce 
to  such  an  event  that  the  defendant  was  not  liable.^  A  carrier 
was  guilty  of  a  negligent  delay  of  six  days  in  transporting  wool 
which,  while  in  his  depot  at  the  place  of  destination  a  few  days 
after,  was  submerged  by  a  sudden  and  violent  flood.  The 
flood  was  the  proximate  cause  of  the  injury  and  the  delay  the 
remote  cause.^  The  same  rule  has  been  applied  where  there 
was  negligent  delay  in  dispatching  goods  and  they  were  lost 
while  in  the  carrier's  hands  by  flood,  sudden  storm  or  other  im- 
mediate cause;  the  damage  occurring  without  his  fault,  he 
was  not  responsible.'  In  similar  cases  in  I^ew  York  and  other 
states  a  different  conclusion  has  been  reached.  In  one  it  was 
held  that  when  a  carrier  is  intrusted  with  goods  for  transpor- 
tation, and  they  are  injured  or  lost  in  transit,  the  law  holds 
him  responsible.  Pie  is  only  exempted  by  showing  that  the 
injury  was  caused  b}'"  an  act  of  God  or  the  public  enemy;  and 
to  avail  himself  of  such  exemption  he  must  show  that  he  was 
himself  free  from  fault.  His  act  or  neglect  must  not  concur 
and  contribute  to  the  injury.  If  he  departs  from  the  line  of 
his  duty  and  violates  his  contract,  and  while  thus  in  fault,  and 
in  consequence  of  that  fault,  the  goods  are  injured  by  the  act 
of  God,  which  would  not  otherwise  have  caused  the  injury,  he 
is  not  protected,''  There  was  unreasonable  delay  on  the  part 
of  the  carrier  in  forwarding  goods,  and  while  they  were  in  a 
railroad  depot  at  an  intermediate  point  they  were  injured  by 
an  extraordinary  flood;  the  carrier  was  liable  because  the 
goods  were  exposed  to  the  flood  by  his  fault.^     These  cases  re- 

1  Morrison  v.  Davis,  20  Pa.  171;  Mc-  5  Read  v.  Spaulding,  30  N.  Y.  630, 
Clary  v.  Sioux  City  &  P.  R.  Co.,  3  86  Am.  Dec.  426:  Wald  v.  Pittsburg, 
Neb.  44,  19  Am.  Rep.  631.  etc.  R.  Co.,  162  111.  545,  44  N.  E.  Rep. 

2  Denny  v.  New  York  Central  R.  888,  53  Am.  St.  332,  35  L.  R.  A.  356, 
Co.,  13  Gray,  481,  74  Am.  Dec.  645.  citing  McGraw  v.  Baltimore  &  O.  R. 

3  Railroad  Co.  v.  Reeves,  10  Wall-  Co..  18  W.  Va.  361,  41  Am.  Rep.  696; 
166;  Daniels  v.  Ballentine,  23  Ohio  Dening  v.  Grand  Trunk  R.  Co.,  48 
St.  532,  13  Am.  Rep.  264;  Hoadley  v.  N,  H.  455,  2  Am.  Rep.  267;  Read  v. 
Northern  Transportation  Co.,  115  St.  Louis,  etc.  R.  Co.,  60  Mo.  199; 
Mass.  304,  15  Am.  Rep.  106.  Williams  v.  Grant,  1  Conn.  487, 7  Am. 

^See  McAlister  v.  Chicago,  etc.  R.  Dec.  235;  Davis  v.  Garrett,  6  Bing. 
Co.,  74  Mo.  351,  4  Am.  &  Eng.  R  Cas.  617;  Crosby  v.  Fitch,  12  Conn,  410,  31 
'210.  Am.    Dec.  745;   Rodgers  v.    Central 


112 


COMPENSATION. 


[§ 


lating  to  carriers  or  others  held  to  an  absolute  responsibility, 
[GO]  except  as  relieved  by  showing  that  the  injury  was  caused 
by  the  act  of  God,  are  not  wholly  controlled  by  the  considera- 
tion of  the  nearness  of  the  injury  to  the  fault.  Davies,  J., 
said:  "It  is  to  be  observed  that  the  foundation  of  this  exemp- 
tion is  that  the  party  claiming  the  benefit  and  application  of 
it  must  be  without  fault  on  his  part."  He  refers  to  several 
cases.^  "These  cases,"  he  continues,  "clearly  establish  the 
rule  that  the  carrier  cannot  avail  himself  of  the  exception 
to  his  liability  which  the  law  has  created,  unless  he  has  been 
free  from  negligence  or  fault  himself.  The  policy  of  the  law 
is  to  hold  him  to  a  strict  liability;  and  this  policy,  for  wise 
and  just  purposes,  ought  not  to  be  departed  from.  But  when 
the  injury  occurs  from  a  cause  which  the  carrier  could  not 
guard  against  nor  protect  himself  from,  from  such  an  event  the 
[61]  law  excuses  him,  but  it  only  does  it  when  he  himself  is  not 
in  fault  and  is  free  from  all  negligence."-     It  has  been  held 


Pacific  R.  Co.,  67  Cal.  606.  8  Pac.  Rep. 
377;  Higgins  v.  Dewey,  107  Mass. 
494,  9  Am.  Rep.  63;  Philadelphia  & 
R.  R.  Co.  V.  Anderson,  94  Pa.  360. 

1  Davis  V.  Garrett,  6  Bing.  716.  In 
this  case  the  plaintiff  put  on  board 
the  defendant's  barge  lime  to  be 
conveyed  from  M.  to  L.  The  master 
of  the  barge  deviated  unnecessarily 
from  the  usual  course,  and  during 
the  deviation  a  tempest  wetted  the 
lime,  and  the  barge  thereby  taking 
fire  the  whole  was  lost,  and  he  was 
held  liable.  Tindal,  C.  J.,  observed 
that  no  wrong-doer  can  be  allowed 
to  apportion  or  qualify  his  own 
wrong,  and  that  as  a  loss  had  act- 
ually happened  whilst  his  wrongful 
act  was  in  operation  and  force,  and 
which  was  attributable  to  such  act, 
he  could  not  set  up  as  an  answer  to 
tiie  action  the  bare  possibility  of  a 
loss  if  the  act  had  never  been  done. 
It  miglit  admit  of  a  different  con- 
struction if  he  could  show  not  only 
that  the  same  loss  might  have  hap- 
pened, but  that  it  must  have  hap- 
pened, if  the  act  complained  of  bad 


cot  been  dona  Charleston  Steam- 
boat Co.  v.  Bason,  1  Harp.  262;  Camp- 
bell V.  Morse,  id.  468;  Bell  v.  Reed,  4 
Bin.  127.  5  Am.  Dec.  398;  Hart  v. 
Allen,  2  Watts,  114;  Hand  v.  Baynes. 
4  Whart.  204:  Williams  v.  Grant, 
Crosby  v.  Fitch,  supra. 

2  In  Read  v.  Spaulding,  30  N.  Y. 
630.  639,  86  Am.  Dec.  426. 

See  last  section.  In  Parmalee  v. 
Wilks,  22  Barb.  539,  the  plaintiff,  the 
owner  of  a  raft  of  saw  logs  lying  at 
Port  Maitland,  Canada,  made  a  con- 
tract with  the  defendants,  the  own- 
ers of  a  steamboat,  by  which  it  was 
agreed  that  they  would  come  to  Port 
Maitland  on  the  next  Tuesday  morn- 
ing with  the  steamboat,  and  proceed 
up  the  river  about  five  miles  t  >  D., 
and  there  land  her  passengers,  and 
immediately  return  to  Port  Maitland 
and  take  the  plaintiff's  raft  in  tow, 
and  tow  it  to  Black  Kock,  a  distance 
of  about  forty  miles,  which  the 
steamboat  could  traverse  in  about 
fourteen  hours  with  the  raft  in  tow. 
The  usuhI  time  for  the  arrival  of  the 
steamboat  at  Port  Maitland,  upon  her 


§37.] 


CONSEQUENTIAL   DAilAGES    FOR   TORTS. 


113 


that  if  an  administrator  deposits  money  of  an  estate  in  a  bank 
and  allows  it  to  remain  after  the  time  when  it  should,  by  punct- 
ual performance  of  his  duty,  have  been  distributed  and  in  the 
hands  of  those  entitled  to  it,  and  the  bank  fails  and  the  money 
is  lost,  he  and  his  sureties  are  liable  therefor,  and  the  sum  so 
lost  is  the  measure  of  damages.^ 

It  is  immaterial  what  is  the  intermediate  cause  between  the 
act  complained  of  and  the  injurious  consequence,  if  such  act 
is  the  eificient  and  proximate  cause,  and  the  consequence  was 
the  probable  result.  There  may  be  intervening  operations  of 
nature,  acts  produced  by  the  volition  of  animals  or  of  human 
beings,  innocent  acts  of  the  injured  party  or  of  third  persons, 
and  even  tortious  acts  of  the  latter,  and  the  chain  of  cause  and 
effect  not  be  necessarily  broken,  or  the  result  rendered  remote. 
The  test  is  not  to  be  found  in  any  arbitrary  number  of  inter- 
vening events  or  agents,  but  in  their  character,  and  in  the  nat- 
ural and  probable  connection  between  the  w^rong  done  and  the 


trip  up,  was  3  o'clock  in  the  morn- 
ing, and  it  generally  took  about 
two  hours  to  proceed  to  D.,  land  her 
passengers  and  return  to  Port  Mait- 
land.  On  Tuesday  morning  the 
weather  was  fair,  and  the  lake  and 
river  were  calm,  and  so  continued 
through  the  day.  But  the  boat  failed 
to  call  for  the  raft  according  to  the 
agreement.  In  the  evening,  about 
sunset,  she  returned,  and  took  the 
raft  in  tow  for  Black  Rock.  During 
the  night  a  storm  arose,  and  the  raft 
went  to  pieces  and  was  scattered 
along  the  shore.  Held,  that  had  the 
defendants  entered  upon  the  per- 
formance of  the  contract  at  the  time 
specified,  and  used  proper  diligence 
in  attempting  to  perform  it,  the 
plaintiff  would  have  taken  all  the 
risk  of  storms  or  other  casualties. 
But  as  they  delayed  for  some  four- 
teen hours  to  enter  uj)on  its  perform- 
ance, and  as  such  delay  resulted  in 
the  raft  being  overtaken  by  the 
storm,  they  were  responsible  for  tbe 
consequences;  that  when  they  took 
ihe  raft  in  tow  in  the  evening  instead 
Vol.  1  —  8 


of  the  morning,  as  agreed,  they  took 
the  risk  of  any  storm  that  should 
arise  after  a  suflHcient  time  had 
elapsed  for  towing  the  raft  to  Black 
Rock,  if  they  had  commenced  the 
towing  in  the  morning.  The  plaint- 
iff had  a  right  to  fix  the  time  in  the 
contract,  and  make  it  an  essential 
part  of  it,  considering  the  dangers  of 
navigation  upon  the  lake,  and  the 
peculiar  nature  and  condition  of  his 
property;  he  might  determine  when 
the  voyage  should  commence,  and 
make  a  special  agreement  to  that 
effect.  And  upon  the  non-perform- 
ance of  the  agreement,  at  the  time 
specified,  the  party  in  default  was 
liable  for  the  damages  resulting  from 
causes  which  would  not  have  arisen 
had  the  agreement  been  performed. 
Michaels  v.  New  Yorli  Central  R.  Co., 
30  N.  Y.  564,  86  Am,  Dec.  415;  Maghee 
V.  Camden  &  A.  R.  Co.,  45  N.  Y.  514, 
6  Am.  Rep.  134;  Condict  v.  Grand 
Trunk  R.  Co.,  54  N.  Y.  500;  Rawson 
V.  Holland,  59  N.  Y.  611,  17  Am.  Rep. 
394. 

1  McNabb  v.  Wixom.  7  Nev.  16a 


114 


COMPENSATION. 


injur^^'  In  entering  a  slip  a  ferryboat,  through  negligence, 
struck  the  side  of  the  rack  with  such  violence  as  to  cause  the 
passengers  to  sway,  in  consequence  of  which  one  of  their  num- 
ber fell  and  was  injured.  The  producing  cause  was  negligence, 
and  there  was  no  interruption  thereof  by  what  the  injured 
person  did  after  his  fall.^  One  who  builds  a  back  lire  to  save 
his  property  from  a  fire  negligently  caused  by  another  does 
only  what  he  ought  to  do,  and  if  the  fire  he  started  ruins  the 
property  it  was  designed  to  save  there  is  no  break  in  the  chain 
of  cause  and  effect  as  to  the  wrong-doer,  if  it  is  clear  that  the 
property  would  have  been  burned,  had  the  second  fire  not 
been  set.*  Allowing  a  long  ladder  to  rest  outside  a  sidewalk 
in  a  village  street  and  against  a  building  was  the  proximate 
cause  of  an  injury  sustained  by  a  passer-by  through  its  fall  in 
consequence  of  an  unusual  wind.* 

[62]  §  38.  Same  subject.  The  primary  cause  may  be  the 
proximate  cause  of  a  disaster  though  it  may  operate  through 
successive  instruments,  as  an  article  at  the  end  of  a  chain  may 
be  moved  by  a  force  applied  at  the  other  end,  that  force  being 
the  proximate  cause  of  the  movement.  The  question  always 
is,  was  there  an  unbroken  connection  between  the  wrongful 
act  and  the  injury,  a  continuous  operation  ?  Did  the  facts  con- 
stitute a  continuous  succession  of  events,  so  linked  together  as 
to  make  a  natural  whole;  or  was  there  some  new  and  inde- 
pendent cause,  disconnected  from  the  primary  fault  and  self- 
operating,  which  produced  the  injury?  The  inquiry  must  be 
answered  in  accordance  with  common  understanding.*     The 


1  McDonald  v.  Snelling,  14  Allen, 
296;  Vandenburgh  v.  Truax,  4  Denio, 
464;  Kellogg  v.  Chicago,  etc.  R.  Co., 
26  Wis.  223.  7  Am.  Rep.  69;  Murdock 
V.  Walker,  43  III.  App.  590;  Northern 
Pacific  R.  Co.  V.  Lewis,  2  C.  C.  A. 
446,  51  Fed.  Rep.  658. 

2  Cash  V.  New  York  Central,  etc. 
R  Co.,  56  App.  Div.  473,  67  N.  Y. 
Supp.  823. 

3  McKenna  v.  Baessler,  86  Iowa, 
197,  53  N.  W.  Rep.  103,  17  L.  R  A. 
310;  Owen  v.  Cook,  9  N.  D.  184,  81  N. 
W.  Rep.  285,  47  L.  R  A.  646. 

*  Moore  v.  Townsend.  76  Minn.  64, 


78  N.  W.  Rep.  880.  See  Parmenter  v. 
Marion,  113  Iowa,  297,  85  N.  W.  Rep. 
90;  Trapp  v.  McCiellan,  68  App.  Div. 
362,  74  N.  Y.  Supp.  130. 

s Milwaukee,  etc.  R,  Co.  v.  Kellogg, 
94  U.  S.  469. 

In  Lowery  v.  Manhattan  R  Co.,  99 
N.  Y.  158,  1  N.  E.  Rep.  608.  52  Am. 
Rep.  12,  12  Daly,  431,  fire  fell  from  a 
locomotive  on  an  elevated  road  upon 
a  horse  and  its  driver.  The  horse 
ran,  and,  resisting  an  attempt  to  get 
him  against  a  curbstone,  ran  over  it 
and  injured  the  plaintiff,  who  was 
on  the  sidewalk.    The  driver's  effort 


§  38.] 


CONSEQUENTIAL    DAMAGES    FOR   TORTS. 


115 


act  of  giving  or  selling  liquor  to  a  man  in  a  stupidly  drunken 
condition,  with  knowledge  thereof,  no  duress,  deception  or 
persuasion  being  used,*  although  a  statutory  misdemeanor,  is 
only  the  remote  cause  of  his  death;  his  act  in  drinking  it  is 
the  proximate  and  intervening  cause.^  The  voluntary  intoxica- 
tion of  a  person  who  has  attained  the  age  of  discretion,  but  for 
which  the  injury  resulting  from  the  sale  of  chloroform  to  him 
in  violation  of  law  would  not  have  happened,  breaks  the  chain 
of  cause  and  effect.^  The  sale  of  poison  without  the  label  re- 
quired b}^  statute  docs  not  make  the  vendor  liable  for  the  death 
of  a  man  who  took  it  while  intoxicated.  His  acts  in  buyino- 
and  taking  it  were  thc'proximate  cause  of  his  death;  they  were 
independent  acts,  which  intervened  and  broke  all  connection 


to  stop  the  horse  by  turning  him 
from  the  course  he  was  taking  was, 
whether  prudent  or  not,  a  continu- 
ation of  the  result  of  the  defendant's 
negligence,  and  its  natural  and  prob- 
able consequence,  as  was  the  injury 
inflicted  upon  the  plaintiff. 

A  fire  started  by  defendant's  neg- 
ligence, after  spreading  one  mile  and 
a  quarter  to  the  northeast,  near  the 
plaintiff's  property,  met  a  fire,  having 
no  responsible  origin,  coming  from 
the  northwest.  After  the  union, 
fire  swept  on  from  the  northwest  to 
and  into  plaintiff's  property, causing 
its  destruction.  Either  fire,  if  the 
other  had  not  existed,  would  have 
reached  the  propertj'  and  caused  its 
destruction  at  the  same  time.  Held, 
that  the  rule  of  liability  in  case  of 
joint  wrong- doers  does  not  apply; 
that  the  independent  fire  from  the 
northwest  became  a  superseding 
cause,  so  that  the  destruction  of  the 
property  could  not,  with  reasonable 
certainty,  be  attributed  in  whole  or 
in  part  to  the  fire  having  a  responsi- 
ble origin;  that  the  chain  of  respon- 
sible causation  was  so  broken  by  the 
fire  from  the  northwest  that  the 
negligent  fire,  if  it  reached  the  prop- 
erty at  all,  was  a  remote  and  not  the 
proximate  cause  of  the  loss.     After 


the  fire  swept  everything  of  a  com- 
bustible character  clean  on  both 
sides  of  defendant's  right  of  way, 
plaintiff's  horses,  that  were  running 
at  large,went  upon  the  railway  track 
and  were  killed  by  a  passing  train 
without  negligence  on  the  part  of 
the  train  men.  The  right  of  way  had 
never  been  fenced  as  required  by 
law.  Held,  that  the  rule  of  absolute 
liability,  under  the  statute  requiring 
railway  companies  to  fence  their 
tracks,  applies  only  where  the  loss 
is  produced,  in  whole  or  in  part,  by 
reason  of  the  failure  to  fence;  that 
in  the  circumstances  stated  the  chain 
of  causation  reaching  from  the  fail- 
ure to  fence  was  broken  by  the  fire 
that  would  unquestionably  have  de- 
stroyed the  fence  if  it  had  existed, 
so  that  the  failure  to  fence  cannot 
be  said  to  have  contributed  to  the 
entry  of  the  horses  upon  the  railway 
track.  Cook  v.  Minneapolis,  etc.  R. 
Co.,  98  Wis.  624,  74  N.  W.  Rep.  561, 
40  L.  R.  A,  457  (as  stated  in  the  sylla- 
bus by  Marshall,  J.). 

1  See  McCue  v.  Klein,  60  Tex.  168, 
48  Am.  Rep.  260. 

2  King  V.  Henkie,   80  Ala.  505,  60 
Am.  Rep.  119. 

3  Meyer  v.  King,  72  Miss.  1,  16  So. 
Rep.  245,  35  L.  R.  A.  474. 


116  COMPENSATION.  [§  39. 

between  the  omission  to  label  and  the  death.'  The  owner  of  a 
ferryboat  must  foresee  that  horses  thereon  may  take  fright  at 
the  sound  of  whistles  from  other  boats,  and  guard  against  such 
horses  backing  into  the  water,  and  if  he  fails  to  provide  a  suf- 
ficient rail  to  prevent  that  result  his  neglect  is  the  efficient 
cause  of  the  loss  of  the  horses.^  One  whose  private  way  over 
the  land  of  another  is  obstructed  by  a  fence  built  under  a  claim 
of  right,  and  who  proceeds  to  have  such  way  laid  out  as  a 
public  way,  cannot  recover  the  expense  of  so  doing  in  a  suit 
for  the  obstruction  of  the  way.'  Any  wrongful  act  which  ex- 
poses one  to  injury  from  rain,  heat,  frost,  fire,  water,  disease, 
the  instinctive  or  known  vicious  disposition  or  habits  of  animals, 
or  any  other  natural  cause,  under  circumstances  which  render 
it  probable  that  such  an  injury  will  occur,  is  a  primary,  efficient 
and  proximate  cause  if  harm  ensues."*  Many  such  cases  have 
been  referred  to  in  the  preceding  pages.  Persons  who  dam 
water-courses  are  presumed  to  have  knowledge  of  the  fact  that 
natural  causes  operate  to  fill  up  their  beds  and  cause  water  to 
overflow  adjacent  lands;  they  cannot  avoid  liability  for  the 
resultant  consequences  because  of  such  fact.-^  If  a  positive  tort 
is  committed  by  unnecessarily  leaving  an  obstruction  in  the 
bed  of  a  natural  water-course  the  parties  who  commit  the 
wronff  must  take  notice  of  the  violence  of  rainfalls  in  that 
locality.^ 

§  39.  Acts  of  injured  party;  fraud  and  exposure  to  peril. 
The  act  of  the  injured  party  may  be  the  more  immediate 
cause  of  his  injury;  yet,  if  that  be  an  act  which  was  as  to  him 
reasonably  induced  by  the  prior  misconduct  of  the  defendant, 
and  without  any  concurring  fault  of  the  sufferer,  that  miscon- 
duct will  be  treated  as  the  responsible  and  efficient  cause  of 
the  damage.  Cases  of  fraud  where,  by  some  artifice  or  false 
representation,  the  plaintiff  has  been  induced  to  incur  obliga- 

iRonkerv.  St.John,  2lOhioCt  Ct.  Ala.   453,   3  So.   Rep.   813;  Vogel  v. 

39.  McAuliflfe,  18  R.  L  79,  31  Atl.  Rep.  1. 

2Sturgis  V.  Kountz,  165  Pa.  358,  30  5  Mississippi  &  T.  R.  Co.  v,  Archi- 

Atl.  Rep.  976,  27  L.  R  A.  390.  bald,  67  Miss.  38,  7  So.  Rep.  212;  El- 

3  Holmes  v.  Fuller,  68  Vt.  207,  34  der  v.  Lykens  Valley  Coal  Co.,  157 

Atl.  Rep.  699.  Pa.  490,  27  Atl.  Rep.  545,  37  Am.  St. 

<  Western   &   A.  R,  Co.  v,  Bailey,  742. 

105  Ga.   100,  31  S.  E.  Rep.  547:  Ala-  «  Brink  v.  Kansas  City,  etc.  R.  Co., 

bama,  etc.   R,  Co.  v.   Chapman,   83  17  Mo.  App.  177,  '~02. 


I 


§  39.]  CONSEQUENTIAL   DAMAGES    FOR   TORTS.  117 

tions,  part  with  his  property,  or  place  himself  in  any  predica- 
ment by  which  he  suffers  loss,  are  apt  illustrations.  The  act 
by  which  he  binds  himself,  pays  money  or  alters  his  situation 
is  his  own,  but  superinduced  by  the  superior  vicious  will  of 
the  defrauding  party;  and  the  latter  is  responsible  for  all  the 
loss  which  ensues.  A  single  instance  will  suffice.  W.  obtained 
goods  from  the  plaintiff  on  credit,  upon  the  representation  of 
R.  that  "W.  was  responsible  and  worthy  of  credit  and  owed 
very  little  if  anything.  At  the  time  of  the  sale  and  delivery 
of  the  goods  W.  was  insolvent  and  R,  knew  it.  R.  himself 
had  a  judgment  agamst  W.  for  a  considerable  amount  dock- 
eted only  a  month  previous  to  the  sale.  On  this  judgment  R. 
caused  an  execution  to  be  issued  and  levied  upon  the  [63] 
goods  so  obtained  from  the  plaintiff  before  they  reached  W. 
It  was  held  that  for  these  representations  R.  was  liable  to  the 
plaintiff  for  the  value  of  the  goods  sold  to  W.^ 

If  the  plaintiff  is  placed  in  a  situation  of  danger  to  person 
or  property  by  the  defendant's  misconduct  and  is  injured  in 
a  reasonable  endeavor  to  extricate  himself,  such  misconduct 
is  the  proximate  cause  of  the  injury,  though  it  proceed  more 
immediately,  and  it  may  be  exclusively,  from  the  plaintiff's 
own  act.  Thus,  if  through  the  default  of  a  coach  proprietor 
in  neglecting  to  provide  proper  means  of  conveyance  a  pas- 
senger be  placed  in  so  perilous  a  situation  as  to  render  it  pru- 
dent for  him  to  leap  from  the  coach,  whereby  his  leg  is 
broken,  the  proprietor  will  be  responsible  in  damages,  al- 
though the  coach  was  not  actually  overturned,^  Nor  is  a  person 

iBean  v.  Wells,  28  Barb.  466.  N.  Y.  158;  Filer  v.  New  York  Cen- 

2  Jones  V.  Boyce,  1  Stark.  493;  In-  tral  R.  Co.,  49  N.  Y.  47,  10  Am.  Rep. 

galls  V.  Bills,  9  Met.  1;  McKinney  v.  337;  Smith  v.  St.  Paul,  etc.  R.  Co.,  30 

Neil,  1  McLean,  540;  Frink  v. Potter,  Minn.  169,  14  N.  W.  Rep.  797;  Dim- 

17  111.  406;  Buel  v.  New  York,  etc.  mitt  v.  Hannibal,  etc.  R  Co.,  40  Mo. 

R  Co.,  31  N.  Y.  314,  88  Am.  Dec.  271;  App.  654;    Knowlton  v.  Milwaukee 

McPeak  v.  Missouri   Pacific  R.  Co.,  City  R.  Co.,  59  Wis.  278,  18  N.  W. 

128  Mo.  617,  30  S.  W.  Rep.  170;  Ep-  Rep.  17;  Knapp  v.  Sioux  City  &  P. 

land  V.  Missouri  Pacific  R.  Co.,  57  R.  Co.,  65  Iowa,  91,  21  N,  W.  Rep.  198, 

Mo.  App.   147;  Southwestern  R  Ca  54  Am.  Rep.  1,  71  Iowa,  41,  32  N.  W. 

V.    Paulk,    24    Ga.   356;    Wilson    v.  Rep.  18;  Schumaker  v.  St.  Paul  &  D. 

Northern   Pacific   R    Co.,  26  Minn.  R  Co.,  46   Minn.  39,  48  N,  W.  Rep. 

278,  3  N.  W.  Rep.  33o,  37  Am.   Rep.  559,  12  L.  R  A.  257;  Budd  v.  United 

410;  Oliver  v.  La  Valle,  36  Wis.  592;  Carriage    Co.,  25   Ore.  314,   35   Pac. 

Twomley  v.  Central,  etc  R  Co.,  69  Rep.  660,  27   L.  R  A.  279;  Nichols- 


118  COMPENSATION.  [§  39. 

chargeable  with  contributoiy  negligence  —  that  is,  with  mak- 
ing his  own  act  in  part  the  efficient  cause  —  for  acting  erro- 
neously in  a  position  of  sudden  danger  in  which  he  is  placed  by 
the  negligence  or  fault  of  another.  If,  therefore,  a  stage-coach 
is  upset  by  the  negligence  of  the  driver,  and  a  passenger  therein, 
under  the  impulse  of  fear,  acts  in  a  manner  which  results  in 
an  injury  to  himself,  where,  had  he  remained  calm  and  kept 
his  place,  he  would  have  escaped  harm,  he  will  not  thereby 
be  precluded  from  recovering  damages  of  the  carrier.^  A  case 
arose  in  Massachusetts  in  which  the  immediate  cause  of  the 
injury  was  the  act  of  the  plaintiff,  and  yet  a  defect  in  a  high- 
w^ay  was  held  to  be  the  proximate  and  efficient  cause  thereof, 
thou":h  other  circumstances  contributed.  The  allesred  defect 
was  a  culvert  extending  across  the  highway  and  a  hole  at  one 
end  of  the  culvert.  As  the  plaintiffs  (husband  and  wife)  were 
driving  together  in  their  wagon  along  the  traveled  part  of  the 
[64]  highway  between  the  hours  of  eight  and  nine  in  the  even- 
ing, a  band  of  musicians,  a  little  way  in  advance,  commenced 
to  pla3%  by  which  the  horse  was  alarmed;  this  happened  near 
the  alleged  defect  in  the  highway.  In  the  course  of  the  inci- 
dent the  wife  was  taken  up  from  the  ground  at  or  near  the 
culvert,  seriously  injured;  but  the  precise  manner  in  which 
she  came  to  the  ground,  whether  by  being  forcibly  thrown 
from  the  wagon,  by  leaping  from  it,  or  by  the  two  actions 
concurring,  and  whether  the  wagon  did  or  did  not  come  into 
contact  with  the  hole,  were  questions  of  fact.  There  was  a 
variance  between  the  proof  and  the  declaration  for  which  the 
judgment  was  reversed,  but  this  instruction  was  approved: 
"  When  a  party  is  traveling  on  a  highway  and  there  is  a  defect 

burg  V.  Second  Avenue  R.  Co.,  11  N.  Co.,  151  Mass.  463,  24  N.  K  Rep.  402,  7 

Y.   Misc.   433,   32    N.   Y.  Supp.    130;  L.  R.  A.  843;  Connell  v.  Prescott,  20 

Baker  v.  North  East   Borough,  151  Ont,  App.  49;  EUick  v.  Wilson,  58 

Pa.  234,  21  At!.  Rep.  1079;  Hookey  v.  Neb.  584,  79  N.  W.  Rep.  152;  Galves- 

Oakdale,  5  Pa.  Super.  Ct.  404;  Vallo  ton,   etc.   R.   Co.    v.   Zantzinger,    92 

V.  United  States   Exp.  Co.,  147  Pa.  Tex.  365,  44  L.  R.  A.  553,  48  S.  W. 

404,  14  L.  R.  A.  743,  23  Atl.  Rep.  594,  Rep.  563;   Postal  Tel.   Cable  Co.  v. 

30  Am.  St  741;  Quinn  v.  Shamokin,  Hulsey,  132  Ala.  444,  453,  31  So.  Rep. 

etc.  R.  Co.,  7  Pa.  Super.  Ct.  19;  Wash-  537;  Texas  &  P.  R.  Ca  v.  Watkins. 

ington,  etc.  R.  Co.  v.  Hickey,  5  D.  C.  26  S.  W.  Rep.  760   (Tex.    Civil   Ap- 

App.  Cas.  430;  South  Covington  &  peals).     See  §  23a. 

C.  R.  Co.  V.  Ware,  84  Ky.  267,  1  S.  W.  i  Id. ;  Stokes  v.  Saltoustall,  13  Pet. 

Rep.  493;  Cody  v.  New  York,  etc.  R.  181. 


§  40.]  CONSEQUENTIAL    DAMAGES    FOR   TORTS.  119 

in  it,  and  the  party,  under  apprehensions  of  an  imminent  peril, 
by  the  near  approach  of  his  carriage  to  the  defect  in  the  high- 
way, but  without  or  previous  to  actual  contact  with  the  de- 
fect, leaps  from  his  carriage  and  is  injured  thereby,  then  the 
rule  of  law  is  this:  it  is  an  element  of  reasonable  care  on  the 
part  of  the  plaintiff.  If  the  plaintiff  be  placed,  by  reason  of 
the  defect  in  the  highway  and  his  approach  thereto,  in  such  a 
situation  as  obliges  him  to  adopt  the  alternative  of  a  danger- 
ous leap,  or  to  remain  at  a  certain  peril,  and  he  leaps  and  is 
injured,  then,  all  the  conditions  of  liability  being  fulfilled,  he 
may  recover  damages  of  the  party  responsible  for  the  repair 
of  the  highway." '  A  lad  aged  ten  years  was  forcibly  put  on 
a  freight  train  and  carried  five  miles.  After  being  released 
he  ran  most  of  the  distance  to  his  home,  was  afterward  taken 
sick  and  became  permanently  crippled.  The  jury  found  that 
this  was  the  result  of  the  trespass;  a  majority  of  the  court  re- 
fused to  interfere  with  the  verdict.^  It  is  a  rule  of  general 
application  that  the  concurrence  of  an  infant  plaintiff's  nat- 
ural indiscretion  with  the  defendant's  negligence  will  not  re- 
lieve the  latter  from  responsibility  for  an  act  which  results  in 
injury  to  the  former.' 

§  40.  Act  of  third  person.  The  innocent  or  culpable  act 
of  a  third  person  may  be  the  immediate  cause  of  the  injury, 
and  still  an  earlier  wrongful  act  may  have  contributed  so  ef- 
fectually to  it  as  to  be  regarded  as  the  efficient,  or  at  least  con- 
current and  responsible,  cause.^     The  noted  squib  case  is  [65] 

iLund  V.  Tyngsboro,  11  Cush.  563;  Atterton,  L.  R.  1  Ex.  239;  Lynch  v. 

Flagg  V.  Hudson,  142  Mass.  280,  56  Nurdin,  1  Q.  B.  29. 
Am.  Rep.  674,  8  N.  E.  Rep.  42.     See        <  Burrows   v.  March,  etc.  Gas  Co., 

§26.  K  R   5  Ex.  67;  Lannen  v.  Albany 

2  Drake  V.  Kiely,  93  Pa.  492.  Gas    Co.,  44    N.   Y.   459;    Guille   v. 

'Pittsburg,  etc.  R.  Co.  v.  Caldwell,  Swan,  19  Johns.  381,  10  Am.  Dec.  234; 

74  Pa,  421;  East  Saginaw  City  R.  Co.  Scholes  v.  North  London  R.  Co.,  21 

V.  Bohn,  27  Mich.  503;  Holly  v.  Bos-  L.  T.  (N.  S.)  835;  Pastene  v.  Adams,  49 

ton  Gas  Co.,  8  Gray,  133,  69  Am.  Dec.  Cal.  87;  Vandenburgh  v.   Truax,    4 

233;  Stillson  v.  Hannibal,  etc.  R  Co.,  Denio,  464,  47  Am.  Dec.  268;  Lowery 

67  Mo.  671;  Lane  v.  Atlantic  Works,  v.  Manhattan  R  Co.,  99  N.  Y.  158,  53 

111  Mass.  136;  Sheridan  v.  Brooklyn  Am.  Rep.  12,  1  N.  E.  Rep.  608,  12  Daly. 

&  N.  R  Co.,  36  N.  Y.  39,  93  Am.  Dec.  431;  Lewis  v.  Terry,  111  Cal.  39,  43 

490.    See  Singleton  v.  Eastern  Coun-  Pac.  Rep.  398,  52  Am.  St.  146,  31  L. 

ties  R,  Co.,  7  C.  B.  (N.  S.)  287;  Hughes  R  A.  220;  Grimes  v.  Bowerman,  93 

V.  Macfle,  2  H.  &  C.  744;  Nangan  v.  Mich.  258,  52  N.  W.  Rep.  751,  quoting 


120  COMPENSATION.  [§  40. 

an  example.'  The  defendant  threw  a  squib  into  the  market- 
house  where  it  first  fell;  a  person,  to  save  himself,  threw  it  off, 
and  where  it  then  fell  it  was  again  thrown  for  like  reason,  and 
struck  and  injured  the  plaintiff.  It  was  held  that  the  defend- 
ant's act  so  directly  caused  the  injury  that  trespass  would  lie. 
A  defendant  stopped  his  team,  and  negligently  left  it  in  a 
business  street  without  being  hitched  or  otherwise  secured.  It 
started  and  ran  violently  along  the  street  and  collided  with 
another  team,  which,  though  properly  hitched  at  the  side  of 
the  street,  was  frightened,  broke  from  its  fastenings  and  ran 
across  the  street  against  a  horse  and  sleigh  belonging  to  the 
plaintiff,  injuring  the  former.  It  appeared  that  while  the 
defendant's  horses  were  running  and  before  they  had  collided 
with  the  other  horses,  a  crowd  of  persons  came  into  the  street, 
hallooed  and  raised  their  hats  for  the  purpose  of  stopping  the 
horses,  which  caused  them  to  swerve  from  the  course  they  were 
taking,  and  in  this  manner  they  came  in  contact  with  the  sec- 
ond team.  The  law  was  said  to  be  well  settled  that  when  the 
plaintiff  has  been  injured  in  his  person  or  property  by  the 
wrongful  act  or  omission  of  the  defendant  or  through  his 
culpable  negligence,  the  fact  that  a  third  party  by  his  wrong 
or  negligence  contributed  to  the  injury  does  not  relieve  him 

the  text;    Chicago    City   R.  Co.   v.  the  purpose  of  getting  off  the  car  the 

Cooney,  95  Hi.  App.  471;  Postal  Tel.  child  was  pushed  therefrom.     Such 

Cable    Co.    v.    Zopfi,   93   Tenn.    369,  conduct  was  not  a  justification  to  the 

24  S.  W.  Rep.  633;  Choctaw,  etc.  R.  defendant  for  its  negligence  in  plac- 

Co.  V.  Halloway,  114  Fed.  Rep.  458,  ing  the  child  on  the  platform. 

52  C.  C.  A.  260,  and  cases  cited;  Cole-  In  Macer  v.  Third  Avenue  R.  Co., 

man  v.  Bennett,  —  Tenn-  — ,  69  S.  47  N.  Y.  Super.  Ct.  461.  the  plaintiff's 

W.  Rep.  734.  injuries  were  increased  by  an  effort 

The  connection  between  the  sale  made  by  the  defendant's  servant  to 

of  unlabeled  poison  and  the  death  of  prevent  them.     The  original   negli- 

a  child  who  takes  it  is  not  broken  gence  was  held  to  be  the  proximate 

because  its  mother  left  the   poison  cause. 

within  the   infant's  reach,  she  not  A  workman  who  is  injured  by  a 

knowing  it  to  be  poison,  nor  by  the  defective  instrument  used  by  a  fellow 

infant's  act  in  taking  it.     Wise  v.  workman    has    a  cause    of    action 

Morgan,  101  Tenn.  273,  48  S.  W.  Rep.  against  the  master.     Ryan  v.  Miller, 

971, 44  L.  R.  A.  548.  12  Daly,  177. 

In  Sheridan  v.  Brooklyn  &  N.  R.  i  Scott  v.  Shepherd,  2  W.  Bl.  892; 

Co.,  36  N.  Y.  39,  93  Am.  Dec.  490,  a  Owen  v.  Cook.  9  N.  D.  134,  81  N.  W. 

child  was  on  the  platform  of  a  car  Rep.  285,  47  L.  R  A.  640;  Bradley  v. 

by  direction  of  the  conductor.     By  Andrews,  51  Vt.  530. 
the  rusliing  of  another  passenger  for 


§  40.]  CONSEQUENTIAL    DAMAGES    FOR    TOKTS.  121 

from  liability.  Ileferrinp^  to  the  facts,  it  was  observed:  "The 
running  away,  from  the  starting  of  the  defendant's  team  till 
the  collision,  was  a  single  transaction;  and  whatever  influence 
the  interposition  of  the  crowd  had  in  occasioning  the  collision, 
it  was  not  the  sole  cause;  the  running  away,  which  occurred 
through  the  defendant's  negligence,  was,  in  part  at  least,  the 
occasion  of  it;  both  causes,  therefore,  in  the  most  favorable 
view  for  the  defendant,  must  have  contributed  to  it;  and  as 
the  defendant  is  responsible  through  his  negligence  for  one  of 
the  agencies  through  which  the  collision  occurred,  under  the 
rule  we  have  stated,  he  is  liable."  Again:  "All  the  conse- 
quences wiiich  actually  resulted  in  this  case  from  the  running 
away  of  the  defendant's  team  might,  we  think,  reasonably 
have  been  expected  to  occur  from  the  running  away  of  any 
team  under  similar  circumstances  in  the  principal  business 
street  of  a  town;  and  the  running  away  of  the  defendant's 
team  was  the  efficient  cause  of  the  injury  to  the  plaintiff's  [66] 
horse  because  it  put  in  operation  the  force  which  was  the  im- 
mediate and  direct  cause  of  the  injury."  ^  In  another  case  a 
team  of  horses,  attached  to  a  truck  and  unattended  in  a  street, 
were  stopped,  after  going  a  few  yards,  by  a  stranger,  who,  in 
trying  to  drive  them  to  where  they  had  been  left,  drove  the 
truck  against  a  push  cart  standing  in  the  street,  overturned 
the  cart  and  injured  the  plaintiff.  The  negligence  of  the  person 
who  had  charge  of  the  horses  was  the  proximate  cause  of  the 
injury.  They  should  not  have  been  left  in  the  middle  of  the 
•carriage  way  obstructing  travel,  besides  subjecting  other  trav- 
elers to  danger.  The  condition  which  authorized  the  by- 
stander to  stop  the  horses  also  authorized  him  to  drive  them 
to  a  position  where  they  would  cease  to  be  an  obstruction  and 
a  menace  to  travel.  A  danger  to  be  fairly  anticipated  from 
leaving  horses  unattended  in  a  public  street  is  that,  if  they 
start  to  run  off,  the  persons  who  attempt  to  stop  them  may  be 
careless  or  ignorant  of  the  management  of  horses  and  thus 
jeopardize  the  safety  of  people  on  the  highway.  In  such  cases 
so  leaving  the  horses  is  the  proximate  cause  of  the  accident.^ 

1  Griggs  V.  Fleckenstein,  14  Minn.  E.  D.  Smith,  413;  Pearl  v,  Macauley, 

81,  100  Am.  Dec.  199;  Billman  v.  In-  6   A  pp.  Div.  70,  39  N.  Y.  Supp.  472. 
dianapolis,  etc.  R.  Co.,  76  Ind.  166,  40        -^Williams  v.  Koehler,  41  App.  Div. 

Am.  Rep.  230;  McDonald  v.  Snelling,  426,  58  N.  Y.  Supp.  863. 
14   Allen,  292;  McCahill  v.    Kipp,  2 


122  COMPENSATION.  [§  40.- 

An  assessor  of  a  town  altered  an  assessment  after  it  had  been 
perfected  and  lodged  with  another  officer,  and  after  his  power 
over  it  had  ceased;  he  altered  it  in  such  a  manner  that  the 
property  of  the  plaintiff  was  rated  at  a  higher  sura.  The  se- 
lectmen made  out  a  rate-bill  by  which  the  plaintiff  was  charged 
with  an  increased  amount  and  procured  a  tax  warrant  which 
they  placed  in  the  hands  of  the  collector.  The  plaintiff  refus- 
ing to  pay  the  illegal  portion  of  the  tax,  the  selectmen,  with  a 
full  knowledge  of  all  the  facts,  directed  the  collector  to  levy  and 
collect  it.  The  levy  was  made,  the  plaintiff  then  paid  the  tax 
and  afterwards  brought  an  action  on  the  case  against  the 
assessor  for  the  injury.  The  jury  were  rightly  instructed  that 
the  action  of  the  selectmen  in  directing  the  levy,  although  it 
might  make  them  liable,  would  not  affect  the  right  of  the  plaint- 
iff to  recover  against  the  defendant  for  the  wrono^ful  altera- 
tion  and  he  was  entitled  to  recover  for  the  injury  resulting 
from  the  levy.^  x\n  officer  who  makes  a  false  return  of  non  est 
to  a  summons  is  not  relieved  from  liability  because  an  order  for 
service  by  publication  intervened  between  his  act  and  a  judg- 
ment by  default.  Such  order  was  the  natural  result  of  such  re- 
turn, and  the  further  action  of  the  court  was  the  legitimate 
consequence  of  it.^  It  is  negligence  to  leave  a  railroad  turn- 
table in  such  condition  that  it  may  be  revolved  by  children;^ 
and  the  negligence  continues  so  as  to  render  the  owner  liable 
for  an  injury  caused  to  a  child  by  the  revolving  of  the  table  by 
other  children.*  A  person  who  has  the  management  and  con- 
trol of  a  public  place  of  amusement,  which  he  invites  the  pub- 
lic, on  payment  of  an  admission  fee,  to  attend  and  at  which  he 
sells  to  his  customers  intoxicating  liquors,  who  sells  to  one  in 
attendance  there  liquor  in  such  quantity  as  to  make  him  drunk 
and  disorderly,  well  knowing  that  when  in  that  condition  he 
is  likely  to  commit  assaults  upon  others,  without  provocation 
or  cause,  is  bound  to  exercise  reasonable  care  to  protect  his  other 

1  Bristol  Manuf.  Co.  v.  Gridley,  28  *  Nagel  v.  Missouri  Pacific  R.  Co., 

Conn.  201,  27  id,  221,  71  Am.  Dec.  56.  75  Mo.  653:  Boggs  v.  Same,  18  Mo. 

estate  V.  Finn,  87  Mo.  310,  revers-  App.  274;  Morrison  v,  Kansas  City, 

ing  11  Mo,  App.  400.  etc.  R.  Co.,  27  id.  418;  Gulf,  etc.  Ry. 

3Koons  V.  St.  Louis,  etc,  R.  Co.,  65  Co.  v.  McWhirter,  77  Tex.  356, 19  Am. 

Mo.  592.  St,  755,  14  S,  W.  Rep.  26. 


§  4     ]  CONSEQUENTIAL    DAMAGES    FOR    TORTS.  123 

patrons  from  the  assaults  and  insults  of  such  person,  and  for  a 
failure  to  so  do  is  liable  to  a  person  assaulted  by  him.^ 

§  41.  Same  subject.  The  subject  under  consideration  is 
well  illustrated  by  those  cases  in  which  a  party  has  suffered 
a  special  injury  at  the  hands  of  third  persons  in  consequence 
of  the  speaking  of  slanderous  words.  "Where  the  injurious  act 
of  the  third  person  is  shown  with  the  requisite  certainty  to 
have  been  the  consequence  of  the  defendant's  speaking  such 
words  the  action  has  been  sustained.^  In  case  for  slanderous 
Avords  by  reason  of  which  the  plaintiff  was  turned  out  of  her 
lodgings  and  employment,  it  appeared  that  the  defendant  com- 
plained to  E.,  the  mistress  of  the  house  and  his  tenant,  that 
her  lodgers,  of  whom  the  plaintiff  was  one,  behaved  improp- 
erly at  the  windows;  and  he  added  that  no  moral  person  would 
like  to  have  such  people  in  his  house.  E.  stated  in  her  evi- 
dence that  she  dismissed  the  plaintiff  in  consequence  of  the 
words,  not  because  she  believed  them,  but  because  she  [67] 
was  afraid  it  would  offend  her  landlord  if  the  plaintiff  re- 
mained. The  action  was  held  maintainable,  the  special  dam- 
ages, which  were  its  gist,  being  the  consequence  of  the  slan- 
derous words  used.  The  witness'  statement  that  she  did  not 
dismiss  the  plaintiff  because  she  believed  the  words  spoken 
was  not  allowed  to  defeat  the  action.  Lord  Denman,  C.  J., 
said:  "It  would  be  speculating  too  finely  on  motives,  and  such 
a  disposition  in  the  court  would  too  often  put  it  in  the  power 
of  the  unwilling  witness  to  determine  a  cause  against  the 
plaintiff.  The  proper  question  is  whether  the  injury  was  sus- 
tained in  consequence  of  the  slanderous  words  having  been 
used  by  the  defendant."^  But  the  injury  must  be  the  natural 
and  proximate  consequence.  Damage  caused  by  the  repeti- 
tion of  the  words  by  a  third  person  who  heard  them  uttered 
by  the  defendant  is  too  remote,''  unless  the  latter  authorized  or 
suggested  their  repetition,  or  there  was  some  duty  on  the  hearer 
to  repeat  them.^     Such  a  spontaneous  and  unauthorized  cora- 

1  Mastad  v.  Swedish  Brethren,  83  7  Bing.  211;  Batetnan  v.  Lyall,  7  C. 

Minn.  40,  85  N.  W.  Rep.  913;  Romnel  B.  (N.   S.)  638;  Williams  v.  Hill,  19 

V.  Schambacher,  120  Pa.  579,  11  Atl.  Wend.  305. 

Rep.  779.  3  Knight  v.  Gibbs,  1  Ad.  &  E.  43. 

-  Fuller  V.    Fenner,  16  Barb.  833;  *  Ward  v.  Weeks,  7  Bing.  211. 

Hallock  V.  Miller.  3  Barb.  630;  Moody  5  Adams  v.  Kelly,  Ry.  &  Moo.  157; 

V.  Baker,  5  Cow.  351;  Ward  V.  AVeeks,  Parkes  v.  Prescott,  L.  R.  4  Ex.  169* 


124: 


COMPENSATION. 


[§41. 


munication,  it  is  said,  cannot  be  considered  as  tbe  necessary 
consequence  of  the  original  uttering  of  the  words.^ 

If  the  injury  inflicted  is  not  the  reasonable  and  natural  result 
of  a  wrongful  act  of  the  defendant,  but  was  caused  by  such 
act  of  a  third  person,  though  it  was  remotely  induced  by  de- 
fendant's conduct,  he  is  not  liable.^  Thus,  in  an  action  by  one 
engaged  in  the  business  of  butchering  for  selling  diseased  sheep 
as  sound  and  healthy,  it  appeared  that  the  plaintiff  had  en- 
gaged one  G.  to  take  some  of  the  mutton  which  might  be  on 
hand  and  sell  it;  Init  in  consequence  of  a  report  that  the  plaint- 
iff had  purchased  the  defendant's  diseased  sheep,  G.  refused  to 
perform  his  contract.  It  was  held  that  the  defendant  was  not 
[68]  liable  for  G.'s  refusal,  nor  for  damages  suffered  by  the 
plaintiff  in  consequence  of  his  customers  refusing  to  deal  with 
him  by  reason  of  that  report.*  In  an  action  against  several  per- 
sons, some  of  whom  had  sold  the  plaintiff's  husband  liquors  on 
the  day  of  his  death  and  others  of  whom  had  done  so  previously, 
and  were  charged  with  having  caused  him  to  become  an  habit- 
ual drunkard,  death  was  held  to  be  the  result  of  the  sales  last 
made;  and  the  fact  that  the  liquor  last  obtained  was  drank  be- 
cause he  was  an  habitual  drunkard  did  not  make  those  who 
had  antecedently  sold  him  liquor  jointly  liable  with  the  other 
defendants,  because  the  latter's  intervening  acts  were  inde- 
pendent and  the  proximate  cause  of  the  wrong.*  This  prin- 
ciple does  not  apply  where  the  intervening  act  of  a  third  per- 
son is  not  direct,  wilful  or  criminal,  as  where  a  person  who  is 
intoxicated  is  run  over  by  a  train  while  lying  on  a  track  situ- 
ated between  his  home  and  the  place  where  he  procured  the 
liquor  which  produced  that  condition."*     If  there  intervenes 


Kendillon  v.  Maltby,  Car.  &  M.  403; 
Deny  v.  Handley,  16  L.  T.  (N.  S.)  263: 
Schoepflin  v.  Coffey,  163  N.  Y.  13, 
56  N.  E.  Rep.  502,  and  cases  cited; 
Hastings  v.  Stetson,  126  Mass.  329, 
30  Am.  Rep.  683;  Elmer  v.  Fessenden, 
131  Mass.  359,  5  L.  R  A.  724,  24  N.  E. 
Rep.  208;  Haehl  v.  Wabash  R  Co., 
119  Mo.  325,  24  S.  W.  Rep.  737. 

1  Id.  See  Riding  v.  Smith,  1  Ex. 
Div.  91;  Kelly  v.  Partington,  5  B.  & 
Ad.  645;  Morris  v.  Langdale,  2  B.  & 
P.  284;  Ashley  V.  Harrison,  1  Esp.48; 


Pilmore  v.  Hood,  5  Bing.  N.  C.  97; 
Allsop  V.  Allsop,  5H.  &  N.  534;  Bent- 
ley  V.  Reynolds,  1  McMull.  16,  36  Am. 
Dec.  251;  Underhill  v.  Welton,  33 
Vt.  40;  cb.  24. 

a  Ward  V.  Weeks,  7  Bing.  211. 

sCrain  v.  Petrie,  6  Hill,  522, 41  Am. 
Dec.  765;  Butler  v.  Kent,  19  Johns. 
223,  10  Am.  Dec.  219. 

^Tetzner  v.  Naughton,  12  111.  App. 
148.     See  Shugart  v.  Egan,  83  IlL  56. 

5  Schroeder  v.  Crawford,  94  111.  357; 
Emory  v.  Addis,  71  111.  273. 


§  4-2.]  CONSEQUENTIAL    DAMAGES    FOR    TORTS.  125 

between  defendant's  act  or  omission  a  wilful,  malicious  and 
criminal  act  committed  by  a  third  person,  which  act  defendant 
had  no  reason  to  apprehend,  the  connection  between  the  orig- 
inal wrong  and  the  result  is  broken.^ 

§  4:2.  Same  subject.  "Where  the  immediate  cause  of  the 
injury  is  the  wrongful  act  of  a  third  person,  the  injured  party 
has,  of  course,  an  action  against  hira;  and  this,  in  some  early 
cases,  was  thought  to  bar  an  action  against  any  antecedent 
actor  more  remotely  responsible;  but  it  now  seems  to  be  set- 
tled that  the  liability  of  the  more  immediate  party  does  not 
relieve  any  other  party  whose  act  can  properly  be  treated  as 
the  efficient  and  proximate  or  concurrent  cause.  A  vendor  of 
property,  who  had  been  paid  for  it,  was  induced  by  the  de- 
fendant's false  and  malicious  representation  that  he  had  a  lien 
on  it  and  was  entitled  to  control  its  custody,  to  refuse  to  de- 
liver it,  whereby  the  purchaser  suffered  injury ;  he  was  held 
entitled  to  his  action  although  he  had  a  remedy  on  his  con- 
tract against  the  vendor.  Knowingly  making  a  false  claim  of 
lien  was  the  gravamen  of  the  action,  and  the  special  damage 
alleged,  namely,  the  non-delivery  of  the  property,  was  suffi- 
ciently connected  with  the  wrongful  act  to  support  the  action.^ 
In  one  case  it  appeared  that  the  defendant,  being  about  to  sell 
a  public  house,  falsely  represented  to  B.,  who  had  agreed  to 
purchase  it,  that  the  receipts  were  £180  a  month;  B.  having, 
to  the  knowledge  of  the  defendant,  communicated  this  repre- 
sentation to  the  plaintiff,  who  became  the  purchaser  instead  of 
B.,  it  was  held  that  an  action  would  lie  for  the  circuitous  deceit 
practiced.' 

The  Indiana   court  announced  a  St.  685;  White  v.  Conly,  14  Lea.  51. 

rule  contrary  to  that  stated  in  the  In  the  last  case  W.  and  C.  quarreled 

text  in  Krach  v.  Heilman,  53  Ind.  and  fought;  during  the  fight  W.'s 

517;  Collier  v.  Early,  54  Ind.  559.    But  son  stabbed  C.  and  caused  his  death, 

these  cases  are  much  restricted  by  This  was  done  without  the  knowl- 

Dunlap  V.  Wagner,  85  Ind.  529,  44  edge  of  W. 

Am.  Rep.  42.  and  are  in  effect  over-  2  Green  v.  Button,  2  Cr.,  M.  &  R. 

ruled  by  Terre  Haute  &  I.  R.  Co.  v.  707. 

Buck,  96  Ind.  346,  355,  49  Am.  Rep.  3  Piimore  v.  Hood,  5  Bing.  N.  C.  97. 

168.  Bosanquet,  J.,  thus  stated  the  facts 

iShugart  v.  Egan,  83  III.  56;  Mars  and  the  grounds  of  the  defendant's 

V.  Delaware  &  H.  Canal  Co.,  54  Hun,  liability:     "It  appears  that  the  de- 

625, 8N.  Y.  Supp.  107;  Roach  v.  Kelly,  fendant  entered  into  a  contract  of 

194  Pa.  24,  44  AtL  Rep.  1090,  75  Am.  sale  of  a  public  house  with  a  person 


126 


COMPENSATION. 


[§42. 


[69]  A  stage-coach  by  the  negligence  of  the  driver  was  pre- 
cipitated into  a  dry  canal;  the  lock-keeper  thereafter  negli- 
gently opened  the  gates  of  the  canal  and  a  passenger  was 
drowned  therein.  Under  Lord  Campbell's  act  ^  the  Irish 
court  of  queen's  bench  held  that  the  death  of  the  passenger 
was  "caused"  by  the  negligence  of  the  driver.  O'Brien,  J., 
said :  "  The  precipitation  of  the  omnibus  into  the  lock  was  cer- 
tainly one  cause  of  her  death,  inasmuch  as  she  would  not  have 
drowned  but  for  such  precipitation.  It  is  true  that  the  subse- 
quent letting  of  the  water  into  the  lock  was  the  other  and 
more  proximate  cause  of  her  death,  and  that  she  would  not 
have  lost  her  life  but  for  such  subsequent  act,  which  was  not 
the  necessary  consequence  of  the  previous  precipitation  by  the 
neo-ljoence  of  the  defendant's  servant.  But  in  mv  opinion  the 
[70j  defendant  is  not  relieved  from  liability  for  his  primary 
neglect  by  showing  that  but  for  such  subsequent  act  the  death 


of  the  name  of  B. ;  that  when  the 
agreement  was  entered  into  he  repre- 
sented to  B.  that  the  public  house 
was  of  a  certain  value  in  respect  of 
its  trade,  and  that  representation  he 
knew  to  be  false  at  the  time  he  made 
it.  After  this  agreement  had  been 
entered  into  withB.,  B.,  finding  him- 
self unable  to  complete  the  contract, 
entered  into  a  negotiation  with  the 
plaintiff,  P.,  and  informed  him  what 
representation  he  had  received  of 
the  value  of  this  public  house  from 
the  defendant;  and  taking  it  accord- 
ing to  the  plea,  that  B.  had  not  any- 
particular  authority  from  the  de- 
fendant to  make  such  communica- 
tion to  P.,  the  defendant  had  notice 
that  the  information  had  been  given 
to  P.,  and  it  is  averred  that  both  at 
the  time  of  the  original  agreement 
with  B.,  as  also  at  the  time  of  the 
agreement  which  subsequently  took 
place  with  P.,  the  defendant  knew 
that  the  information  was  false.  Then 
having  notice  that  that  communica- 
tion had  been  made,  and  knowing  at 
the  time  that  it  was  false,  he  enters 
into  a  new  agreement  with  P.  and  B. 


that  P.  shall  stand  in  the  place  of  B. 
in  the  purchase  of  this  public  house. 
The  record  further  states  that  P., 
confiding  in  that  representation, 
paid  money  to  the  defendant.  I 
think  it  is  impossible,  on  the  state- 
ment of  these  facts,  not  to  see  that 
the  defendant  when  he  entered  into 
that  contract  with  B.,  having  thus 
himself  made  the  fraudulent  repre- 
sentation, and  knowing  it  to  have 
been  communicated  to  the  person 
with  whom  he  was  about  to  contract 
a  second  time,  then  withholding  an 
explanation  or  denial  of  his  author- 
ity for  communication,  and  suffer- 
ing tlie  plaintiff,  on  the  faith  of  the 
communication,  to  enter  into  a  con- 
tract, was  as  much  guilty  of  a  deceit 
on  the  plaintiff  as  if  he  had  in  terms 
repeated  the  statement  himself.  On 
these  grounds,  without  entering 
further  into  the  case,  I  think  this 
action  may  be  maintained. "  See 
Langridge  v.  Levy,  2  M.  &  W.  519; 
Levy  V.  Langridge,  4  id.  337;  Rich- 
ardson V.  Dunn,  8  C.  B.  (N.  S.)  655; 
§  1170. 

1  9  and  10  Vict,  ch.  93. 


§  42.]  CONSEQUENTIAL    DAMAGES    FOE   TORTS.  127 

would  not  have  ensued."  ^  A  railroad  company  placed  a  pusb- 
car  in  the  hands  of  a  foreman  to  be  used  for  specific  purposes; 
he  loaned  it  for  another  purpose,  and  while  the  borrower  was 
using  it  plaintiff  was  injured  through  the  negligence  of  the 
borrower.  The  company  was  liable  tliough  such  injury  oc- 
curred at  a  time  when  there  was  no  relation  between  it  and 
the  man  who  ran  the  car.^ 

Cases  may  be  stated  where  the  wrongful  conduct  of  one  per- 
son affords  the  opportunity  or  occasion  for  the  illegal  acts  of 
another  or  for  an  injury  from  other  causes;  as  where  a  street- 
car driver  permits  boys  to  ride  on  the  platform  without  paying 
fare,  and  on  their  being  ordered  to  get  off  one  of  them  pushes 
another,  who  is  injured.  In  such  cases  the  injury  is  too  re- 
mote,* unless  it  was  such  as  would  probably  result;  and  the 
same  rule  applies  where  inaction  offers  an  opportunity  for  in- 
jury. The  neglect  of  duty  by  bailees  and  agents  renders  them 
liable  for  losses  resulting,  in  co-operation  with  such  neglect,  by 
the  torts  of  third  persons.*  The  cases  collected  in  the  note 
following  will  give  the  reader  an  insight  into  various  branches 
of  the  subject  of  consequential  damages.* 

1  Byrne  v.  Wilson,  15  Irish  C.  L.  *  Adams  v.  Lancashire,  etc.  R.  Co., 
(N.  S.)  332-342,  Thompson's  Car.  Pass.  L.  R  4  C.  P.  739;  Smith  v.  Dobson,  3 
290;  Eaton  v.  Boston,  etc.  R.  Co.,  11  M.  &  Gr.  59;  Rigby  v.  Hewitt,  5  Ex. 
Allen,  500,  87  Am.  Dec.  730;  Spooner  240;  Greenland  v.  Chaplin,  id.  243; 
V.  Brooklyn  City  R.  Co.,  54  N.  Y.  230,  Barnes  v.  Ward,  9  C.  B.  392;  Collins 
13  Am.  Rep.  570.  v.  Middle  L.  Com'rs,  L.  R.  4  C.  P.  279; 

2  Erie  R.  Co.  v.  Salisbury,  66  N.  J.  Harrison  v.  Great  Northern  R.  Co.,  3 
L.  233,  50  Atl.  Rep.  117.  The  court  H.  &  C.  231;  Butterfield  v.  Forrester, 
was  divided,  6  to  5.  11  East,  60;  Martin  v.  Great  Northern 

SLott  V.  New  Orleans,  etc.  R.  Co.,  R.  Co.,  16  C.  B.  179;  General  Steam 

37  La.  Ann.  337,  55  Am.  Rep.  500;  Nav.  Co.  v.  Mann,  14C.  B.  127;  Holden 

Cuff  V.  Newark,  etc.  R,  Co.,  35  N.  J.  L.  v.  Liverpool  Gas  Co.,  3  C.  B.  1 ;  Cot- 

30,  10  Am.  Rep.  205;  Scholes  v.  North  ton   v.    Wood.  8   C.   B.   (N.   S.)   568; 

London  R.  Co.,  21  L.  T.  (N.  S.)  835;  Flower  v.  Adam,  2  Taunt.  314;  Ellis 

Marks  v.  Rochester  R.  Co.,  41  App.  v.  London,  etc.  R,  Co.,  2  H.  &  N.  424; 

Div.  OG,  58  N.  Y.  Supp.  210.  Singleton  v.  Williamson,  7  H.  &  N. 

*Norcross  v.  Norcross,  53  Me.  163;  410;  Skelton  v.  London,  etc.  R.  Co., 
Mason  v.  Thompson,  9  Pick.  280,  20  L.  R.  2  C.  P.  631;  Thompson  v.  North- 
Am.  Dec.  471;  Shaw  v.  Berry,  31  Me.  eastern  R.  Co.,  2  B.  &  S.  106;  Bridge 
478.  52  Am.  Dec.  628;  Sibley  v.  Aid-  v.  Grand  Junction  R.  Co.,  3  M.  &  W„ 
rich,  33  N.  H.  553,  66  Am.  Dec.  745;  244:  Glover  v.  London,  etc.  R  Co.,  3 
Sasseen  v.  Clark,  37  Ga.  242;  Clute  v.  Q,  B.  25;  The  Flying  Fish.  34  L.  J. 
Wiggins,  14  Johns.  175;  McDaniels  v.  (Adm.)  113;  Everard  v.  Hopkins,  1 
Hobinson,  26  Vt.  316.  Bulst.  332;  Hughes  v.  Quentin,  8  C. 


128 


COMPENSATION. 


[§4S. 


§  43.  Wilful  or  malicious  injuries.  The  authorities  are 
[71]  not  agreed  as  to  whether  in  cases  of  wilful  or  malicious 
injuries,  injuries  caused  by  reckless  or  illegal  acts,  or  by  posi- 
tive fraud,  the  damages  are  so  strictly  confined  to  proximate 
consequences  as  when  none  of  these  elements  is  present.  On 
principle,  at  least  where  exemplary  damages  are  allowed,  it  is 
not  readily  seen  why  the  doctrine  of  proximate  cause  should 
be  varied  because  of  the  presence  or  absence  of  facts  which 
characterize  the  wrong.  In  Indiana  the  existence  of  any  such 
reason  is  denied;*  in  some  other  states,  as  will  be  seen  in  the 


&  P.  703;  Peacock  v.  Young,  21  L.  T. 
(N.  S.)  527;  Priestley  v.  Maclean.  2  F. 
&  F.  288;  Sneesby  v.  Lancashire  R. 
Co.,  L.  R.  9  Q.  B.  263;  Smith  v.  Con- 
dry,  1  How.  35;  Loker  v.  Damon,  17 
Pick.  284;  State  v.  Thomas,  19  Mo. 
613;  Oil  Creek,  etc.  R.  Co.  v.  Keigh- 
ron,  74  Pa.  316;  Tarleton  v.  McGaw- 
ley,  Peake,  270;  Carrington  v.  Taylor, 

11  East,  571;  Keeble  v.  Hickeringill, 
id.  574;  Herring  v.  Skaggs,  62  Ala.  180, 
34  Am.  Rep.  4;  Hanover  R.  Co.  v. 
Coyle,  55  Pa.  396;  Baldwin  v.  United 
States  Tel.  Co.,  45  N.  Y.  744,  6  Am. 
Rep.  165;  Bartlett  v.  Hooksett,  48  N. 
H.  18;  Ayer  v.  Norwich.  39  Conn.  376, 

12  Am.  Rep.  396;  Dimock  v.  Suffield, 
30  Conn.  129;  Foshay  v.  Glen  Haven, 
25  Wis.  288,  3  Am.  Rei?.  73;  Morse  v. 
Richmond,  41  Vt.  435, 98  Am.  Dec.  600; 
Howard  v.  North  Bridgewater,  16 
Pick.  189;  Kingsbury  v.  Dedham,  13 
Allen,  186,  90  Am.  Dec  191;  Tisdale 
V.  Norton,  8  Met.  388;  Page  v.  Bucks- 
port,  64  Me.  51,  18  Am.  Rep.  239; 
Bigelow  V.  Reed,  51  Me.  325;  Lake  v. 
Milliken,  62  Me.  240, 16  Am.  Rep.  456; 
Cobb  V.  Standish,  14  Me.  198;  Merrill 
V.  Hampden,  26  Me.  234;  Lawrence 
V.  Mt.  Vernon,  35  Me.  100;  Davis  v. 
Bangor,  42  Me.  522;  Jewett  v.  Gage, 
55  Me.  538,  92  Am.  Dec.  615;  Cook  v. 
Cliarlestown,  98  Mass.  80;  Card  v. 
Ellsworth,  65  Me.  547,  20  Am.  Rep. 
722;  Chicago  v.  Hoy,  75  111.  530; 
Pittsburgh,  etc.  R  Co.  v.  Iddings.  28 
Ind.  App.   504,  62    N.    E.   Rep.    112; 


Wallin  v.  Eastern  R.  Co.,  83  Minn. 
149,  86  N.  W.  Rep.  76,  54  L.  R  A.  481; 
Butler-Ryan  Co.  v.  Williams,  84 
Minn.  447,  88  N.  W.  Rep.  3;  Fezler  v. 
Willmar,  etc.  R.  Co.,  85  Minn.  252,  88 
N.  W.  Rep.  746;  Schreiner  v.  Great 
Northern  R  Co.,  86  Minn.  245,  90  N. 
W.  Rep.  400;  Illinois  Central  R  Co. 
V.  Seamans,  79  Miss.  106,  31  So.  Rep. 
546;  Leeds  v.  New  York  Telephone 
Co.,  64  App.  Div.  484,  72  N.  Y.  Supp. 
250;  Harrison  v.  Weir,  71  App.  Div. 
248,  75  N.  Y.  Supp.  909;  Koch  v.  Fox, 
71  App.  Div.  288,  75  N.  Y.  Supp.  913, 
Chambers  v.  Carroll,  199  Pa.  371,  4& 
Atl.  Rep.  128;  Forrow  v.  Arnold,  22 
R  I.  305,  47  Atl.  Rep.  693;  Butts  v. 
Cleveland,  etc.  R.  Co.,  110  Fed.  Rep. 
329,  49  C.  C.  A.  69;  Reynolds  v.  Pier- 
son.  —  Ind.  App.  — ,  64  N.  E.  Rep. 
484;  Simonson  v.  Minneapolis,  etc.  R 

Co.,  —  Minn.  ,  92  N.  W.  Rep.  459. 

1 "  There  is,  in  truth,  no  case  that 
has  been  recognized  as  sound,  that 
holds  that  the  rule  as  to  the  respon- 
sibility of  the  wrong-doer  is  different 
in  cases  of  actionable  negligence 
from  that  which  prevails  in  cases  of 
wilful  or  malicious  torts.  There  is  a 
difference  as  to  the  measure  of  dam- 
ages, for  where  the  tort  is  malicious 
exemplary  damages  may  be  recov- 
ered, but  such  damages  cannot  be 
recovered  in  cases  of  negligenca 
This  consideration  has,  however,  no 
influence  upon  the  question  of  a 
negligent  wrong-doer's  responsibility 


^  43.]  CONSEQUENTIAL    DAMAGES    FOE   TORTS.  129 

next  section,  such  distinction  is  recognized.  The  elements 
stated  are  aggravations  which  juries  are  apt  to  regard  in  de- 
termining their  verdicts,  and  which  courts  consider  in  passing 
on  them.^  It  was  said  by  Baldwin,  J. i^  ""When  a  trespass  is 
committed  in  a  wanton,  rude  and  aggravated  manner,  indi- 
cating malice  or  a  desire  to  injure,  the  jury  ought  to  be  liberal 
in  compensating  the  party  injured  in  all  he  has  lost  in  prop- 
erty, in  expenses  for  the  assertion  of  his  rights,  in  feeling  or 
reputation,"  and  to  superadd  to  such  compensation  a  sum  for 
punishment.  In  a  case  of  wilful  negligence  the  trial  court  in- 
structed the  jury  that  they  might  take  into  consideration  all 
the  circumstances,  and  see  whether  there  was  anything  to 
satisfy  them  that  the  defendant  had  behaved  in  an  improper 
and  unjustifiable  manner;  and  if  so,  they  need  not  give  dam- 
ages strictly,  but  might  give  them  with  a  liberal  hand.  This 
instruction  was  approved.  Pollock,  C.  B.,  in  giving  judgment, 
said:  "It  is  universally  felt  by  all  persons  who  have  had  oc- 
casion to  consider  the  question  of  compensation,  that  there  is  a 
difference  between  an  injury  which  is  the  mere  result  of  such 
negligence  as  amounts  to  little  more  than  an  accident,  and  an 
injury,  wilful  or  negligent,  which  is  accompanied  with  expres- 
sions of  insolence.  I  do  not  say  that  in  actions  of  negligence 
there  should  be  vindictive  damages,  such  as  are  some-  [72] 
times  given  in  actions  of  trespass;  but  the  measure  of  damage 
should  be  different  according  to  the  nature  of  the  injury  and 
the  circumstances  with  which  it  is  accompanied.     .    .    .    The 

for  the  consequences  resulting  from  be  a  natural  and  direct  result,  the 

his  act."     Indianapolis,  etc.  R.  Co.  v.  only    exceptions  being  where  a  wil- 

Pitzer,  109  Ind.  179,  189,  58  Am.  Rep.  ful  tort  consists  in  the  unlawful  as- 

387,  6  N.  E.  Rep.  310,  10  id.  70.  Com-  sumption  of  dominion  over  another's 

pare  Kline  v.  Kline,  158  Ind.  602,  64  property,  and  where  a  carrier  devi- 

N.  E.  Rep.  9.      See  Gatzow  v.  Buen-  ates  from  its  route, 

ing,  106  Wis.  1,  81  N.  W.  Rep.  1003,  i  Merest  v.  Harvey.  5  Taunt.  442; 

49  L.  R  A.  475,  80  Am.  ;St.   17;  note  Wright  v.  Gray,  2  Bay,  464;  McDan- 

to  Gilson  V.  Delaware,  etc.  Canal  Co.,  iel  v.  Emanuel,  2  Rich.  455;  Detroit 

36  Am.  St.  821,  in  which  numerous  Daily   Post   v.  McArthur,   16  Mich, 

cases  are  summarized  and  the  con-  447;  West  v.    Forrest,   22  Mo.   344: 

elusion  is  reached  that  there  is  no  Huckle  v.  Money, 2  Wils.  205;  McAfee 

essential     difference     between    the  v.  Crofford,  13  How.  447. 

measure  of  liability  for  wilful  and  2  Pacific  Ins.  Co,  v.  Conard,  Bald- 

negligent    torts,  and    that  in   both  win,  142. 
cases  the  injury  complained  of  must 
Vol.  1  —  9 


130  COMPENSATION.  [§  43. 

courts  have  always  recognized  the  distinction  between  damages 
given  with  a  liberal  and  a  sparing  hand."^  For  this  reason 
all  the  circumstances  of  the  injurious  act  are  provable  and  to 
be  considered  by  the  jury.'^  In  an  action  of  tort  for  a  wilful 
injury  to  the  person  the  manner  and  manifest  motive  of  the 
wrongful  act  ma}''  be  given  in  evidence  as  affecting  the  ques- 
tion of  damages;  for  when  the  mere  physical  injury  is  the 
same  it  may  be  more  aggravated  in  its  effects  upon  the  mind 
if  it  is  done  in  wanton  disregard  of  the  rights  and  feelings  of 
the  plaintiff  than  if  it  is  the  result  of  mere  carelessness.*  The 
same  view  is  expressed  by  another  court:  "The  common  sense 
of  mankind  has  never  failed  to  see  that  the  damage  done  by  a 
wilful  wrong  to  person  or  reputation,  and,  in  some  cases,  to 
property,  is  not  measured  by  the  consequent  loss  of  money. 
A  person  assaulted  may  not  be  disabled  or  even  disturbed  in 
his  business,  and  may  not  be  put  to  any  outlay  in  repairs  or 
medical  services.  He  may  not  be  made  poorer  in  money  di- 
rectly or  consequentially.  He  may  incur  no  pecuniary  dam- 
age whatever.  .  .  .  When  the  law  gives  an  action  for  a 
wilful  wrong  it  does  it  on  the  ground  that  the  injured  person, 
ought  to  receive  pecuniary  amends  from  the  wrong-doer.  It 
assumes  that  every  such  wrong  brings  damage  upon  the  suf- 
ferer, and  that  the  principal  damage  is  mental  and  not  phys- 
ical. And  it  assumes  further,  that  this  is  actual  and  not  meta- 
physical damage,  and  deserves  compensation.  When  this  is 
once  recognized  it  is  just  as  clear  that  the  wilfulness  and 
wickedness  of  the  act  must  constitute  an  important  element  in 
the  computation,  for  the  plain  reason  that  we  all  feel  our  in- 
dignation excited  in  direct  proportion  with  the  malice  of  the 
offender,  and  that  the  wrong  is  aggravated  by  it."* 

lEmblen  v.  Myers,  6  H.  &  N,  54;        4  Welch  v.  Ware,  32  Mich.  77;  Davis 

Bixby  V.  Dunlap,  56  N.  H.  463.  v.  Standard  Nat.  Bank,  50  App.  Div. 

2  Bracegirdle  v.  Orford,  2  M.  &  S.  210,  63  N.  Y.  Supp.  764;  De  Leon  v. 
79;  Snively  v.  Fahnestock,  18  Md.  McKernan,  25  N.  Y.  Misc.  182,  54  N. 
391;  Treat  v.  Barber,  7  Conn.  279;  Ed-  Y.  Supp.  167;  Rigney  v.  Monette,  47 
wards  V.  Beach,  3  Day,  447;  Churchill  La,  Ann.  648,  17  So.  Rep.  211;  Taylor 
V.  Watson,  5  Day,  140,  5  Am.  Dec.  v.  Howard.  110  Ala.  468,  18  So.  Rep. 
130;  Post  V.  Munn,  4  N.  J.  L.  61,  7  311;  Railway  Co.  v.  Beard.  56  Ark. 
Am.  Dec.  570.  309,   19  S.  W.  Rep.  923;  Watson  v. 

3  Hawes  v.  Knowles,  114  Mass,  518,  Dilts, Iowa,  — ,  89  N.  W.  Rep.  1068, 

19  Am.  Rep.  383.  57  L.  R  A.  559.     See  ^§  1038,  1029. 


§  44.]  CONSEQUENTIAL    DAMAGES    FOR   TORTS.  131 

§  44-.  Same  subject.  There  are,  however,  authorities  -which 
go  to  the  extent  of  holding  that  where  a  wrong  is  done  wil- 
fully and  with  knowledge  of  all  the  facts  which  make  the  doing 
of  it  an  aggravation,  the  scope  of  the  natural  and  proximate 
consequence  of  such  wrong  is  thereby  enlarged.  Where  a  ten- 
ant, whose  wife  was  sick  at  the  expiration  of  the  lease,  was  de- 
nied a  reasonable  time  in  which  to  vacate  the  premises  without 
out  unnecessary  risk  to  her,  and  the  landlord,  knowing  that 
she  was  pregnant  and  confined  to  her  bed  by  heart  disease, 
began  tearing  down  the  house,  thereby  making  a  noise  and 
causing  adust,  which  aggravated  the  wife's  illness,  who,  though 
removed  from  the  premises  the  next  day,  died  a  week  later, 
after  having  had  a  miscarriage,  it  was  decided  that  the  rule  of 
the  court  of  final  appeal^  denying  a  recover}^  for  injuries  due 
solely  to  fright  and  excitement,  unaccompanied  by  actual,  im- 
mediate, personal  injury,  had  no  application.  "In  that  case  it 
was  held  that  no  recovery  could  be  had  for  mere  fright  occa- 
sioned by  negligence ;  and  as  no  action  would  lie  for  the  fright 
alone,  it  necessarily  followed  that  none  could  be  maintained 
merely  because  the  fright  was  followed  by  serious  consequences. 
If  the  act  complained  of  was  not  in  itself  actionable  the  grav- 
ity of  the  consequences  would  not  make  it  so.  In  this  case, 
however,  the  act  of  the  defendants  was  in  itself  wrongful.  It 
was  a  wilful  and  violent  trespass  upon  the  plaintiff's  house  for 
which  an  action  will  lie;  and  if  the  death  of  the  plaintiff's  wife 
can  be  clearly  and  directly  traced  to  it  as  a  natural  and  neces- 
sary consequence  which  they  might,  or  should,  have  reason- 
ably anticipated,  the  defendants  are  liable  even  although  no 
actual  blow  was  struck  in  the  course  of  the  destruction  of  the 
building.  The  defendants  knew  her  condition  and  the  risk 
which  was  involved  in  their  contemplated  act,  and  it  would  be 
ridiculous  to  say  that,  without  the  shadow  of  a  right,  they 
could  tear  the  house  down  from  over  her  head  with  no  liabil- 
ity for  the  consequences  unless  she  chanced  to  be  hit  by  a  fall- 
ing beam."^  Substantially  the  same  rule  was  applied  where  the 

1  Mitchell  V.  Rochester  R.  Co.,  151  UnderhilK  63  App.  Div.  223,  71  N.  Y. 

N.  Y.  107,  45  N.  E.  Rep.  354,  56  Am.  Supp.  291.  See  quotation  from  Spade 

St.  604,34  L.  R.  A.  781.     See  §§  21-24.  v.  Lynn  &  B.  R.  Co.,  168  Mass.  285, 

^Preiser  v.  Wielandt,  48  App.  Div.  47  N.  E.  Rep.  88,  38  L.  R.  A.  513,  in 

569,  62  N.  Y.  Supp.  890;  Williams  v.  note  to  §  21. 


132 


COMPENSATION. 


[§44. 


defendant,  intending-  to  have  a  practical  joke,  represented  to  a 
married  woman,  who  was  in  an  ordinary  state  of  health  and 
mind,  that  her  husband  had  met  with  a  fearful  accident;  the 
statement  was  made  with  intent  that  it  should  be  believed,  and 
it  was  believed;  in  consequence  a  violent  nervous  shock  was 
produced  which  rendered  plaintiff  ill.  Her  right  to  maintain 
an  action  was  vindicated,  and  judgment  rendered  on  a  verdict 
for  £100  on  account  of  the  injury  caused  by  the  shock.'  In  an 
action  for  maliciously  and  wilfully  making  false  statements 
respecting  the  plaintiff  in  his  capacity  as  an  apprentice  to  the 
defendant,  and  which  had  the  effect  to  deprive  the  plaintiff  of 
the  employment  on  which  he  relied  for  support,  there  may  be 
a  recovery  for  injury  to  feelings.  Such  an  accusation  would 
naturally  cause  the  plaintiff  mental  suffering  and  anxiety  in 
reference  not  only  to  the  estimation  in  which  he  would  be 
likely  to  be  held  by  his  employer,  or  by  others  to  whom  the  fact 
of  his  discharge  might  become  known,  but  also  as  to  its  effect 
upon  his  income,  through  the  loss  of  his  situation.-  In  Yer- 
mont  it  is  not  necessary  that  an  act  be  wanton  in  order  that 
liability  for  all  the  injurious  consequences  result  from  it.  If 
it  is  voluntary  and  not  obligatory  it  is  enough.     Thus  where 


1  Wilkinson  v.  Downton,  [1897]  2 
Q.  B.  57.  After  referring  to  cases 
which  are  discussed  in  ^§  31-24,  and 
admitting  that  the  case  was  without 
precedent,  the  court  said:  A  more 
serious  difficulty  is  the  decision  in 
AUsop  V.  Allsop.  5  H.  &  N.  534,  which 
was  approved  by  the  house  of  lords 
in  Lynch  v.  Knight,  9  H.  of  L.  Cas. 
577.  In  that  case  it  was  held  by  Pol- 
lock, C.  B.,  Martin,  Bramwell,  and 
Wilde.  BB.,  that  illness  caused  by 
a  slanderous  imputation  of  unchas- 
tity  in  the  case  of  a  married  woman 
did  not  constitute  such  special  dam- 
ages as  would  sustain  an  action  for 
such  slander.  That  case,  however,  ai> 
pears  to  have  been  decided  on  the 
ground  that  in  all  the  innumerable 
actions  for  slander  there  were  no 
precedents  for  alleging  illness  to  be 
sufficient  special  damage  and  that  it 
would  be  of  evil  consequence  to  treat 


it  as  sufficient,  because  such  a  rule 
might  lead  to  an  infinity  of  trump- 
ery or  groundless  actions.  Neither 
of  these  reasons  is  applicable  to  the 
present  case.  Nor  could  such  a  rule 
be  adopted  as  of  general  application 
without  results  which  it  would  be 
difficult  or  impossible  to  defend. 
Suppose  that  a  person  is  in  a  preca- 
rious and  dangerous  condition,  and 
another  person  tells  him  that  his 
physician  has  said  that  he  has  but  a 
day  to  live.  In  such  a  case,  if  death 
ensued  from  the  shock  caused  by  the 
false  statement,  I  cannot  doubt  that 
at  this  day  the  case  might  be  one  of 
criminal  homicide,  or  that  if  a  seri- 
ous aggravation  of  illness  ensued 
damages  might  be  recovered.  See 
Nelson  v.  Crawford,  122  Mich.  466,  81 
N.  W.  Rep  335,  80  Am.  St.  577. 

2  Lombard  v.  Lennox,  155  Mass.  70, 
28  N.  E.  Rep.  1125,  31  Am.  St.  528. 


§  44.]  CONSEQUENTIAL   DAMAGES    FOR   TORTS.  133 

defendant  shot  at  a  fox  that  the  plaintiff's  dog  had  driven  to 
cover,  and  accidentally  hit  the  dog,  he  was  liable.'  Where  a 
dog  was  wantonly  and  maliciously  shot  at,  with  intent  to  kill 
it,  and  was  set  wildly  in  motion,  and  that  motion  continued, 
without  the  interruption  of  any  other  agency,  until  the  dog 
got  into  its  owner's  house  and  there  knocked  down  and  injured 
his  wife,  the  defendant  was  liable  for  her  injury.'^  In  a  case 
in  which  recovery  for  injury  to  business  was  sought  the  court 
said:  The  defendant's  conduct  was  so  lawless  and  malicious 
that  on  that  ground  alone  he  might  properly  be  held  respon- 
sible for  damages  more  indefinite  than  in  ordinary  instances 
where  elements  of  malice  and  oppression  are  lacking.'  In  an- 
other case  it  was  observed:  We  have  no  doubt  that  where  the 
act  charged  was  wilfully,  wantonly  or  maliciously  done,  and 
especially  where  its  obvious  purpose  was  to  wound,  humiliate 
or  oppress  another,  substantial  damages  may  be  given  for  the 
mental  suffering  it  entailed.* 

The  effect  of  fraud  in  causing  a  loss  on  the  amount  re-  [73] 
coverable  beyond  the  measure  of  damages  in  analogous  cases 
of  breach  of  contract  and  tort  is  manifest  in  many  particulars. 
A  difference  is  made  on  this  ground  when  there  is  a  breach  of 
the  contract  to  sell  and  convey  lands,  and  where  there  is  a  con- 
fusion of  goods.  Where  one  sells  a  chattel  and  delivers  pos- 
session, so  that  he  is  taken  to  have  warranted  the  title,  his  ven- 
dee cannot  recover  damages  until  he  is  dispossessed  by  the  true 
owner;  but  if  he  sells  property  with  a  false  and  fraudulent  rep- 
resentation of  ownership,  his  vendee  may  recover  damages  for 
the  deceit  before  he  is  disturbed  in  his  possession  and  according 
to  the  measure  of  damages  applicable  to  a  breach  of  warranty.^ 
It  was  held  by  Lord  Kenyon  that  an  action  lay  for  firing  on 
negroes  on  the  coast  of  Africa,  and  thereby  deterring  them 
from  trading  with  the  plaintiff,  and  that  damages  might  be  re- 

1  Wright  V.  Clark,  50  Vt.  130  28,  14;  Cooper  v.  Hopkins,  70  N.  H.  271, 
Am.  Rep.  496.  279.  48    Atl.  Rep.    100;    Kimball  v. 

2  Ishara  V.  Dow's  Estate,  70  Vt  588,  Holmes,  60  N.  H.  163;  Kline  v.  Kline, 
41  Atl.  Rep.  585,  67  Am.  St.  691,  45  158  Ind.  603,  64  N.  E.  Rep.  9,  58  L.  R. 
L.  R.  A.  87.  A.  397. 

3  Gildersleeve  v.  Overstolz,  90  Mo.  »  Case  v.  Hall,  24  Wend.  103,  35  Am. 
App.  518,  530.  Dec.  605. 

*  Hickey  v.  Welch,  91  Mo.  App.  i. 


134:  COMPENSATION.  [§  45. 

covered  for  loss  of  their  trade.^  "Where  a  dealer  in  drugs  and 
medicines  carelessl}''  labels  a  deadly  poison  and  sends  it  so  la- 
beled into  market,  he  will  be  held  liable  to  all  persons  who, 
without  fault,  are  injured  by  using  it  as  such  medicine  as  it 
purports  to  be.^  So,  a  party  who  fraudulently  sold  a  gun  falsely 
representing  it  to  have  been  made  by  a  particular  maker  and 
to  be  well  made,  was  held  liable  to  the  purchaser  whose  son 
was  injured  by  its  explosion.^  "Without  regard  to  the  question 
of  warranty,  a  vendor  of  disinfectant  powder  put  up  in  a  tin 
can  who  knows  that  it  was  likely  to  cause  injury  to  a  person 
who  might  open  it,  unless  special  care  is  taken  in  doing  so,  the 
danger  not  being  such  as  presumably  would  be  known  to  or 
appreciable  by  the  purchaser,  unless  warned  of  it,  is  bound  to 
give  such  warning  or  answer  for  the  consequences  of  his  neg- 
lect to  the  purchaser.*  In  several  states  the  expenses  of  the 
suit,  above  taxable  costs,  to  obtain  redress  for  such  wrongs, 
are  allowed  to  be  considered  by  the  jury.*  But  in  some  states 
it  is  otherwise.^ 

Section  4. 

consequential  damages  foe  breach  of  conteact. 

§  45,  Recoverable  only  when  contemplated  by  the  parties. 

[74]  In  an  action  founded  upon  a  contract  only  such  damages 
can  be  recovered  as  are  the  natural  and  proximate  consequence 
of  its  breach ;  such  as  the  law  supposes  the  parties  to  it  would 
have  apprehended  as  following  from  its  violation  if  at  the 
time  they  made  it  they  had  bestowed  proper  attention  upon 
the  subject  and  had  full  knowledge  of  all  the  facts.''  As  other- 
wise expressed,  the  damages  which  are  recoverable  must  be 

1  Tarletoa    v.    McGawley,    Peake,  Seeman  v.  Feeney,  19Minn.  79;  Titus 

205.  V.  Corkins,  21  Kan.  722;  Marshall  v. 

2 Thomas  v.  Winchester,  6  N.   Y.  Betner,    17   Ala.   832;    Thompson  v. 

397.  Povvning,  15  Nev.  210;  New  Orleans, 

3  Langridge  v.  Levy,  2  M.  &  W.  etc.  R.  Co.  v.  Albritton,  38  Miss.  243, 

519;    Levy   v.    Langridge,   4  id.  337.  75  Am.  Dec.  98. 

SeeRose  V.  Beattie,  2N.  &McC.  538;  «'Earle    v.    Tupper,     45    Vt.    274; 

Fultz  V.  Wycoff,  25  Ind.  321.  Howell  v.  Scoggins,  48  CaL  355. 

*  Clarke  v.  Army  &  Navy  Co-opera-  "^  Leonard   v.    New  York,  etc.  Tel. 

tive  Society,  [1903]  1KB.  155,  in  the  Co.,  41  N.  Y.  544,  567, 1  Am.  Rep.  446; 

court  of  appeal.  Meyer  v.  Haven,  70   App.  Div.  529, 

5  Dibble   v.  Morris,  26  Conn.  416;  535,  75  N.  Y.  Supp.  261;    Smith    v. 

Roberts  v.  Mason,  10  Ohio  St.  278;  Western  U.  TeL  Co.,  83  Ky.  104 


§  45.]       CONSEQUENTIAL  DAMAGES    FOE    BREACH  OF  CONTRACT.       135 

incidental  to  the  contract  and  be  caused  by  its  breach ;  such 
as  may  reasonably  be  supposed  to  have  been  in  the  contempla- 
tion of  the  parties  at  the  time  the  contract  was  entered  into.* 
Direct  damages  are  always  recoverable,  and  consequential 
losses  must  be  compensated  if  it  can  be  determined  that  the 
parties  contracted  with  them  in  view.-  It  is  not  in  the  least 
essential  to  the  existence  of  this  liability  that  an  actual  breach 
of  the  agreement  should  have  been  in  the  minds  of  the  parties 
or  either  of  them.  For  anything  which  amounts  to  a  breach 
of  contract,  whether  foreseen  or  unforeseen,  the  party  who  is 
responsible  therefor  must  answer.'  Here  an  important  dis- 
tinction is  to  be  noticed  between  the  extent  of  responsibility 
for  a  tort  and  that  for  breach  of  contract.  The  wrong-doer  is 
answerable  for  all  the  injurious  consequences  of  his  tortious 
act  which,  according  to  the  usual  course  of  events  and  general 
experience,  were  likely  to  ensue,  and  which,  therefore,  when 
the  act  was  committed,  he  may  reasonably  be  supposed  to 
have  foreseen  and  anticipated.*  But  for  breaches  of  contracts 
the  parties  are  not  chargeable  with  damages  on  this  principle. 
"Whatever  foresight,  at  the  time  of  the  breach,  the  defaulting 
party  may  have  of  the  probable  consequences,  he  is  not  gener- 
ally held  for  that  reason  to  any  greater  responsibility;  he  is 
liable  only  for  the  direct  consequences  of  the  breach,  such  as 
usually  occur  from  the  infraction  of  like  contracts,  and  w^ere 
within  the  contemplation  of  the  parties  when  the  contract  was 
entered  into  as   likely  to  result  from  its   non-performance.^ 

1  Williams  v.  Barton,  13  La.  404;  ^Hadley  v.  Baxendale,  9  Ex.341; 
Jones  V.  George.  61  Tex.  345,  354,  48  Can  dee  v.  Western  U.  Tel.  Co.,  34 
Am.  Rep.  280;  Howe  v.  North,  69  Wis.  479,  17  Am.  Rep.  452;  Pacific 
Mich.  272,  281,  37  N.  W.  Rep.  213.  Exp.    Co.   v.    Darnell,   63  Tex.   639; 

2  Rhodes  v  Baird,  16  Ohio  St.  581;  Thomas,  etc.  Manuf.  Co.  v.  Wabash, 
Brayton  v.  Chase,  3  Wis.  456;  Bridges  etc.  R.  Co.,  62  Wis.  642,  51  Am.  Rep. 
V.  Stickney,  38  Me.  361;  Paducah  725,  22  N.  W.  Rep.  827;  Jones  v. 
Lumber  Co.  v,  Paducah  Water  Nathrop,  7  Colo.  1,  1  Pac.  Rep.  435; 
Supply  Co.,. 89  Ky.  340,  25  Am.  St.  Smith  v.  Osborn,  143  Mass.  185,  9  N. 
536,  12  S.  W.  Rep.  454,  13  id.  249,  7  E.  Rep.  558;  Froheich  v.  Gammon, 
L.  R.  A.  77;  Meyer  v.  Haven,  supra.  28  Minn.  476, 11  N.  W.  Rep.  88;  West- 

3  Wilson  V.  Dunville,  6  L.  R.  Ira  ern  U.  Tel.  Co.  v.  Hall,  124  U.  S. 
210;  Hamilton  v.Magill,  12 id.  186,203.  444,   8  Sup.   Ct    Rep.   577;    Detroit 

*  Grimes  v.  Bowerman,  92  Mich.  White  Lead  Works  v.  Knaszak, 
258,  53  N.  W.  Rep.  751,  quoting  the  13  N.  Y.  Misc.  619,  U.  N.  Y.  Supp. 
text.  924;     Simpson    Brick -Press    Co.    v. 


136 


COMPENSATION. 


[§45. 


Those  damages  which  arise  upon  the  direct,  necessary  and  im- 
mediate effects  are  always  recoverable,  because  every  person 
is  supposed  to  foresee  and  intend  the  direct  and  natural  re- 


Marshall,  5  S.  D.  528,  59  N.  W.  Rep. 
728,  citing  the  text;  Guetzkow  v. 
Andrews,  92  Wis.  214,  66  N.  W.  Rep. 
119,  53  Am.  St.  909;  Dwyer  v.  Ad- 
ministrators, 47  La.  Ann.  1232,  17  So. 
Rep.  796;  Carnegie  v.  Holt,  99  Mich. 
606.  58  N.  W.  Rep.  623;  North  v. 
Johnson,  58  Minn.  242,  59  N.  W.  Rep. 
1012;  Sloggy  v.  Crescent  Creamery- 
Co.,  72  Minn.  316,  75  N.  W.  Rep.  225; 
McConaghy  v.  Pemberton,  168  Pa. 
121,  31  Atl.  Rep.  996;  Rockefeller  v. 
Merritt,  22  C.  C.  A.  617,  76  Fed.  Rep. 
909,  35  L.  R.  A.  633;  Central  Trust 
Co.  V.  Clark,  34  C.  C.  A.  354,  93  Fed. 
Rep.  293;  Krebs  Manuf.  Co.  v.  Brown, 
108  Ala.  508,  18  So.  Rep.  659,  54  Am. 
St.  188;  Slaughter  v.  Denmead,  88 
Va,  1019,  14  S.  E.  Kep.  833;  Skirm  v. 
Hilliker.  66  N.  J.  L.  410,  49  Atl.  Rep. 
679;  Witherbee  v.  Meyer,  155  N.  Y. 
449,  50  N.  E.  Rep.  58;  De  Ford  v. 
Maryland  Steel  Co.,  113  Fed.  Rep.  72, 
51  C.  C.  A.  59. 

The  rule  was  very  strictly  applied 
in  a  case  in  which  it  was  held  that 
the  vendor  of  diseased  sheep  who 
sold  them  without  knowledge  of 
their  condition  was  not  responsible 
for  damages  resulting  to  the  vendee 
from  their  being  placed  with  cattle, 
the  vendor  not  being  informed  that 
this  would  be  done.  Weaver  v. 
Penny,  17  III.  App.  628.  The  last 
reason  given  is  of  doubtful  cogency. 
See  Packard  v.  Slack,  32  Vt.  9; 
Smith  V.  Green,  1  C.  P.  Div.  92,  where 
it  IS  said  that  one  who  sells  diseased 
sheep  may  be  charged  witli  knowl- 
edge that  the  purchaser  intends,  or 
is  almost  certain,  to  put  them  with 
other  sheep.     See,  also,  ch.  14. 

An  employee  who  quits  the  service 
of  his  employer  in  violation  of  his 
contract  is  not  liable  for  the  loss  of 
property  following  his  act  through 


the  inability  of  the  master  to  pro- 
cure other  help.  Riech  v.  Bolch,  68 
Iowa,  526,  27  N.  W.  Rep.  507. 

A  carrier  who  has  not  contracted  to 
transport  cattle  received  from  a  con- 
necting carrier  in  the  cars  in  which 
they  came  to  his  care  and  who  has 
no  notice  that  they  are  of  a  kind 
which  it  is  unlawful  to  unload  in  the 
state  in  which  they  are  received  is 
not  liable  to  the  shipper  because  they 
were  seized  and  sold  to  pay  a  fine  for 
such  unloading,  although  the  shipper 
protested  against  it.  McAlister  v. 
Chicago,  etc.  R.  Co.,  74  Mo.  351. 

Barges  were  not  returned  to  their 
owner  at  the  time  agreed,  and  on  ac- 
count of  the  delay  were  swept  from 
their  moorings  by  an  extraordinary 
ice  gorge  and  lost.  "All  that  the 
defendants  could  foresee  by  ordinary 
forecast  as  a  result  of  the  breach  of 
their  contract  to  return  the  boats 
would  be  the  expense  to  the  plaintiff 
in  taking  them  himself.  They  are 
liable  for  damages,  the  primary  and 
immediate  result  of  the  breach  of 
their  contract,  and  not  for  those 
which  arise  from  a  conjunction  of 
this  fault  with  other  circumstances 
that  are  of  an  extraordinary  nature." 
Jones  V.  Gilmore,  91  Pa.  310.  See 
Parmalee  v.  Wilks,  22  Barb.  539, 
stated  in  §  37. 

For  the  breach  of  a  contract  to  re- 
pair a  tool,  the  loss  of  the  material 
on  hand  when  it  ought  to  have  been 
repaii'ed  may  be  recovered  for;  but 
not  the  profits  which  might  have 
been  made  by  working  up  such  ma- 
terial with  the  tool,  they  being  un- 
usual, considering  the  value  of  the 
implement,  and  notice  not  having 
been  given  him  who  was  to  repair  it. 
Sitton  V.  Macdonald,  25  S.  C.  68. 

The  immediate  result  of  the  breach 


§  45.]       CONSEQUENTIAL    DAIIAGES    FOE    BREACH  OF  CONTRACT.       137 

suits  of  his  acts;  those  which   ensue  in  the  ordinary  course  of 
things,  considering  the  particular  nature  and  subject-matter 


of  a  contract  not  to  engage  in  the 
hotel  business  within  the  limits  of  a 
designated  city  during  the  time  the 
plaintiff  was  the  proprietor  of  a  cer- 
tain hotel  therein,  the  agreement 
being  part  of  the  consideration  for 
its  purchase,  is  the  diversion  of  pa- 
tronage therefrom;  depreciation  in 
the  value  of  the  hotel  property  is 
secondary:  this  last  cannot  be  recov- 
ered for  unless  specially  claimed. 
Lashus  V.  Chamberlam,  5  Utah,  140, 
13  Pac.  Rep.  361.  Compare  Burck- 
hardt  v.  Burckhardt,  42  Ohio  St.  474, 
51  Am.  Rep.  842,  in  which  it  was 
held  that  one  who  purchased  the  real 
estate,  personal  property,  firm  name 
and  good-will  of  a  partnership  busi- 
ness might  prove  as  an  element  of 
his  damage  the  value  of  the  property 
with  and  without  the  good-will  and 
trade-mark,  and  the  difference  in 
«uch  value  might,  in  the  absence  of 
more  specific  proof,  be  taken  as  the 
measure  of  damages.  The  Utah  court 
remark  of  this  case  that  it  appears 
to  stand  alone. 

The  code  of  Georgia,  expressing 
the  rule  deduced  from  the  decisions 
of  the  court  therein  (Coweta  Falls 
Manuf.  Co.  v.  Rogers,  19  Ga,  417,  65 
Am.  Dec.  602;  Cooper  v.  Young,  22 
Ga.  269.  68  Am.  Dec.  502;  Red  v.  Au- 
gusta, 25  Ga,  386),  provides  that  "  re- 
mote or  consequential  damages  are 
not  allowed,  unless  they  can  be  traced 
solely  to  the  breach  of  the  contract 
or  are  capable  of  exact  computation, 
such  as  the  profits  which  are  the 
immediate  fruit  of  the  contract  and 
are  independent  of  any  collateral  en- 
terprise entered  into  in  contempla- 
tion of  the  contract."  Sec.  2944. 
Under  this  provision  it  has  been  held 
that  the  purchaser  of  a  saw-mill  and 
outfit  cannot  recover  against  his 
vendor,  who  furnished  machinery  of 


a  quality  inferior  to  that  called  for 
by  the  contract,  damages  sustained 
from  abandoning  the  business  in 
which  he  had  been  engaged  and  in 
getting  ready  to  use  the  mill,  im- 
provements made  to  carry  on  the 
business  of  running  the  mill,  loss  of 
profits,  purchase  of  material,  pay- 
ments made  for  help,  nor  for  his  per- 
sonal services.  The  measure  of  his 
damages  was  the  difference  between 
the  value  of  the  machinery  con- 
tracted for  and  the  value  of  that  in 
fact  delivered  at  the  time  of  delivery, 
or  such  difference  as  ascertained  by 
a  resale  within  a  reasonable  time 
thereafter.  Willingham  v.  Hooven, 
74  Ga.  233,  248,  58  Am.  Rep.  435. 

Damages  from  injury  to  grain  be- 
cause of  the  failure  of  a  warranted 
machine  to  work  to  the  capacity 
specified,  and  which  was  sold  with 
the  understanding  that  it  was  to  be 
used  in  securing  a  large  crop,  were 
held  not  recoverable;  they  could  not 
be  fairly  considered  such  as  would 
naturally  arise  from  the  breach  of 
the  contract  or  to  have  been  contem- 
plated by  the  parties  as  a  probable 
result.  Wilson  v.  Reedy,  32  Minn. 
256,  20  N.  W.  Rep.  153;  Osborne  v. 
Poket,  33  Minn.  10,  21  N.  W.  Rep.  752; 
Brayton  v.  Chase,  3  Wis.  456.  These 
cases  carry  the  rule  to  the  extreme. 
The  Wisconsin  case  is  probably  over- 
ruled by  cases  referred  to  in  Thomas, 
etc.  Manuf.  Co.  v.  Wabash,  etc.  R. 
Co.,  63  Wis.  642,  650,  22  N.  W.  Rep. 
827,  51  Am.  Rep.  725.  Contra,  Smeed 
V.  Foord,  1  E.  &  E.  602.    See  ch.  14. 

The  breacli  of  a  contract  to  furnish 
articles  to  be  used  in  completing  a 
building  does  not  make  the  con- 
tractor liable  for  the  loss  of  the  rent, 
no  extrinsic  facts  being  alleged.  LiU 
jengren  Furniture  &  L.  Co.  v.  Mead, 
42  Minn.  420,  44  N.  W.  Rep.  306. 


138 


COMPENSATION. 


[§  45.. 


of  the  contract.'  It  is  conclusively  presumed  that  a  party  vio- 
lating his  contract  contemplates  the  damages  which  directly 
ensue  from  the  breach,^  There  are  fixed  rules  for  measurin"- 
[76]  damages  of  a  pecuniary  nature,  which  apply  to  all  persons 


Though  the  breach  of  a  contract  to 
furnish  guards  for  the  shops  and 
work-houses  in  a  prison  enables  an 
incendiary  toset  fire  to  the  building, 
and  the  loss  resulting  is  the  direct 
and  immediate  consequence  of  the 
fire,  it  was  not,  in  legal  contempla- 
tion, of  the  failure  to  provide  a 
watch.  Tennessee  v.  Ward,  9  Heisk. 
100,  133.  This  ruling  is  open  to  ques- 
tion. The  agreement  to  mamtain  a 
guard,  considered  as  a  precaution 
contracted  for  to  insure  the  safety 
of  the  plaintiff's  property,  was  such 
as  was  apparently  intended  to  pre-' 
vent,  among  other  things,  the  loss 
which  occurred,  and  hence  that  loss 
may  properly  be  considered  as  within 
the  contemplation  of  the  parties 
when  they  contracted  as  a  conse- 
quence of  a  breach.  Paducah  Lum- 
ber Co.  V.  Paducah  Water  Supply 
Co.,  89  Ky.  340,  25  Am.  St.  536,  13  S. 
W.  Rep.  554,  13  id.  249,  7  L.  R.  A.  77. 

A  warehouseman  who  agrees  to 
store  goods  at  a  particular  place  is 
liable  to  the  bailor  for  the  loss  of 
those  intrusted  to  him  and  which 
are  stored  in  another  place  and  de- 
stroyed by  fire,  tlie  latter  having  in- 
sured them  at  the  place  where  the 
contract  provided  they  were  to  be 
stored.  If  the  destruction  of  the 
goods  must  have  inevitably  taken 
l)iace  in  the  event  they  had  been 
stored  as  agreed,  the  bailee  might 
have  been  released.  Lilley  v.  Double- 
day,  7  Q.  B.  Div.  510. 

A  warehouseman  who  neglects  to 
ship  one  bale  of  cotton  out  of  a 
larger  quantity  is  not  liable  for  the 
cost  of  insurance  for  one  day  on  the 
whole  lot  nor  for  the  interest  on 
money  which  was  borrowed  because 
of  his  refusal  to  so  do,  no  notice  hav- 


ing been  given  him  of  the  liability  of 
the  owner  for  these  expenses.  Swift 
V.  Eastern  Warehouse  Co.,  86  Ala. 
294,  5  So.  Rep.  505. 

1  Booth  V.  Spuyten  Dnyvil  Rolling 
Mill  Co.,  60  N.  Y.  487;  Hadley  v. 
Baxendale,  9  Ex.  341. 

One  who  agrees  to  procure  an  as- 
signment of  a  mortgage  being  fore- 
closed and  then  to  forbear  for  a 
specified  time  to  enable  the  promisee 
to  enforce  it,  and  who,  after  procur- 
ing such  assignment,  sells  it  to  one 
who  immediately  proceeds  to  a  sale 
and  thereby  extinguishes  the  prom- 
isee's interest  in  the  mortgaged  prem- 
ises before  the  expiration  of  the 
agreed  period  of  forbearance,  is  lia- 
ble for  the  net  value  of  the  prom- 
isee's interest.  Gallup  v.  Miller,  25 
Hun.  298. 

=^  Whether  the  parties  who  entered 
into  a  contract  had  in  mind  the  dam- 
ages which  might  follow  its  breach 
or  not  does  not  in  the  least  vary  the 
question  of  their  liability  or  the 
measure  of  recovery,  under  ordinary 
circumstances:  this  is  governed  by 
the  injury  proximately  resulting. 
Collins  V.  Stephens,  58  Ala.  543:- 
Dougherty  v.  American  U.  Tel.  Co., 
75  Ala.  168,  177.  51  Am.  Rep.  435: 
Cohn  V.  Norton,  57  Conn.  480,  492,  5 
L.  R.  A.  572,  18  At).  Rep.  595;  Belt  v. 
Washington  Water  Power  Co.,  24 
Wash.  387,  64  Pac.  Rep.  525;  Farmers' 
Loan  &  Trust  Co.  v.  Eaton,  114  Fed. 
Rep.  14,  51  C.  C.  A.  640;  Eckington 
&  S.  H.  R.  Co.  V.  McDevitt,  18  D.  C. 
App.  Cas.  497. 

A  railroad  company  which  violates 
its  contract  to  fence  its  track  laid 
through  a  farm  is  supposed  to  have 
contemplated  that  animals  on  the- 
farm   would   be  exposed   to  injury 


§  -iC]       CONSEQUENTIAL  DAMAGES    FOR    BREACH  OF  CONTRACT.       139 

without  regard  to  their  actual  foresight  of  the  particular  ele- 
ments. And  this  is  also  true  of  the  direct  damages  from  torts.' 
§  46.  Illustrations  of  liability  under  the  rule.  In  an  ac- 
tion to  recover  damages  for  the  breach  of  a  contract  to  har- 
vest oats,  where  the  petition  stated  that  by  reason  of  such 
breach  the  oats  were  entirely  lost,  the  verdict  given  for  their 
value  was  retained,  the  court  having  refused  to  instruct  the 
jur}^  that  they  were  to  be  guided  by  the  general  rule  of  dam- 
ages, namely,  the  difference  between  the  contract  price  and 
what  the  labor  would  have  cost,  and  having  instructed  that 
the  plaintiff  was  entitled  to  recover  the  value  if  he  took  all 
reasonable  precaution  to  prevent  such  loss.^  Where  ^  a  party 
contracted  with  a  manufacturer  of  bar  iron  to  furnish  pig  iron 
in  prescribed  quantities  at  specified  times,  and  made  default, 
in  consequence  of  which  the  manufacturer  was  obliged  to  get 
and  use  an  inferior  quality  of  iron  in  order  to  carry  on  his  busi- 
ness, and  thereby  suffered  loss  with  his  customers,  it  was  said : 
"  When  the  vendor  fails  to  comply  with  his  contract  the  gen- 
eral rule  for  the  measure  of  damages  undoubtedly  is  the  differ- 
ence between  the  contract  and  the  market  price  of  the  article 
at  the  time  of  the  breach.*  This  is  for  the  evident  reason  that 
the  vendee  can  go  into  the  market  and  obtain  the  article  con- 
tracted for  at  that  price.  But  when  the  circumstances  of  the 
case  are  such  that  the  vendee  cannot  thus  supply  himself  the 
rule  does  not  apply,  for  the  reason  of  it  ceases.*  .  .  .  If  an 
article  of  the  same  quality  cannot  be  procured  in  the  market 
its  market  price  cannot  be  ascertained  and  we  are  without  the 
necessary  data  for  the  application  of  the  general  rule.    This  is 

from  its  trains;  that  damage  would  The  text  is  cited  in  Anderson  Elec- 

be  done  by  trespassing  animals  and  trie  Co.  v.  Cleburne  Water,  Ice  &  L. 

pasturage   injured.     Louisville,   etc.  Co.,  23  Tex.  Civ.  App.  328,  337,  57  S. 

R.  Co.  V.  Sumner,  106  Ind.  55,  55  Am.  W.  Rep.  575. 

Rep.  719,  5  N.  E.  Rep.  404;  Same  v.  »  McHose  v.  Fulmer,  73  Pa.  865. 

Power,  119  Ind.  269,  21  N.  E.  Rep.  751 ;  ^  Browning  v.  Simons,  17  Ind.  App. 

Lake  Erie  &  W.  R.  Co.  v.  Power,  15  45,  46  N.  E.  Rep.  86,  citing  the   text. 

Ind.  App.  179,  43  N.  E.  Rep.  959.  5  Bank  of  Montgomery  v.  Reese,  26 

lEten   V.    Luyster,   60  N.  Y.    252;  Pa.  143;  Laporte   Imp.  Co.   v.  Brock, 

Lovvenstein    v.    Chappell,   30    Barb.  99  Iowa,  485,  61  Am.  St.  245.  68  N.  W. 

241;  Horner  v.  Wood,  16  Barb.  389;  Rep.  810,  citing  the  text;  Chalice  v. 

§  13.  Witte,  81  Mo.  App.  84,  also  citing  the 

^  Houser  v.  Pearce,   13  Kan.    104.  text. 
See  Prosser  v.  Jones,  41   Iowa,  674. 


140  COMPENSATION  [§  46. 

a  contingency  which  must  be  considered  to  have  been  within 
the  contemplation  of  the  parties,  for  they  must  be  presumed 
to  know  whether  such  articles  are  of  limited  production  or 
not.  In  such  a  case  the  true  measure  is  the  actual  loss  which 
the  vendee  sustains  in  his  own  manufacture  by  having  to  use 
[70]  an  inferior  article,  or  not  receiving  the  advance  on  his 
contract  price  upon  any  contracts  which  he  himself  had  made 
in  reliance  upon  the  fulfillment  of  the  contract  by  the  vendor. 
We  do  not  mean  to  say  that  if  he  undertakes  to  fill  his  own 
contracts  with  an  inferior  article,  and,  in  consequence,  such 
article  is  returned  on  his  hands,  he  can  recover  of  his  vendor, 
besides  the  loss  sustained  on  his  contracts,  all  the  extraordi- 
nary loss  incurred  by  his  attempting  what  was  clearly  an  un- 
warrantable experiment.  His  legitimate  loss  is  the  diff'erence 
between  the  contract  price  he  was  to  pay  his  vendor  and  the 
price  he  was  to  receive.  This  is  a  loss  which  springs  directly 
from  the  non-fulfillment  of  the  contract." 

The  rule  under  consideration  was  comprehensively  stated  in 
an  early  case.^  In  general  the  delinquent  party  is  holden  to 
make  good  the  loss  occasioned  by  his  delinquency.  His  lia- 
bilit}'^  is  limited  to  direct  damages,  which,  according  to  the 
nature  of  the  subject,  may  be  contemplated  or  presumed  to 
result  from  his  failure.  Remote  or  speculative  damages,  al- 
though susceptible  of  proof  and  deducible  from  the  non-per- 
formance, are  not  allowed.  It  was  agreed  between  the  owner 
of  a  rice  mill  and  a  planter  that  if  the  latter  would  bring  his 
rice  to  the  former's  mill  it  should  have  priority  in  being  beaten. 
Rice  so  brought  was  not  so  beaten,  but  was  kept  to  await  an- 
other turn,  and  before  it  was  beaten  the  mill  and  the  rice 
were  consumed  by  an  accidental  fire.  It  was  held  that  dam- 
ages for  the  loss  could  not  be  assessed  as  the  consequence  of 
the  breach  of  the  contract.^  The  damages  for  a  breach  of  con- 
tract must  be  such  as  the  party  suffers  in  respect  to  the  par- 
ticular thing  which  is  the  subject  of  the  contract,  and  not 
such  as  has  been  accidentally  occasioned  or  supposed  to  be 
occasioned  in  his  business  or  affairs.^     The  defendant  agreed 

1  Miller  v.  Mariner's  Church,  7  Me.     72  Am.  Dec.  552.     Contra,  Lilley  v. 
55,  20  Am,  Dec.  341.  Doubleday,  7  Q.  B.  Div.  510. 

2  Ashe  V.  De  Rossett,  5  Jones,  299,        3  Batchelder  v.  Sturgis,  3  Cusli.  201; 


§  4G.]       CONSEQUENTIAL  DAMAGES    FOR    BREACH  OF  CONTRACT.       141 

to  rent  to  the  plaintiff  a  store  for  a  year,  to  commence  some 
weeks  in  the  future.  Eelying  upon  this  agreement  the  plaint- 
iff sold  his  lease  of  a  store  he  then  occupied  to  M.,  agreeing  to 
give  possession  about  the  time  he  would  be  entitled  to  [77] 
occupy  the  store  rented  of  the  defendant,  M.  allowing  the 
plaintiff  to  occupy  a  part  of  the  store  in  the  meantime.  The 
defendant  refused  to  give  the  lease  in  accordance  with  his 
agreement.  The  plaintiff's  goods  were  packed  by  him  to  put 
them  in  the  space  they  were  permitted  to  occupy  in  M.'s  store, 
and  suffered  some  damage  therefrom.  It  was  held  that  this 
damage  was  not  the  result  of  the  defendant's  breach  of  con- 
tract; nor  was  he  entitled  to  interest  on  the  value  of  his  stock 
of  goods,  which,  by  the  defendant's  refusal  to  fulfill  his  con- 
tract, the  plaintiff  had  been  obliged  to  keep  elsewhere,  and 
was  prevented  from  exposing  for  sale  for  the  period  of  fifteen 
days,  as  the  defendant's  act  did  not  necessarily  prevent  a  sale 
of  the  stock  for  that  length  of  time.^  In  a  similar  case  the 
lessor  was  not  liable  to  the  lessee  for  money  paid  for  clerk 
hire  nor  for  losses  resulting  from  the  purchase  of  goods. 
"While  the  former  may  have  supposed  that  the  latter  would 
make  preparations  to  occupy  the  store  he  could  not  know 
what  it  would  be  necessary  for  him  to  do.^  One  merchant 
agreed  with  another  that  he  would  not  enter  judgment  on  a 
bond  given  him  except  on  a  contingency  named.  The  con- 
tract was  violated,  and  as  a  result  the  fact  that  judgment  was 
entered  was  published  in  a  commercial  journal  known  as  the 
"Black  List,"  with  the  effect  of  injuring  the  plaintiff's  credit. 
Such  publication  was  an  event  the  parties  could  have  foreseen.'* 

A  case  of  first  impression  came  before  one  of  the  appellate 
courts  of  Illinois  not  long  since.  The  vendor  of  a  safe  war- 
Hay  den  V.  Cabot,  17  Mass.  169;  State  2Cohn  v.  Norton,  57  Conn.  480,  492, 
V.  Thomas,  19  Mo.  613,  61  Am.  Dec.  5  L.  R.  A,  572,  18  Atl.  Rep.  595; 
580;  Webster  v.  Woolford,  81  Md.  Friedland  v.  Myers,  139  N.  Y.  482,  34 
339,  32  Atl.  Rep.  319;  Clark  v.  Moore,     N.  E.  Rep.  1058. 

3  Mich.  55;  Johnson  v.  Matthews,  5  Loss  of  profits  is  too  remote  to 
Kan.  118;  Doud  v.  Duluth  Milling  be  considered  where  there  is  a  breach 
Co.,  55  Minn.  53,  56  N.  W.  Rep,  463;  of  such  a  contract,  Alexander  v. 
Florida  Central  &  P,  R.  Co.  v.  Bucki,  Bishop,  59  Iowa,  572,  13  N.  W.  Rei>. 
16  C.  C.  A.  42,  68  Fed.  Rep.  864.  714. 

1  Lowenstein  v.  Chappell,  30  Barb.        3  Blair  v.  Kinch,  10  L.  R.  Ire.  234. 
241. 


142  COMPENSATION.  [§  46. 

ranted  it  to  be  burglar  proof  if  directions  given  for  locking  it 
were  observed;  these  were  incomplete  and  the  safe  was  opened 
bj  burglars  without  the  use  of  force,  and  money  therein  was 
taken.  It  was  said  in  the  opinion:  It  seems  to  be  no  undue 
stretch  of  the  well-established  rule  that  if  the  damages  suffered 
be  such  as  may  reasonably  be  supposed  to  have  been  in  the 
contemplation  of  both  parties  at  the  time  of  the  contract  as  the 
probable  result  of  its  breach,  to  hold  that  the  very  intervention 
of  the  burglar  was  the  essential  element  that  both  parties  con- 
templated as  being  the  thing  to  be  guarded  against,  and  con- 
cerning which  the  warranty  was  interposed.  If  so,  then  the 
consequence  that  followed  was  the  natural  and  proximate 
result  of  the  breach,  and  the  recovery  was  right.^  A  vendor 
of  powder  broke  his  contract  to  furnish  the  plaintijff  with  the 
papers  necessary  to  lawfully  land  the  powder,  knowing  that 
the  failure  to  do  so  would  make  plaintiff  liable  for  the  viola- 
tion of  law  in  attempting  to  import  an  interdicted  article.  The 
defendant  was  liable  for  the  fine  paid  by  the  plaintiff .^  A  cor- 
poration which  deducts  a  part  of  the  wages  of  an  employee  to 
pay  a  physician  employed  under  a  contract  to  provide  compe- 
tent medical  service  to  him  and  his  family  is  liable  for  the  death 
of  the  child  of  the  employee  caused  by  the  breach  of  the  con- 
tract.' Where  there  was  a  delay  of  four  months  in  delivering  a 
wheel  and  pinion  to  a  street  railway  company,  in  consequence 
of  which  its  earning  power  was  largely  reduced,  the  defendant, 
not  having  been  apprised  of  the  facts,  was  not  liable  for  the 
losses.*  The  breach  of  a  contract  between  two  railroad  com- 
panies which  confers  a  license  upon  one  of  them  to  run  its 
trains  over  the  track  of  the  other  does  not  make  the  party 
guilty  thereof  liable  to  the  other  for  damage  sustained  to  prop- 
erty which  it  was  unable  to  carry  because  of  such  violation 
and  which  it  was  obliged  to  unload  from  its  cars  at  a  place 

iDeanev.  Michigan  Stove  Co.,  69  ing  an   employer   liable   to  an  em- 

IlL  A  pp.  106.  ployee   for  tlie    malpractice  of  its 

2Hecla  Powder  Co.  v.  Sigua  Iron  hospital  surgeon,   money  being  de- 
Co.,  157  N.  Y.  437,  52  N.  E.  Rep.  650.  ducted  from  the  wages  of  employees 

3  American  Tin-Plate  Co.  v.  Guy,  for  the  support  of  the  hospital. 
25  Ind.  App.  558,   58  N.  E.  Rep.  738,        ^  Central  Trust  Co.  v.  Clark,  34  C. 

following  Wabash  R.  Co.  v.  Kelly,  C.  A.  354,  93  Fed.  Rep.  293. 
153  Ind.  119,  25  N.  E.  Rep.  152,  hold- 


^  4G.]       CONSEQUENTIAL    DAMAGES    FOE    BREACH  OF  CONTKACT.       143 

where  it  was  exposed  to  rain  and  mud.'  The  damages  result- 
ing from  the  foreclosure  of  a  mortgage  are  not  proximately 
caused  by  the  breach  of  a  contract  to  loan  the  mortgagor 
raoney.^  The  lessor  of  personalty  must  deliver  it  in  a  condi- 
tion for  its  safe  use  by  the  lessee;  failing  to  do  so,  he  is  liable 
for  any  damages  resulting  from  defects  therein.'  It  is  the 
proximate  cause  of  the  refusal  of  the  purchaser  of  shares  of 
stock  to  accept  the  same  that  the  vendor  shall  become  liable 
for  assessments  thereon.*  If  poor  seed  is  sold  in  lieu  of  good, 
a  crop  of  inferior  quality  and  of  less  value  is  the  natural  re- 
sult.^ 

"Where  the  defendant  contracted  to  make  and  deliver  dies 
to  be  used  in  the  manufacture  of  lanterns,  in  which  business 
the  plaintiff's  assignor  proposed  to  engage  when,  so  far  as  ap- 
peared, the  dies  were  furnished,  it  was  not  contemplated  that 
he  would  rent  premises  and  employ  men  in  preparation  for 
carrying  on  the  business  to  be  established ,  the  natural  and 
obvious  consequence  of  the  breach  would  be  to  compel  him  to 
obtain  dies  elsewhere;  the  assignee  of  the  contract,  of  whose 
connection  with  it  defendant  had  no  notice,  could  only  re- 
cover such  damages  as  were  contemplated  when  the  contract 
was  made.^  Pursuant  to  a  contract  of  bailment  the  defendant 
delivered  to  the  plaintiff,  without  warranty,  seed  which  he 
believed  to  be  clean,  which  was  to  be  sown  on  the  plaintiff's 
land,  the  produce  thereof  to  be  returned  and  delivered  to  and 
paid  for  by  the  defendant  at  a  fixed  price.  Such  seed  was  not 
pure,  and  the  plants  grown  from  the  foreign  seed,  having  be- 
come scattered  on  the  ground  during  the  harvesting,  came  up 
the  following  year.     The  damage  thus  caused  was  too  remote.^ 

1  Railway  Co.  v.  Neel,  56  Ark.  279,  ^  Stewart  v.  Scultborp,  25  Ont.  544. 

19  S.  W.  Rep.  963.  But  in  McMullen  v.  Free,  13  Ont. 

2 Savings  Bank  v.  Asbury,  117  Cal.  57,  tlie  vendor  of  seed  grain,  which 

96,  48  Pac.  Rep.  1081.  was  impure  by  reason  of  the  pres- 

3  Moriarty  v.  Porter,  23  N.  Y.  Misc.  ence  of  the  seed  of  noxious  weeds, 

536,  49  N.  Y.  Supp.  1107.  was  held  liable  to  a  farmer  to  wliom 

*  Gay  v.  Dare,  103  CaL  454,  37  Pac.  he  sold  such  seed  for   the  damage 

Rep.  466.  done  to  his  farm  by  reason  of  the 

5  Hoopes  v.  East,  19  Tex.  Civ.  App.  growth  of  such  weeds,  though  the 

53,  48  S.  W.  Rep.  764.  crop  raised    from   the  seed  of  the 

<»  Rochester   Lantern  Co.  v.  Stiles  grain  was  not  injured.    See  §  670  et 

&  Parker  Press  Co.,  135  N.  Y.  209,  31  seq. 
N.  E.  Rep.  1018. 


14-i  COMPENSATION.  [§  4T^ 

But  it  is  otherwise  where  there  is  a  breach  by  a  landlord  of 
his  contract  to  furnish  his  tenant  with  fertilizer.^ 

§  47,  Liability  not  affected  by  eollaterjil  ventures.  Par- 
ties, when  they  enter  into  contracts,  may  well  be  presumed  to 
contemplate  the  ordinary  and  natural  incidents  and  conse- 
quences of  performance  or  non-performance;  but  they  are  not 
supposed  to  know  the  condition  of  each  other's  affairs,  nor  to 
take  into  consideration  any  existing  or  contemplated  transac- 
tions, not  communicated  nor  known,  with  other  persons.^  Few 
persons  would  enter  into  contracts  of  any  considerable  extent 
as  to  subject-matter  or  time  if  they  should  thereby  incident- 
ally assume  the  responsibility  of  carrying  out,  or  be  held  le- 
gally affected  by,  other  arrangements  over  which  they  have 
no  control  and  the  existence  of  which  are  unknown  to  them. 
In  awarding  damages  for  the  non-performance  of  an  existing 
contract  the  gains  or  profits  of  collateral  enterprises  in  which 
the  party  claiming  them  has  been  induced  to  engage  by  rely- 
ing upon  the  performance  of  such  a  contract,  and  of  which 
no  notice  has  been  given  the  other  party,  cannot  be  included. 
In  an  action  for  breach  of  a  warranty  of  a  horse  the  plaintiff 
cannot  recover  as  special  damage  the  loss  of  a  bargain  for  its 
resale  at  a  profit,  though  the  contract  for  such  resale  had  act- 
ually been  completed  before  the  unsoundness  was  discovered.* 

1  Herring  v.  Armwood,  130  N.  C.  Supp.  924;  Scaramanga  v.  English, 
177,  41  S.  E.  Rep.  96.  1   Commercial    Cas.   99;   Brauer    v. 

2  Horner  v.  Wood,  16  Barb.  386;  Oceanic  Steam  Navigation  Co.,  66 
Cuddy  V.Major,  13  Mich.  368;  Mas-  App.  Div.  605,  73  N.  Y.  Supp.  291; 
terton  v.  Mayor,  7  Hill,  61 ;  Story  v.  Witherbee  v.  Meyer,  155  N.  Y.  446.  50 
New  York  R.  Co.,  6  N.  Y.  85;  Bridges  N.  E.  Rep.  58;  Dean  Pump  Works  v. 
V.  Stickney,  38  Me.  361 ;  Barnard  v.  Astoria  Iron  Works,  40  Ore.  83,  66 
Poor,  21  Pick.  378;  Fox  v.  Harding,  Pac.  Rep.  605. 

7  Cush.  516;  Brauer  v.  Oceanic  Steam  The  text  is  quoted  with  approval 

Navigation  Co.,  34  N.  Y.  Misc.  127,  69  in  Mitchell  v.  Clarke.  71  Cal.  163,  11 

N.  Y.  Supp.  465;  Hay  v.  Williams,  8  Pac.  Rep.  882,  60  Am.  Rep.  529.  which 

Ky.  L.  Rep.  434  (Ky.  Super.  Ct.).  was  an  action  for  the  breach  of  a 

3  Clare  v.  Maynard,  6  Ad.  &  EL  contract  to  pay  the  plaintiff's  cred- 
519;  Walker  v.  Moore,  10  B.  &  C.  416;  itor  a  sum  of  money  intrusted  to  the 
Lawrence  v.  Ward  well,  6  Barb.  423;  defendant  for  that  purpose.  Dam- 
Williams  V.  Reynolds,  6  B.  &  S.  495;  ages  resulting  to  the  plaintiff  by 
Harper  v.  Miller,  27  Ind.  277;  Jones  reason  of  his  creditor's  attaching 
V.  National  Printing  Co.,  13  Daly,  92;  and  selling  h's  property  were  not 
Detroit  White  Lead  Works  v.  suchas  were  the  natural  consequence 
Knazak,  13  N.  Y.  Misc.  619,  34  N.  Y.  of  tlie  bread..     To  the  same  effect 


§  4S.]      CONSEQUENTIAL   DAMAGES    FOR  BREACH  OF  CONTRACT.       145 

§  48.  Distinction  between  consequential  liability  in  tort 
and  on  contract.  The  distinction  between  the  liability  for  [78] 
consequential  damages  resulting  from  a  tort  and  the  damages 
recoverable  for  a  breach  of  contract  is  forcibly  illustrated  by 
comparing  an  English  case  ^  with  two  Wisconsin  cases.^  In  the 
first  case  a  carrier  negligently  induced  the  plaintiff  and  his 
wife  and  child  to  leave  the  train  in  the  night  at  a  wrong  station ; 
no  conveyance  could  be  had,  and  they  were  obliged  to  take  a 
long  walk  through  the  rain  to  reach  their  destination.  In  con- 
sequence of  the  exposure  and  fatigue  the  wife  was  taken  sick. 
The  action  to  recover  damages  was  considered  as  being  brought 
on  the  contract  for  carriage,  and  they  were  held  too  remote. 
In  the  earlier  of  the  Wisconsin  cases  the  action  was  upon  a 
contract  to  convey  the  plaintiff  and  about  eighty  others  from 
one  station  to  a  given  place  and  back  on  a  named  day  by  a 
special  train,  which  was  to  leave  on  the  return  trip  at  a  stated 
hour.  It  was  alleged  that  they  were  convej^ed  to  the  place 
designated,  but  no  cars  were  furnished  to  convey  them  back, 
and  the  breach  was  charged  to  be  wilful  and  fraudulent;  that 
b\^  reason  thereof  the  plaintiff  was  greatly  injured  in  bodily 
health,  suffered  great  pain  and  anxiety  of  mind,  lost  much  time 
from  business  and  was  subjected  to  indignities  and  insults  from 
employees  of  the  carrier.  It  was  held,  the  action  being  upon 
contract,  that  the  trial  court  erred  in  charging  that,  if  the  de- 
fendant's conduct  was  wilful  and  malicious,  the  jury  might 
award  full  compensatory,  though  not  punitive,  damages,  "  em- 
bracing such  loss  of  time,  such  injury  to  health,  such  annoy- 
ance and  vexation  of  mind,  and  such  mental  distress  and  sense 
of  wrong  as  the  jury  might  find  was  the  immediate  result  of 
the  defendant's  misconduct,  and  must  necessarily  and  reason- 
are  Wallace  v.  Ah  Sam,  71  Cal.  197,  ^  Hobbs  v.  London,  etc.  R  Co.,  L. 
13   Pac.  Rep.  46,  60  Am.   Rep.  534;     R,  10  Q.  B.  111. 

Cohn  V.  Norton,  57  Conn.  480,  493, 18        2  Walsh  v.  Chicago,  etc.  R.  Co.,  43 
Atl.  Rep.  595;  Wetmore  v.  Pattison,     Wis.  23,  24  Am.  Rep.  376;  Brown  v. 
45  Mich.  439,  8  N.  W.  Rep.  67;   Hunt    Same,  54  Wis.  342, 11  N.  W.  Rep.  356, 
V.  Oregon  Pacific  R.  Co.,  36  Fed.  Rep.    911.  The  Walsh  case  is  cited  approv- 
481 ;  Illinois  Central  R.  Co.  v.  United     ingly  in  North  German  Lloyd  Steam- 
States,  16  Ct.  of  Cls.  312,  334;  Cates    ship  Co.  v.  Wood,  18  Pa.  Super.  Ct. 
V.  Sparkman,  73  Tex.  619,  11  S.  W.     488,  493. 
Rep.  846;  Houston,  etc.  R  Co.  v.  Hill, 
63  Tex.  384,  51  Am.  Rep.  642. 
Vol.  I  —  10 


14G  COMPENSATIO:l  [§  40. 

ably  have  been  expected  to  arise  therefrom  to  the  plaintiff." 
Such  damages  were  held  too  remote;  they  could  not  have  been 
in  contemplation  when  the  contract  was  made.  The  court 
quoted  and  adopted  the  reasoning  of  the  several  judges  in  the 
English  case.  The  other  "Wisconsin  case  was  an  action  for 
[71)J  negligence,  and  the  facts  were  nearly  like  those  in  the 
Ilobbs  case.  Recovery  was  allowed  for  the  sickness  caused 
by  the  necessary  walk  of  the  female  plaintiff  to  her  destina- 
tion.' 

§49.  Same  subject;  criticism  of  the  Hobbs  case.  The  doc- 
trine of  the  Hobbs  case  which  is  stated  in  the  preceding  sec- 
tion made  some  impression  upon  the  law  in  similar  cases  in  a 
few  states;  its  influence  is  most  seen  in  cases  ruled  soon  after 
the  opinions  of  the  judges  who  decided  it  were  received  in  this 
country.^  As  has  been  stated  elsewhere  *  the  tendency  of  Amer- 
ican authority  is  in  opposition  to  the  view  promulgated  therein.* 
In  addition  to  the  cases  cited  in  the  previous  discussion  atten- 
tion is  directed  to  a  Texas  decision  in  which  the  English  case 
and  those  which  have  followed  it  are  said  to  be  rested  upon 
too  narrow  ground,^  and  which  holds  that  a  railway  company 
which  has  violated  its  contract  by  carrying  a  passenger  beyond 
his  destination  is  liable  to  him  for  the  discomfort,  inconven- 
ience, sickness,  expenses,  costs  and  charges  which  are  the  direct, 
natural  and  proximate  result.  The  Hobbs  case  stands  but  little 
better  in  England  than  it  does  in  this  country;  indeed,  it  is 
practically  overruled  there.  The  court  of  appeal,  queen's  bench 
division,  has  unanimously  held  that  it  is  a  probable  result  of 
turning  horses  which  have  been  transported  on  a  railway  out 
of  a  stable  in  which  it  had  been  contracted  that  they  should 

1  This  case  has  been  discussed  in  is  no  connection  between  the  agree- 

g  30,  where  other  cases  on  the  sub-  nient  and  the  arrest  of  the  passenger 

ject  are  collected.  by  the  conductor  of  tlie  train,  who 

^See  Walsh  v.  Chicago,  etc.  R.  Co.,  was  a  police  officer,  and  who  wrong- 

42  Wis.  23,  24  Am.  Rep.  376;  Indian-  fully  refused  to  receive  the  ticket 

apolis,  etc.  R  Co.  v.  Birney,  71  III.  tendered,  and  delivered  the  passen- 

391.  ger  to  another  police  officer  by  wlioni 

8§  36.  he  was  confined  in  a  cell  with  the  re- 

*  Massachusetts  may  be  an  excep-  suit  that  illness  followed.     Murdock 

tion  to  the  rule,  it  being  held  there  v.  Boston  &  A.  R.  Co.,  133  Mass.  15. 
that  in  an  action  for  the  breach  of  a        &  I.  &  G.  N.  R.  Co.  v.  Terry,  62  Tex. 

contract  to  carry  on  a  railroad  there  380. 


§  40.]       CONSEQUENTIAL   DAMAGES    FOR   BREACH  OF  CONTRACT.       147 

be  sheltered  that  some  of  them  would  take  cold  while  their 
owner  was  finding  room  for  them  elsewhere,  and  that  dam- 
ages resulting  might  be  recovered.^  In  the  case  last  cited 
Bramwell,  L.  J.,  said,  referring  to  the  ITobbs  case,  "  I  do  not 
see  why  a  passenger  who,  by  default  of  the  railway  company, 
was  obliged  to  walk  home  in  the  dark  might  not  recover  in 
respect  of  such  damage,  it  being  an  event  which  might  not 
unreasonably  be  expected  to  occur."  Brett,  L.  J.,  observed, 
"  Why  was  the  damage  to  the  wife  too  remote?  There  was  no 
accommodation  or  conveyance  to  be  obtained  wiiere  the  par- 
ties were  put  off  the  train,  so  that  it  was  not  only  reasonable 
that  the}'-  should  walk,  but  they  were  obliged  to  do  so.  Why 
was  it  that  which  happened  was  not  the  natural  consequence 
of  the  breach  of  contract  ?  Suppose  a  man  let  lodgings  to  a 
woman  and  then  turned  her  out  in  the  middle  of  the  night 
with  only  her  night  clothes  on,  would  it  not  be  a  natural  con- 
sequence that  she  would  take  a  cold?  .  .  .  It  is  not,  how- 
ever, necessary  for  me  to  say  more  than  that  I  am  not  contented 
with  it,  for  there  is  a  difference  between  such  a  case  and  the 
present  one.  People  do  not  get  out  of  a  train  and  walk  home 
at  night  without  catching  cold,  and  it  is  not  nearly  so  inevi- 
table a  consequence  that  a  person  getting  out  of  a  train  under 
such  circumstances  as  in  the  Hobbs  case  should  catch  cold  as 
that  horses  turned  out  as  these  were  in  this  case  should  suffer. 
There  is,  therefore,  a  difference,  though  I  own  I  do  not  see 
much  between  this  case  and  that."  The  question  has  also  been 
passed  upon  in  Canada,  and  the  view  there  taken  is  rested  on 
a  basis  which  is  entirely  satisfactory.  In  that  case  a  passenger 
was  ejected  from  a  street  car  after  an  altercation  with  the  con- 
ductor which  put  him  in  a  state  of  perspiration;  he  took  cold 
and  suffered  from  rheumatism  and  bronchitis.  The  defendant 
contended  that  the  right  interfered  with  was  one  of  contract, 
and  that,  as  the  illness  was  not  reasonably  contemplated  at  the 
time  the  contract  was  made,  there  was  no  liability  on  account 
of  it.  The  recbvery  of  damages  on  account  of  the  illness  was 
sustained  by  the  divisional  court  and  the  court  of  appeal.  It 
was  said  in  the  opinion  of  the  supreme  court  that  when  one, 
whether  in  performance  of  a  contract  or  not,  takes  charge  of 

iMcMahon  v.  Field,  7  Q.  B.  Div.  591. 


148  COMPENSATION.  [§  50. 

the  person  or  property  of  another,  there  arises  a  duty  of  rea- 
sonable care;  and  if  by  his  own  act  he  creates  circumstances 
of  danger  and  subjects  the  person  or  propert}''  to  risk  without 
exercising  reasonable  care  to  guard  against  injury  or  damage, 
he  is  responsible  for  such  injury  and  damage  as  arises  as  the 
direct  or  natural  and  probable  consequence  of  the  wrongful 
act.  The  writer  of  the  opinion  shared  in  the  doubts  expressed 
by  the  court  of  appeal  in  England  respecting  the  conclusive- 
ness of  the  reasoning  in  the  Hobbs  case,  but  thought  the  case 
in  hand  was  independent  of  it.  A  dissenting  judge  approved 
of  the  Hobbs  case,  and  thought  it  governed  the  one  before  the 
court.' 

§  50.  Liability  under  special  circumstances;  Hartley  v. 
Baxendale.  The  leading  English  case'-^  on  the  scope  of  recov- 
ery for  the  breach  of  a  contract  established  two  propositions 
which  have  been  very  generally  accepted :  "  Where  two  parties 
have  made  a  contract  which  one  of  them  has  broken,  the  dam- 
ages which  the  other  ought  to  receive  in  respect  to  such  breach 
of  contract  should  be  such  as  may  fairly  and  reasonably  be 
considered  either  as  arising  naturally  —  that  is,  according  to 
the  usual  course  of  things  —  from  such  breach  of  contract  it- 
self, or  such  as  may  reasonably  be  supposed  to  have  been  in  the 
contemplation  of  both  parties  at  the  time  they  made  the  con- 
tract as  the  probable  result  of  a  breach  of  it.  Now,  if  the 
special  circumstances  under  which  the  contract  was  actually 
made  were  communicated  by  the  plaintiff  to  the  defendant, 
and  thus  known  to  both  parties,  the  damages  resulting  from 
the  breach  of  such  contract,  which  they  would  reasonably  con- 
template, would  be  the  amount  of  injury  w^hich  would  ordina- 
rily follow  from  a  breach  of  contract  under  the  special  circum- 
stances so  known  and  communicated.  But,  on  the  other  hand, 
if  these  special  circumstances  were  wholly  unknown  to  the 
party  breaking  the  contract,  he,  at  the  most,  could  only  be 
supposed  to  have  had  in  contemplation  the  amount  of  injury 
which  would  arise  generally,  and  in  the  great  multitude  of 
cases,  not  affected  by  any  special  circumstances,  from  such  a 
breach  of  contract.'"'     The  first  of  these  rules  has  been  consid- 

1  Toronto  R  Co.  V.  Grinsted,  24  Can.        s  Griffin  v.  Colver,  16  N.  Y,  489; 

Sup.  Ct.  570.  Rochester  Lantern   Co.   v.  Stiles  & 

^  Hadley  v.  Baxendale,  9  Ex.  353.        Parker  Press  Co.,  135  N.  Y.  209,  31  N. 


I  50.]       CONSEQUENTIAL   DAMAGES    FOR  BREACH  OF  CONTRACT.       149 

ered  in  the  preceding  sections.  It  is  to  be  remembered  that 
there  is  no  relaxation  of  the  rule  confining  the  recovery  to  the 
damages  naturally  and  proximately  resulting  from  the  breach 
in  cases  where  there  are  such  known  special  circumstances. 
Indeed,  the  same  strictness  exists  to  confine  the  recovery  to 
the  immediate  consequences.  The  general  principle  of  com- 
pensation is  that  it  should  be  equal  to  the  injury.  It  is  a  rule 
based  on  that  principle  that  the  amount  of  the  benefit  which  a 
party  to  a  contract  would  derive  from  its  performance  is  the 
measure  of  his  damages  if  it  be  broken.^  It  is  a  rule  of  inter- 
pretation, too,  that  the  intention  of  the  parties  is  to  be  ascer- 
tained from  the  whole  contract,  considered  in  connection  with 
the  surrounding  circumstances  known  to  them.  If  it  appear 
by  such  circumstances  that  the  contract  was  entered  into,  [80] 
and  known  by  both  parties  to  be  entered  into,  to  enable  one  of 
them  to  serve  or  accomplish  a  particular  purpose,  whether  to 
S3cure  special  gain  or  to  avoid  an  anticipated  loss,  the  liability 
of  the  other  for  its  violation  will  be  determined  and  the  amount 
of  damages  fixed  with  reference  to  the  effect  of  the  breach  in 
hindering  or  defeating  that  object.  The  proof  of  such  circum- 
stances makes  it  manifest  that  such  damages  were  within  the 
contemplation  of  the  parties.  Looking  alone  at  a  contract  of 
this  character,  silent  as  to  the  circumstances  which  were  in 
view,  such  damages  are  consequential  and  sometimes  appear 
to  arise  very  remotely  and  collaterally  to  the  undertaking  vio- 
lated. But  when  the  contract  is  considered  in  connection  with 
the  extrinsic  facts  there  is  established  a  natural  and  proximate 
relation  of  cause  and  effect  between  its  breach  and  the  injury 
to  be  compensated.^    If  all  such  facts  as  are  admissible  to  jus- 

E.  Rep.   1018.     Criticisms  upon  the  i  Alder  v.  Keighley,  15M.  &  W.  117; 

language  used  in  the  extract  quoted  Guetzkow  v.  Andrews,  92  Wis.  214,66 

in    the    text    have    been    made  by  N.   W.   Rep.    119,   53    Am,   St.    909; 

various  judges  and  writers;  but  the  Blagen  v.  Thompson,  23  Oreg.  239,  31 

principles  enunciated   therein  have  Pac.  Rep.  647,  18  L.  R.  A.  315. 

received    general    approval.      Occa-  2  Machine  Co.  v.  Compress  Co.,  105 

sionally  a  judge  intimates  that  the  Tenn.   187,  204,  58    S.  W.  Rep.  270, 

conditions    of     business     have      so  quoting  the  text, 

changed  since  that  case  was  decided  In  Fox  v.  Everson,  27  Hun,  335,  the 

that  it  is  no  longer  applicable  in  its  defendant  sold  the  plaintiff  clover 

entirety.    See  Daugherty  v.  Ameri-  seed  with  which  was  mixed  plain  tain 

can  U.  Tel.  Co.,  75  Ala.  168,  178,  51  seed.     A  recovery  was  allowed  for 

Am.  Rep.  435.  the  difference  between  the  value  of 


150 


COMPENSATION. 


[§  50. 


tify  the  proof  of  consequential  damages  were  recited  in  the 
contract  as  the  law  connects  them  with  it  when  known,  or  if 
the  legal  obligation  which  the  law  imposes  by  reason  of  them 
had  been  expressed  in  words  by  the  parties,  such  damages 
would  be  direct  and  not  consequential. 

In  a  case  in  Wisconsin  the  plaintiff  was  a  butcher,  and  the 
defendant  agreed  to  furnish  him  with  what  ice  he  might  re- 
quire for  a  season,  knowing  that  the  plaintiff  needed  it  to  pre- 
serve fresh  meat.  About  the  hist  of  July  the  defendant  stopped 
supplying  ice  and  refused  to  furnish  any  more,  in  consequence 
of  which  plaintiff  lost  considerable  meat.  This  loss  the  plaint- 
iff recovered.  The  court  say:  "As  the  defendant  was  ac- 
quainted with  all  the  special  circumstances  in  respect  to  this 
contract  —  knew  for  what  purpose  the  ice  agreed  to  be  fur- 
nished by  him  was  to  be  used, —  he  should  fully  indemnify  the 
plaintiff  for  the  loss  he  sustained  by  the  non-delivery  of  the  ice; 
and  he  was  therefore  justly  chargeable  in  damages  for  the 
meat  spoiled  in  consequence  of  the  inability  of  the  plaintiff  to 
procure  ice  elsewhere."^     This  case  was  not  one  of  simple  con- 


pure  seed  and  that  actually  sown 
and  for  the  depreciation  in  value 
of  the  farm  on  account  of  the 
plaintain  seed.  It  was  contended 
that  there  was  no  liability  for  the 
last  item  because  it  was  not  proven 
that  the  defendant  knew  the  seed 
was  bought  for  the  purpose  of  being 
sown.  The  contention  was  overruled 
because  that  is  the  purpose  for  wliich 
such  seed  is  usually  purchased.  But 
the  vendor  was  not  apprised  of  the 
fact  that  the  seed  sold  was  to  be 
mixed  with  timothy  seed,  and  hence 
was  not  liable  for  the  loss  of  the 
latter. 

1  Hammer  v.  Schoenf elder,  47  Wis. 
455,  2  N.  W.  Rep.  1129.  See  Manning 
V.  Fitch,  138  Mass.  273;  Beeman  v. 
Banta.  118  N.  Y.  538,  16  Am.  St.  779, 
23  N.  E.  Rep.  887. 

The  text  is  cited  in  New  Orleans  & 
N.  E.  R.  Co.  V.  Meridian  Water- works 
Co.,  18  C.  C.  A.  519,  72  Fed.  Rep.  227, 
where  it  was  alleged  that  the  de- 


fendant had  failed  to  perform  its 
contract  to  furnish  at  the  plaintiff's 
shops  the  required  pressure  of  water, 
which  it  had  contracted  to  furnish 
for  all  purposes  for  which  it  might 
be  desired  or  used;  that  one  of  such 
purposes  was  the  extinguishment  of 
fires  in  the  plaintiff's  shops,  of  which 
the  defendant  had  knowledge;  that 
at  the  time  the  fire  which  burned 
the  shops  broke  out  there  was  less 
than  half  the  required  pressure,  and 
that,  in  consequence,  the  shops  were 
burned.  A  good  cause  of  action  was 
stated. 

In  Jones  v.  George,  61  Tex.  345,  48 
Am.  Rep.  280  (see  s.  c,  56  Tex.  149, 
42  Am.  Rep.  689),  the  plaintiff  ap- 
plied to  the  defendant,  a  druggist, 
for  a  quantity  of  Paris  green;  by 
mistake  he  was  supplied  with  chrome 
green,  a  substance  similar  in  appear- 
ance but  not  possessing  the  same 
properties.  The  vendor  knew  that 
the  article  called  for  was  desired  to 


§  50.]       CONSEQUENTIAL    DAMAGES    FOR    BREACH  OF  CONTRACT.       151 

tract  of  sale.  The  special  circumstances,  known  to  botii  [81] 
parties,  made  it  more  than  that  in  its  aims  and  consequences, 
although  the  terms  in  which  it  was  made,  considered  alone, 
imported  only  a  contract  of  sale.  The  vendor,  knowing  the 
purpose  for  which  the  ice  was  wanted,  was  held,  by  implica- 
tion, to  undertake  to  deliver  it  as  agreed  in  order  that  tho 
vendee  should  not  suffer  loss  on  his  fresh  meat  from  his  inabil- 
ity to  preserve  it  for  want  of  ice.  Such  being  the  contract, 
the  loss  which  occurred  from  its  breach  was  the  direct  conse- 
quence thereof.  It  is  to  be  observed  that  the  implication  from 
the  vendor's  knowledge  of  the  special  circumstances  required 
performance  of  no  additional  act  to  fulfill  the  contract.  It 
merely  enjoined  on  him  the  duty  to  perform  it  in  view  of  more 
serious  consequences  than  those  which  usually  follow  a  ven- 
dor's default.  The  principle  that  the  injured  party  is  entitled 
to  compensation  proportioned  to  the  actual  injury  is  para- 
mount, and  overrides  any  rule  not  adapted  to  measure  com- 
pensation in  such  a  special  case.  The  vendor  is  thus  admon- 
ished that  if  he  fails  to  deliver  the  property  as  agreed  he  can- 
not satisfy  the  injury  to  the  vendee  by  paying  the  difference 
of  a  higher  market  price  unless  the  article  can  be  obtained  in 

prevent  the  destruction  of  the  plaint-  pears  that  the  contract  was  made  for 
iff's  cotton  crop  by  the  cotton  worm,  the  express  purpose  of  avoiding  a  loss 
which  had  for  years  been  very  de-  likely  to  occur  from  a  known  natural 
structive.  Without  knowing  the  cause,  which  could  be  controlled  and 
mistake  the  chrome  green  was  ap-  avoided;  that  this  was  known  to  the 
plied  to  the  cotton,  and  failed  to  pro-  contracting  parties,  and  that  com- 
duce  the  desired  result.  Evidence  pliance  with  the  contract  would 
was  given  to  show  that  Paris  green  have  prevented  the  injury  by  de- 
would  have  had  a  beneficial  effect,  stroymg  the  thing  which  immedi- 
It  was  ruled  that  there  was  not  a  ately  inflicts  it,  then  it  is  believed 
technical  warranty  that  Paris  green  that  the  breach  of  such  a  contract 
was  delivered,  but  an  implied  con-  must  be  said,  within  the  meaning  of 
tract  that  such  was  the  fact.  In  an-  the  law,  to  be  the  direct  cause  of  the 
swer  to  the  contention  that  it  is  not  injury.  In  such  case  there  is  'an 
enough  to  entitle  a  party  to  recover  immediate  and  natural  relation  be- 
daniages  lor  breach  of  contract  to  tween  tlie  act  complained  of  and  the 
show  that  without  the  breach  relied  injury  without  the  intervention  of 
on  the  injury  would  not  have  been  other  and  independent  cause; '  for  a 
received  when  it  results  from  an  un-  cause  which  is  subject  to  control 
foreseen  or  unexpected  cause,  or  and  contemplated  by  the  parties  to 
from  a  cause  which  no  reasonable  a  contract,  looking  to  its  avoidance 
human  exertion  could  counteract,  or  control,  cannot  be  said  to  be  an 
the    court  observed,  "but  if  it  ap-  'independent  cause.'" 


152  COMPENSATION.  [|  51. 

market;  that  the  loss  will  be  the  value  of  the  property  which 
the  ice  was  needed  to  preserve.^  Where  a  vendor  broke  his 
contract  to  supply  ice  to  a  local  dealer  for  the  entire  season  at 
a  fixed  price,  the  latter  was  entitled  to  recover  the  increased 
price  he  was  obliged  to  pay  for  ice  bought  from  other  parties, 
and  for  the  loss  of  profits  which  he  would  have  realized 
from  his  business  from  the  time  he  was  compelled  to  suspend 
the  same  because  of  inability  to  procure  ice  from  any  source.^ 
§51.  Same  subject;  illustrations  and  discussion  of  the 
rule.  In  a  case  ^  in  which  the  plaintiff  had  contracted  to  sell 
a  large  quantity  of  bullets  of  a  certain  quality  and  at  a  fixed 
price,  he  made  a  contract  with  the  defendant  by  which  the 
latter  agreed  to  manufacture  and  deliver  to  him  the  same 
quantit}^  and  quality  of  bullets;  at  the  time  of  making  it  he 
informed  the  defendant  of  his  arrangement  and  that  he  was 
contracting  with  him  for  the  bullets  in  order  to  fulfill  that 
agreement.  The  contract  between  these  parties  was  in  writ- 
ing, but  did  not  contain  any  allusion  to  the  special  object  of 
making  it.  It  was  held,  notwithstanding,  that  it  was  compe- 
tent to  prove  such  antecedent  contract  and  parol  proof  was 
admissible  to  establish  that  the  defendant  was  informed  that 
[82]  the  plaintiff  made  the  contract  in  question  with  a  view  to 
performing  the  other;  and  that  the  proper  measure  of  dam- 
ages was  the  difference  between  the  price  at  which  the  defend- 
ant was  to  furnish  the  bullets  and  that  the  plaintiff  was  to 
receive.  It  appeared  that  the  market  price  advanced  so  that 
the  bullets  could  not  be  obtained  below  the  latter  price;  the 
market  price  was  considerably  higher,  but  the  recovery  was 

1  The  contract  in  suit  provided  that  Am.  St.  899,  7  S.  E.  Eep.  644;  Dennis 

the  manufacturer  should  furnish,  de-  v.  Stoughton,  55  Vt.  371;  Goodloe  v. 

liver  and  put  in  running  order  by  a  Rogers,  10  La.  Ann.  631;  Lobdell  v. 

specified   day  machinery  for  a  cot-  Parker,  3  La.  328.  Compare  Brayton 

ton-seed   oil   mill.     By  reason    of  a  v.  Chase,  3  Wis.  456,  which  is  incon- 

breach  a  quantity  of  seed  purchased  sistent  with    Hammer    v.    Schoen- 

for  grinding  was  damaged.      Parol  f elder,  47  id.  455,  2  N.  W.  Rep.  1129, 

evidence  was  received  to  show  that  stated  supra. 

time  was  of  the  essence  of  the  con-  2  Border  City  Ice    &  Coal   Co.  v. 

tract,  and  that  the  purchase  of  seed  Adams,  69  Ark.  219,  62  S.  W.  Rep. 

in  advance  of  the  period  fixed  for  the  591. 

completion  of  the  mill  was  within  *  Messmore  v.  New  York  Shot  &  L. 

the    contemplation   of    the   parties.  Co.,  40  N.  Y.  422. 
Van  Winkle  v.  Wilkins,  81  Ga.  93,  12 


§  51.]       CONSEQUENTIAL    DAMAGES    FOE    BREACH  OF  CONTRACT.       153 

limited  as  above  stated,  for  that  gave  the  plaintiff  compensa- 
tion for  his  actual  loss,  and  that  was  the  loss  which  was  in. 
oontemplation  by  the  parties  when  the  contract  was  made. 
Where  the  contract  relates  to  commodities  commonly  pur- 
chasable in  the  market  the  purchaser  is  made  whole  when  he 
recovers  the  difference  between  the  contract  price  and  the 
value  of  the  article  in  the  market  at  the  time  and  place  of  de- 
livery, because  he  can  supply  himself  with  this  article  by  going 
into  market  and  making  his  purchase  at  such  price,  and  these 
are  all  the  damages  he  is  ordinarily  entitled  to  recover,  for 
nothing  beyond  this  was  within  the  contemplation  of  the 
parties  when  they  contracted.  If,  however,  the  vendor  knows 
that  the  purchaser  has  an  existing  contract  for  a  resale  at  an 
advanced  price,  and  that  the  purchase  is  made  to  fulfill  such  a 
contract,  the  profits  on  such  resale  are  those  contemplated  by 
the  parties.  In  other  words,  on  the  ordinary  contract  of  sale 
the  damages  contemplated  are  those  which  would  result  with 
reference  to  market  value  if  the  subject  of  the  contract  have 
such  a  value;  otherwise,  on  the  basis  of  its  actual  value,  as  it 
may  be  ascertained  by  proof  or  for  the  use  to  which  the  prop- 
erty is  commonly  applied,  whether  known  or  not.^  But  if  the 
contract  of  purchase  is  made  with  a  view  to  a  known  resale 
already  contracted  or  any  known  special  use,  the  damages 
which  are  contemplated  to  result  from  the  vendor's  breach  are 
those  which  would  naturally  follow  on  the  basis  of  the  contract 
for  resale  or  other  special  use,  known  to  the  vendor  when  the 
contract  was  made.  The  contemplation  of  damages  will  in- 
clude such  as  ordinarily  arise  according  to  the  intrinsic  nature 
of  the  contract  and  the  surrounding  facts  and  circumstances 
made  known  to  the  parties  at  the  making  of  it.^ 

1  Rhodes  v.  Baird,  16  Ohio  St.  573;  v.  New  York,  etc.  Tel.  Co.,  41  N.  Y. 
Borries  v.  Hutchinson,  18  C.  B.  (N.  544,  1  Am.  Rep.  446;  Hexter  v.  Knox, 
S.)465.  63   N.  Y.  561;  True  v.  International 

2  Davis  V.  Talcott,  14  Barb.  611;  Tel.  Co.,  60  Me.  9;  Fletcher  v.  Tay- 
Cobb  V.  I.  C.  R.  Co.,  38  Iowa,  601;  leur,  17  C.  B.  21;  Squire  v.  Western 
Haven  v.  Wakefield,  39  111.  509;  Illi-  U.  Tel.  Co.,  98  Mass.  232,  93  Am.  Dec. 
nois  Central  R.  Co.  v.  Cobb,  64  111.  157;  Cory  v.  Thames  Iron  Works  Co., 
128;  Winne  v.  Kelley,  34  Iowa,  339;  L.  R.  3  Q.  B.  181:  Borradaiie  v.  Brun- 
Van  Arsdale  v.  Rundel,  82  111.  63;  ton,  8  Taunt  535;  In  re  Trent  &  H. 
Rogers  v.  Bemus,  69  Pa.  432;  Hinck-  Co.,  L.  R.  6  Eq.  396;  Dobbins  v.  Du- 
ley  V.  Beck  with,  13  Wis.  31;  Leonard  quid,  65  111.  464;  Richardson  v.  Ciiy- 


154 


COMrE^'SATION. 


[§  51. 


This  is  illustrated  by  several  recent  cases.  Plaintiff  was  a 
coal  merchant  and  had  contracted  to  supply  coal  to  steamers; 
he  had  also  contracted  for  coal  with  the  defendant,  who  knew 
the  purpose  for  which  the  coal  was  wanted.     The  defendant 


noweth,  26  Wis.  G56;  Wolcott  v. 
Mount,  36  N.  J.  L.  262,  18  Am.  Rep. 
438;  Benton  v.  Fay,  64  111.  417;  Grin- 
die  V.  Eastern  Exp.  Co.,  67  Me.  317, 
24  Am.  Rep.  31;  Hamilton  v.  Magiil, 
12  L.  R.  Ira  186,  204:  Kramer  v. 
Messner,  101  Iowa,  88,  69  N.  W.  Rep. 
1142;  Guetzkow  v.  Andrews,  92  Wis. 
214.  53  Am.  St.  909, 66  N.  W.  Rep.  119; 
Agius  V.  Great  Western  Colliery  Co., 
[1897]  1  Q.  B.  413;  Chalice  v.  Witte, 
81  Mo.  App.  84;  Uhlig  v.  Barnum,  43 
Neb.  584,  61  N.  W.  Rep.  749;  Waco 
Artesian  Water  Co.  v.  Cauble,  19 
Tex.  Civ.  App.  417,  47  S.  W.  Rep.  588; 
Drug  Co.  V.  Byrd,  92  Fed.  Rep.  290, 
34  C.  C.  A.  351;  Central  Trust  Co.  v. 
Clark,  id.  354,  92  Fed.  Rep.'  293; 
Liman  v.  Pennsylvania  R.  Co.,  4  N. 
Y.  Misc.  539,  24  N.  Y.  Supp.  824,  cit- 
ing the  text;  Blagen  v.  Thompson,  23 
Or&  239,  31  Pac.  Rep.  647,  18  L.  R.  A. 
315;  Machine  Co.  v.  Compress  Co., 
105  Tenn.  187,  58  S.  W.  Rep.  270; 
M'Neill  V.  Richards,  [1899]  1  Ire.  79; 

Hirschhorn  v.  Bradley, Iowa, , 

90  N.  W.  Rep.  592;  Trigg  v.  Clay,  88 
Va.  330,  335, 13  S.  E.  Rep.  434,  29  Am. 
St.  723. 

In  Borries  v.  Hutchinson,  18  C.  B. 
(N.  S.)  445,  the  defendant  contracted 
to  sell  to  the  plaintiff  seventy-five 
tons  of  caustic  soda,  an  article  not 
ordinarily  procurable  in  the  market, 
at  a  given  price,  to  be  delivered  on 
the  rails  at  Liverpool  for  Hull, 
twenty-Sve  tons  in  June,  twenty-five 
tons  in  July  and  twenty-five  tons  in 
August;  but  he  failed  to  deliver  any 
until  the  16th  of  September,  between 
which  day  and  the  26th  of  October 
he  delivered  twenty-six  tons  in  all. 
At  the  time  of  entering  into  the 
contract  the  defendant  was  aware 
that  the  plaintiffs  were  buying  the 


soda  for  a  foreign  correspondent,  but 
did  not  know  until  the  end  of  Au- 
gust tiiat  it  was  designed  for  St.  Pe- 
tersburg. The  plaintiffs  had,  in  fact, 
contracted  to  sell  the  soda  to  Heit- 
mann.a  merchant  at  St.  Petersburg, 
at  an  advanced  price,  and  he  had 
contracted  to  sell  it  to  one  Heinbur- 
ger,  a  soap  manufacturer  of  tiiat 
place,  for  a  still  further  advance.  In 
consequence  of  the  late  delivery  of 
the  twenty-six  tons,  the  plaintiffs 
were  compelled  to  pay  a  higher  rate 
of  freight  and  insurance.  This 
amounted  to  40^.  17«.  For  their  fail- 
ure to  deliver  the  remainder  to  Heit- 
mann  they  were  called  upon  to  pay 
and  actually  paid  159Z.,  which  he 
claimed  as  the  compensation  he  bad 
been  obliged  to  pay  Heinburger  for 
the  failure  to  perform  his  subcon- 
tract with  him.  In  this  action  by 
the  plaintiffs  to  recover  from  the  de- 
fendant for  the  breach  of  his  con- 
tract with  them,  it  was  conceded 
that  they  were  entitled  to  recover 
the  difference  between  the  price  (on 
the  forty-nine  tons  undelivered)  at 
which  he  had  sold  the  caustic  soda 
to  them,  and  the  price  at  which  they 
had  contracted  to  sell  it  to  Heit- 
mann,  in  other  words,  the  loss  of  the 
profit  on  the  resale;  and  it  was  held 
that  they  were  also  entitled  to  re- 
cover the  40Z.  17s.,  the  excess  of 
freight  and  insurance,  which  was 
the  necessary  result  of  the  defend- 
ant's breach  of  contract,  butth^t  the 
defendant  was  not  chargeable  with 
the  1597.  which  the  plaintiff  had  paid 
to  Heitmann  to  compensate  Hein- 
burger for  the  loss  of  his  bargain; 
this  was  held  too  remote.  As  to  the 
latter  item,  Erie,  C.  J.:  "He  (the  de- 
fendant) had  no  notice  cf  the  subse- 


f 


§  51.]       CONSEQUENTIAL    DAMAGES    FOR  BREACH   OF  CONTRACT.       155 

broke  its  contract  by  failing  to  furnish  coal  as  fast  as  it  Avas 
needed ;  in  consequence  a  steamer  was  delayed,  a  claim  made 
on  the  plaintiff  for  damages  and  a  suit  was  brought  to  enforce 
that  claim.  The  defendant  refused  to  defend  such  suit,  which 
was  defended  by  the  plaintiff,  who  satisfied  the  judgment 
therein,  and  then  sued  the  defendant  for  reimbursement.  His 
right  to  recover  was  held  to  be  within  the  rule  of  Hadley  v. 
Baxendale.^  In  another  case^  the  defendant  supplied  a  de- 
fective chain  to  a  firm  of  stevedores  for  use  in  discharo-infj:  a 
cargo  from  a  vessel  owned  by  a  third  party.  He  was  taken  to 
have  known  that  such  firm  would  employ  men  to  do  the  un- 
loading, and  was  liable  for  the  injury  received  by  a  man  so 
employed,  through  a  defect  in  the  chain,  notwithstanding  such 
defect  might  have  been  discovered  by  the  employer  in  the  ex- 
ercise of  reasonable  care.  Such  injury  was  the  natural  conse- 
quence of  the  defect.  The  defendant's  agent  guaranteed 
that  a  theater  troupe  to  whom  he  sold  tickets  should  arrive 
at  their  destination  by  a  stated  time,  which  they  did  not  do. 
A  recovery  was  allowed  of  the  damages  sustained  by  missing 
engagements  on  account  of  the  delay,  but  not  for  missing  other 
engagements  because  of  the  breaking  up  of  the  troupe  through 
failure  to  pay  its  members,  which  failure  resulted  from  the  loss 
of  the  money  which  would  have  been  received  from  keeping 
the  first-mentioned  engagements;  that  result  could  have  been 
avoided  by  a  like  sum  of  money  realized  from  any  other 
source.*  The  defendant  contracted  with  the  owner  of  a  vessel 
to  tow  her  to  a  designated  point,  where  she  was  to  be  loaded, 
and  to  keep  a  tug  there  for  the  removal  of  the  vessel.  No  tug 
was  kept  there  in  pursuance  of  the  contract,  and  none  was 
available  for  service  there.     The  defendant  failed  to  move  the 


quent  resale;  and  it  is  not  to  be  as-  Co.,  [1899]  1  Q.  B.  418, approving  Ham- 

sumed  that  the  parties  contemplated  mond  v.  Bussey,  20  Q.  B.  Div.  79,  and 

that  he  was  to  be  held  responsible  doubting  Baxendale  v.  London,  etc. 

for  the  failure  of  any  number  of  sub-  R.  Co.,  L.  E.  10  Ex.  35,  and  Fisher  v. 

sales.     These  could  not  in  any  sense  Val  de  Travers  Asphalte  Co.,  1  C.  P. 

be  considered  as  the  direct,  natural  Div.  511;  Scott  v.  Foley,  5  Commer- 

or    necessary    consequence    of   the  cial  Cas.  53. 

breach  of  the  contract  he  was  enter-  ^  Mowbray  v.  Merry  weather,  [1895] 

inginto."    Hinde  v.  Liddell,  L.  R.  10  1  Q.  B.  857,  [1895]  2  id.  G40. 

Q.  B.  265.  3  Foster  v.  Cleveland,  etc.  R.  Co.,  5G 

1  Aguis  v.  Great  Western  Colliery  Fed.  Rep.  431.    See  note  to  J^  52. 


156  COMPENSATION.  [§  52. 

vessel  to  a  place  of  safety,  and  in  consequence  of  a  storm  she 
was  greatly  damaged  and  was  sunk.  The  liability  of  the  de- 
fendant was  co-extensive  with  the  loss  suffered  by  the  plaintiff.^ 
The  breach  of  a  contract  for  building  a  motor  railway,  entered 
into  for  the  purpose  of  securing  by  performance  the  enhance- 
ment of  the  value  of  land,  renders  the  party  in  default  liable 
for  the  loss  of  the  profits  the  purchaser  of  such  land  would 
have  made  if  the  road  had  been  built.^  But  this  rule  does  not 
apply  as  a  defense  to  an  action  by  a  railroad  company  upon  a 
subsidy  contract."''  One  who  has  broken  his  contract  with  the 
stockholders  of  a  corporation  to  loan  it  money  is  not  bound  to 
foresee  that  they  would  give  their  notes  to  another  as  a  bonus 
to  obtain  a  loan,  and  is  not  liable  for  the  value  of  their  shares.* 
[83]  §52.  Same  subject;  market  value;  resale;  special 
circumstances. —  "Where  an  article  had  been  bargained  for 
for  a  particular  and  exceptional  purpose,  unknown  to  the  seller, 
[84]  and  had  no  market  value,  it  was  held  that  the  vendor  was 
liable  for  the  damages  which  would  have  been  sustained  if  it 
had  been  used  for  the  purpose  for  which  he  supposed  it  would 
be  used.^  If  the  vendor  has  notice  that  bis  vendees  have  con- 
tracted to  resell  the  article  he  will  be  held  liable  for  loss  of 
profits  by  such  resale  if  he  fails  to  fulfill  his  contract,  though 
he  was  not  informed  of  the  price  in  the  contract  to  resell, 
unless  there  is  a  market  value  for  the  article  or  the  resell- 
ing price  is  of  an  unusual  or  exceptional  character.^  Since  the 
decision  of  Hadley  v.  Baxendale,''  the  rule  first  stated  in  that 
case  for  ascertaining  damages  which  are  recoverable  for 
breach  of  contract,  namely,  that  they  be  such  as  arise  "  natu- 
rally, i.  e.,  according  to  the  usual  course  of  things  from  such 
breach  of  contract  itself,"  has  been  universally  assented  to; 

1  Loud  &  Sons'  Lumber  Co.  v.  Peter,  ^  Cory  v.  Thames  Iron  Works  Co., 

20  Ohio  Ct.  Ct.  73;   Boutin  v.  Rudd,  L.  R.  3  Q.  B.  181. 

27  C.  C.  A.  526,  82  Fed.  Rep.  685.  <*  Booth  v.  Spuyten  Duy vil  Rolling 

-'Blagen  v.  Thompson,  23  Ore.  239,  Mill  Co.,  60  N.  Y.  487;  Home  v.  Mid- 
18  L.  R.  A.  315,  31  Pac.  Rep.  647;  Belt  land  R  Co.,  L.  R.  8  C.  P.  131;  Lewis 
V.  Washington  Water  Power  Co.,  24  v.  Rountree,  79  N.  C.  122;  Guetzkow 
Wash.  387,  64  Pac.  Rep.  525.  v.  Andrews,  92  Wis.  214,  53  Am.  St. 

3  Coos  Bay  R.  Co.  v.  Nosier,  30  Ore.  909,  66  N.  W.  Rep.  119;  Snell  v.  Cot- 

547,  48  Pac.  Rep.  361.  tingham,  76  111.  161. 

4 Kelly  V.  Fahrney,  38  C.  C.  A.  103,  ^  9  Ex.  341. 
97  Fed.  Rep.  176. 


§   52.]       CONSEQUENTIAL    DAMAGES    FOE  BREACH  OF  CONTRACT.       157 

as  also  what  is  said  in  the  opinion  of  Alderson,  B.,  to  the 
effect  that  if  a  contract  be  made  under  special  circumstances, 
which  arc  unknown  to  the  party  breaking-  it,  they  cannot  be 
taken  into  consideration  for  the  purpose  of  enhancing  the 
damages;  that  such  a  defaulting  part}'',  at  the  most,  can  only  be 
supposed  to  have  had  in  his  contemplation  the  amount  of  in- 
jury which  would  arise  from  such  a  breach  generally  in  the  great 
multitude  of  cases  unaffected  by  special  circumstances.^  His 
observations,  however,  in  favor  of  a  more  extended  liability, 
embracing  damages  brought  within  the  contemplation  of  the 
parties  at  the  time  of  contracting  by  communication  of  special 
circumstances,  have  been  the  subject  of  some  criticism  and 
conflict  of  opinion.  In  England,  however,  the  cases  have 
been  uniformly  decided  in  conformity  to  the  doctrine  of  that 
case;^  but  there  have  been  dicta  in  several  of  a  contrary  tend- 
ency, especially  with  reference  to  its  application  to  carriers, 
who  were  supposed  to  have  no  option  to  refuse  to  accept  goods 
offered  for  transportation,  in  view  of  enlarged  responsi-  [85] 
bility  on  account  of  special  circumstances,  unless  an  increased 
compensation  be   paid.^     The  tendency  of  the  decisions  there 

1  GrifBn  v.  Colver,  16  N.  Y.  490;  and  there  is  no  market  for  the  goods. 
Western  U.  Tel.  Co.  v.  Graham,  1  the  latter  may  recover  as  damages 
Colo.  230;  Sanders  v.  Stuart,  1  C.  P.  for  the  breach  the  profit  he  would 
Div.  326;  Great  Western  R.  Co,  v.  have  made  had  he  been  able  to  sup- 
Redmayne,  L.  R.  1  C.  P.  329;  Master-  ply  his  customer,  and  also  damages 
ton  V.  Mayor,  7  Hill,  61;  Cuddy  v.  recovered  against  him  by  the  latter 
Major,  13  Mich.  368;  Johnson  v.  for  the  resulting  breach.  In  esti- 
Mathews,  5  Kan.  118;  Lawrence  v.  mating  such  last-mentioned  dam- 
Wardwell,  6  Barb.  423;  Portman  ages  the  judgment  of  a  foreign 
V.  Middleton,  4  C.  B.  (N.  S.)  322;  court  will  be  regarded  as  establish- 
Gee  V.  Lancashire,  etc.  R.  Co.,  6  H.  ing  a  reasonable  sum  for  their  com- 
&  N.  211;  Hales  v.  London,  etc.  R.  putation.  The  liability  of  the  pur- 
Co.,  4  B.  &  S.  66;  Travis  v.  Duflfau,  20  chaser  to  his  customer  for  a  penalty 
Tex.  49;  Fox  v.  Harding,  7  Cush.  516.  if  he  failed  to  keep  his  contract  with 

2  Agius  v.  Great  Western  Colliery  him  must  have  been  known  to  the 
Co.,  [1899]  1  Q.  B.  413.  original  vendor.     Grebert-Borgnis  v. 

If  the  goods  contracted  for  are  of  Nugent,  15  Q.  B.  Div.  85. 
a  particular  shape  and  description,        3  gee  g§  900,  913,  914.   In  Borries  v. 

and   the  party   who    is    to    furnish  Hutchinson,  18  C.  B.  (N.  S.)  445,  and 

them   knows    that  the  contract   is  in  Smeed  v.  Foord,  1  E.  &  E.  602,  the 

substantially  like  one  the  purchaser  damages  were  larger  and  the  recov- 

has  made  with  a   customer  of  his,  ery  sustained   by  reason  of  the  de- 

aud  that  it  is  made  to  enable  the  fendant  having  notice  of  the  purpose 

purchaser  to  fulfill   such   contract,  of  the  other  party  in  making  the 


158 


COMPENSATION. 


[§  52. 


[86]  appears  to  be  to  require  the  special  purpose  of  the  con- 
tract to  be  so  far  in  view  when  the  contract  is  made  that  it  is 
reasonable  to  infer  a  tacit  acceptance  of  it  as  made  for  the  ac- 
complishment of  that  object,  and  a  tacit  consent  to  be  bound 


contract.  Hobbs  v.  London,  etc.  R. 
Co..  L.  R,  10  Q.  B.  Ill;  Smith  v. 
Green,  1  C.  P.  Div.  92;  Simpson  v. 
London,  etc.  R.  Co.,  1  Q.  B.  Div.  274; 
Wilson  V.  General  Iron  S.  Co.,  47  L. 
J.  (N.  S.)  (Q.  B.)  239. 

In  Britipli  Columbia  Saw  Mill  Co. 
V.  Nettleship,  L.  R.  3  C.  P.  499,  the 
plaintiffs  delivered  to  the  defendant 
for  carriage  to  Vancouver's  Island 
several  cases  of  machinery  intended 
for  the  erection  of  a  saw  mill.  The 
defendant  knew  generally  that  the 
cases  contained  machinery.  On  the 
arrival  of  the  vessel  at  her  destina- 
tion, one  of  the  cases  which  con- 
tained parts  of  the  macliinery  was 
missing,  and  without  these  parts  the 
mill  could  not  be  completed.  The 
plaintiffs  were  obliged  to  replace 
these  parts  from  England  at  a  cost, 
including  freight,  of  353/.  17s.  M., 
and  suffer  a  delay  of  twelvemonths. 
A  fair  rate  of  hire  of  the  machinery, 
applied  to  the  purposes  for  which  it 
was  required  by  the  plaintiffs,  would 
have  been  for  twelve  months  2,646Z. 
2s.  3d.,  and  the  plaintiffs  sought  to 
recover  that  amount,  but  it  was  held 
not  recoverable,  because  the  defend- 
ant did  not  know  that  the  missing 
case  contained  portions  of  the  ma- 
chinery which  could  not  be  replaced 
at  Vancouver's  Island,  and  without 
which  the  rest  could  not  be  put  to- 
gether. Willes,  J.,  said:  "The  con- 
clusion at  which  we  are  invited  to 
arrive  would  fix  upon  the  ship-owner, 
beyond  the  value  of  the  thing  lost 
and  the  freight,  the  further  liability 
to  account  to  the  intended  mill-own- 
ers, in  the  event  of  a  portion  of  the 
machinery  not  arriving  at  all  or  ar- 
riving too  late  through  accident  or 


his  default,  for  the  full  profits  they 
might  have  made  by  the  use  of  the 
mill,  if  the  trade  were  successful  and 
without  a  rival.  If  that  had  been 
presented  to  the  mind  of  the  shii> 
owner  at  the  time  of  making  the  con- 
tract, as  the  basis  upon  which  he  was 
contracting,  he  would  at  once  have 
rejected  it.  And  though  he  knew 
from  the  shippers  the  use  they  in- 
tended to  make  of  the  articles,  it 
could  not  be  contended  that  the  mere 
fact  of  knowledge,  without  more, 
would  be  a  reason  for  imposing  upon 
him  a  greater  degree  of  liability  than 
would  otherwise  have  been  cast  upon 
him.  To  my  mind  that  leads  to  the 
inevitable  conclusion  that  the  mere 
fact  of  knowledge  cannot  increase 
the  liability.  The  knowledge  must 
be  brought  home  to  the  party  sought 
to  be  charged,  under  such  circum- 
stances that  he  must  know  that  the 
person  he  contracts  with  reasonably 
believes  that  he  accepts  the  contract 
with  the  special  condition  attached 
to  it.  Several  circumstances  occur 
to  one's  mind  in  this  case  to  show 
that  there  was  no  such  knowledge 
on  the  defendant's  part  that  would 
warrant  the  conclusion  contended  for 
by  the  plaintiffs.  In  the  first  place 
the  carrier  did  not  know  that  the 
whole  of  the  machinery  would  be 
useless  if  any  portion  of  it  failed  to 
ai'rive,  or  what  that  particular  part 
was.  And  that  suggests  another  con- 
sideration. He  did  not  know  that 
the  part  which  was  lost  could  not  be 
replaced  without  sending  to  England. 
And  applying  what  I  have  before 
suggested,  if  he  did  know  this,  he  did 
not  know  it  under  such  circum- 
stances as  could  reasonably  lead  to 


§  52.]       CONSEQUENTIAL    DAMAGES    FOR  BREACH  OF  CONTRACT.       159 

to  more  than  the  ordinary  damages,  in  case  of  default,  on  that 
account;  otherwise  tiie  damages  in  respect  to  that  object  [87] 
are  not  deemed  to  have  been  within  the  contemphition  of  the 
parties.     This  is  probably  also  the  doctrine  of  the  American 


the  conclusion  that  it  was  contem- 
plated at  the  time  of  the  contract 
that  he  would  be  liable  for  all  these 
consequences  in  the  event  of  a 
breach.  Knowledge  on  the  part  of 
the  carrier  is  only  important  if  it 
forms  part  of  the  contract.  It  may- 
be that  the  knowledge  is  acquired 
casually  from  a  stranger,  the  person 
to  whom  the  goods  belong  not  know- 
ing or  caring  whether  he  had  such 
knowledge  or  not.  Knowledge,  in 
effect,  can  only  be  evidence  of  fraud 
or  of  an  understanding  by  both  par- 
ties that  the  contract  is  based  upon 
the  circumstances  which  are  com- 
municated." 

In  the  subsequent  case  of  Home  v. 
Midland  R.  Co.,  L.  R.  7  C.  P.  583,  the 
defendant,  as  a  carrier,  was  guilty 
of  a  negligent  delay  in  the  transpor- 
tation of  goods  consigned  to  fill  a 
special  contract  at  an  exceptionally 
high  price.  The  carrier  had  notice 
that  the  goods  were  for  a  purchaser 
who  would  not  take  them  unless 
they  were  offered  on  time,  but  the 
carrier  was  not  informed  of  the  con- 
tract price.  It  was  considered  that 
the  notice  was  not  sufiBcient  to 
chai'ge  the  defaulting  carrier  with 
damages  computed  on  the  basis  of 
the  loss  of  the  bargain  for  such  an 
unusual  and  exceptional  price.  It 
was  also  held  that  the  notice  must 
be  such  as  leads  to  the  inference  that 
the  carrier  accepts  the  goods  assent- 
ing to  the  increased  responsibility 
as  part  of  the  contract.  Kelly,  C.  B., 
said  on  appeal  (L.  R.  8  C.  P.  136): 
"  The  goods  with  which  we  have  to 
deal  are  not  the  subject  of  any  ex- 
press statutory  enactment;  the  case 
in  regard  to  them  depends  on  the 


common  law,  taken  in  connection 
witii  the  acts  relating  to  the  defend- 
ant's railway  company.  Now  it  is 
clear,  in  the  first  place,  that  a  rail- 
way company  is  bound,  in  general, 
to  accept  goods  sucli  as  these  and 
carry  them  as  directed  to  the  place 
of  delivery,  and  there  deliver  them. 
But  suppose  that  an  intimation  is 
made  to  the  railway  company,  not 
merely  that  if  the  goods  are  not  de- 
livered by  a  certain  date  they  will 
be  thrown  on  the  consignor's  hands, 
but  in  express  terms  stating  that 
they  have  entered  into  such  and 
such  a  contract,  and  will  lose  so 
many  pounds  if  they  cannot  fulfill 
it;  what  is  then  the  position  of  the 
company?  Are  they  the  less  bound 
to  receive  the  goods?  I  apprehend 
not.  If  then  they  are  bound  to  re- 
ceive and  so  do  without  more,  what 
is  the  effect  of  the  notice?  Can  it 
be  to  impose  on  them  a  liability  to 
damages  to  any  amount,  however 
large,  in  respect  of  goods  which  they 
have  no  option  but  to  receive?  I 
cannot  find  any  authority  for  the 
proposition  that  the  notice,  witiiout 
more,  could  have  any  such  effect. 
It  does  not  appear  to  me  that  the 
railway  company  has  any  power 
such  as  was  suggested  to  decline  to 
receive  the  goods  after  such  a  notice, 
unless  an  extraordinary  rate  of  car- 
riage be  paid.  Of  course,  they  may 
enter  into  a  contract,  if  they  will,  to 
pay  any  amount  of  damages  for  the 
non-pei'formance  of  their  contract, 
in  consideration  of  an  increased  rate 
of  carriage,  if  the  consignors  are 
willing  to  pay  it;  but  in  the  absence 
of  any  such  contract  expressly  en- 
tered into,  there  being  no  power  on 


160 


COMPENSATION. 


[§52. 


courts.^  The  parties  are  not  supposed  to  actually  intend  to 
pay  damages  oy  any  other  than  a  legal  standard,  unless  they 
[88]  formally  liquidate  them,  whether  there  are  special  cir- 
cumstances or  not.     They  know  the  legal  principle  of  com- 


the  part  of  the  company  to  refuse  to 
accept  the  goods  or  to  compel  pay- 
ment of  an  extraordinary  rate  of 
carriage  by  tlie  consignor,  it  does 
not  appear  to  me  that  any  contract 
to  be  liable  to  more  than  the  ordi- 
nary amount  of  damages  can  be  im- 
plied from  mere  receipt  of  the  goods 
after  such  a  notice  as  before  men- 
tioned." 

In  Elbinger  Actien-Gesellschaftv. 
Armstrong,  L.  R.  9  Q.  B.  473  (ap- 
proved in  Grebert-Borgnis  v.  Nugent, 
lo  Q.  B.  Div.  85),  the  plaintiff  con- 
tracted for  the  purchase  of  six  hun- 
dx-ed  and  sixty -six  sets  of  wheels  and 
axles,  which  he  designed  to  use  in 
the  manufacture  of  wagons;  and  the 
wagons  he  had  contracted  to  sell  and 
deliver  to  a  Russian  company  by  a 
certain  day,  or  forfeit  two  roubles  a 
wagon  per  day.  The  defendant,  who 
contracted  to  sell  the  wheels  and 
axles,  was  informed  of  the  other  con- 
tract, but  not  of  tlie  amount  of  the 
penalties.  Some  delay  occurred  in 
the  plaintiff's  deliveries,  by  the  de- 
fendant's fault,  and  in  consequence 


the  plaintiff  had  to  pay  lOOZ.  in  pen- 
alties; and  the  action  was  brought 
to  recover  that  sum  of  the  defendant. 
There  was  no  market  in  which  the 
goods  could  be  obtained,  and  it  was 
therefore  contended  in  behalf  of  the 
defendant  that  only  nominal  dam- 
ages could  be  recovered.  The  court 
held  the  defendant  liable  for  sub- 
stantial damages,  not  for  the  penal- 
ties the  plaintiff  had  been  obliged 
to  pay,  the  defendant  having  no 
notice  of  them,  but  the  reasonable 
value  of  the  use  of  the  wagons  dur- 
ing the  delay.  A  verdict  of  1007. 
was  sustained.  But  the  court,  by 
Blackburn,  J.,  remarked:  "If  we 
thought  that  this  amount  could  only 
be  come  at  by  laying  down  as  a  prop- 
osition of  law  that  the  plaintiffs 
were  entitled  to  recover  the  penal- 
ties actually  paid  to  the  Russian  com- 
pany, we  should  pause  before  we  al- 
lowed the  verdict  to  stand."  After 
referring  to  Hadley  v.  Baxendale  he 
continued:  "But  an  inference  has 
been  drawn  from  the  language  of 
the  judgment,  that  whenever  there 


1  Notice  to  a  carrier,  after  goods 
have  been  shipped,  of  circumstances 
w'hich  render  special  damages  a  prob- 
able consequence  of  delay  does  not 
affect  the  original  contract  so  as  to 
render  the  carrier  liable  for  such 
damages  although  the  subsequent 
delay  is  unreasonable.  Bradley  v. 
Ciiicago.  etc.  R.  Co.,  94  Wis.  44,  68  N. 
W.  Rep.  410;  Missouri,  etc.  R.  Co.  v. 
Belcher,  35  S.  W.  Rep.  6  (Tex.  Sup. 
Ctl 

If  the  bill  of  lading  is  silent  as  to 
the  time  goods  are  to  be  delivered 
the  fact  that  notice  was  given  the 
carrier  that  unusual  loss  would  re- 


sult if  there  was  delay  in  delivery 
may  be  shown  by  parol.  Central 
Trust  Co.  V.  Savannah,  etc.  R.  Co.,  69 
Fed.  Rep.  683. 

"  In  the  absence  of  a  definite  con- 
tract for  carriage  to  a  given  point 
by  a  given  time,  with  such  reasons 
for  its  making  as  would  naturally 
lead  the  agent  of  the  carrier  to  con- 
template the  profits  the  passenger 
expected  to  realize,  it  is  clear  that  the 
damage  claimed  for  the  failure  to 
realize  such  profits  is  too  uncertain 
and  remote."  Southern  R.  Co.  v. 
Myers,  32  C.  C.  A.  19,  87  Fed.  Repu 
149. 


§  52.]       CONSEQUENTIAL    DAMAGES    FOR  BREACH  OF  CONTRACT.       161 

pensation  and  the  rules  subsidiary  to  it;  and  when  they  do  not 
liquidate  the  damages  they  are  content  to  enter  into  the  con- 
tract and  leave  the  measure  of  liability  to  be  decided  b}''  law; 
they  know  that  the  law  will  require  them  to  make  com-  [89] 


has  been  notice,  at  the  time  of  the 
contract,  that  some  unusual  conse- 
quence is  likely  to  ensue,  if  the  con- 
tract is  broken  the  damages  must  in- 
clude th.at  consequence;  but  this  is 
not,  as  yet,  at  least,  established  law. 
In  Mayne  on  Damages  (p.  10,  2d  ed. 
by  Lumley  Smith),  in  commenting 
on  Hadley  v.  Baxendale,  it  is  said: 
'The  principle  laid  down  in  the 
above  judgment,  that  a  party  can 
only  be  held  responsible  for  such  con- 
sequences as  may  be  reasonably  sup- 
posed to  have  been  in  the  contempla- 
tion of  both  parties  at  the  time  of 
making  the  contract,  and  that  no 
consequence  which  is  not  the  neces- 
sary result  of  a  breach  can  be  sup- 
posed to  have  been  so  contemplated, 
unless  it  was  communicated  to  the 
other  party,  are,  of  course,  clearly 
just.  But,  it  may  be  asked,  with 
great  deference,  whether  the  mere 
fact  of  such  consequences  being  com- 
municated to  the  other  party  will  be 
sufficient,  without  going  on  to  show 
that  he  was  told  that  he  would  be 
answerable  for  them,  and  consented 
to  undertake  such  a  liability.  .  .  . 
The  law  says  that  every  one  who 
breaks  a  contract  shall  pay  for  its 
natural  consequences;  and,  in  most 
cases,  states  what  those  consequen- 
ces are.  Can  the  other  party,  by 
merely  acquainting  him  with  a  num- 
ber of  further  consequences,  which 
the  law  would  not  have  implied,  en- 
large his  responsibility,  without  any 
contract  to  that  effect  ? '  We  are 
not  aware  of  any  case  in  which  Had- 
ley V.  Baxendale  has  been  acted  upon 
in  any  such  way  as  to  afford  an  an- 
swer to  the  learned  author's  doubts; 
and,  in  Home  v.  Midland  R.  Co.,  L. 
Vol.  I  — 11 


R.  8  C.  P.  131,  much  that  fell  from 
the  judges  in  the  exchequer  cham- 
ber tends  to  confirm  those  doubts." 
In  this  case  the  court  held  that  the 
plaintiff  was  not  entitled  to  damages 
for  the  delay,  exceeding  the  penalty 
he  was  bound  for  and  had  paid  to 
his  vendee. 

In  Hinde  v.  Liddell,  L.  R.  10  Q.  B, 
265,  the  defendant  contracted  to  sup- 
ply the  plaintiff  two  thousand  pieces 
of  grey  shirtings,  to  be  delivered  on 
the  20th  of  October,  certain,  at  so 
much  per  piece,  the.  defendant  being 
informed  that  they  were  for  ship- 
ment. Shortly  before  the  20th  of 
October  the  defendant  informed  the 
plaintiff  that  he  would  be  unable  to 
complete  his  contract  by  the  time 
specified;  and,  thereupon,  the  plaint- 
iff endeavored  to  get  the  shirtings 
elsewhere,  but,  there  being  no  market 
in  England  for  it,  that  kind  of  shirt- 
ings could  only  be  procured  by  a 
pi-evious  order  to  manufacture  it. 
The  plaintiff,  therefore,  in  order  to 
ship  according  to  his  contract  with 
his  sub-vendee,  procured  two  thou- 
sand pieces  of  other  shirtings,  of  a 
somewhat  superior  quality,  at  an  in- 
crease of  price,  which  the  sub-vendee 
accepted,  but  paid  no  advance  in 
price  to  the  plaintiff.  The  plaintiff 
recovered  against  the  defendant  this 
excess  over  the  contract  price.  It  is 
manifest  that  the  plaintiff  suffered 
damage  to  that  amount,  by  reason  of 
delivering  the  substituted  article  to 
his  vendee,  without  realizing  any- 
thing for  having  procured  an  article 
of  superior  quality.  Is  it  possible 
that  if  there  had  been  no  subcontract 
which  necessitated  this  loss,  and  the 
plaintiff   had  the  article  on   hand. 


1G2 


COMPENSATION. 


[§  52. 


pensation  in  case  of  a  breach  for  damages  which  directly  arise 
therefrom  in  view  of  the  intrinsic  nature  of  the  contract,  and 
of  the  special  circumstances  known  to  them  when  it  was  made 


that  he  could  have  recovered  dam- 
ages by  that  standard?  It  would 
have  been  said  that  no  loss  could 
be  inferred  from  such  a  purchase. 
Borries  v.  Hutchinson  was  approved 
and  said  to  be  directly  in  point,  and 
tlie  same  judge,  Blackburn,  J.,  said, 
in  giving  judgment:  "  In  the  present 
case  the  goods  are  for  a  foreign 
market;  and  it  was  admitted  that 
the  only  reasonable  thing  the  plaint- 
iff could  do  was  to  put  himself  in  the 
same  position  as  if  the  defendants 
had  fulfilled  their  contract,  by  ob- 
taining a  somewhat  dearer  article. 
1  do  not  see  on  what  principle  it  can 
be  said  that  the  plaintiff  is  not  en- 
titled to  recover  this  difference  in 
price.  We  do  not  decide  anything  as 
to  what  the  effect  of  a  notice  of  the 
plaintiff's  subcontract  might  have 
been.  Under  the  circumstances,  the 
value  of  the  goods  contracted  to  be 
supplied  by  the  defendants,  at  the 
time  of  their  breach  of  contract,  was 
the  price  the  plaintiff  had  to  give 
for  the  substituted  article." 

In  Grebert-Borgnis  v.  Nugent,  15 
Q.  B.  Div.  (1885)  85,  it  is  said  that  a 
vendor  who  contracts  with  a  pur- 
chaser knowing  that  the  latter  has 
a  foreign  customer  for  the  articles 
contracted  for  must  understand  that 
if  such  purchaser  fails  to  fulfill  his 
contract  he  will  be  liable  to  his  cus- 
tomer for  damages;  and  while  the 
judgment  of  a  foreign  court  will  not 
be  held  binding  as  to  the  amount  of 
damages,  it  will  be  assumed  that  the 
sum  fixed  thereby  is  reasonable. 

In  Simpson  v.  London,  etc.  R,  Co., 
1  Q.  B.  Div.  274,  the  plaintiff,  who 
was  a  manufacturer  of  cattle  food, 
was  in  the  habit  of  sending  samples 
of  his  goods  to  cattle  sliows,  with  a 
show  tent  and  banners,  and  attend- 


ing there  himself  to  attract  custom. 
He  intended  to  exhibit  some  of  these 
samples  at  the  Newcastle  show,  and 
delivered  them  for  transmission  to 
the  defendants.  The  contract  was 
made  with  the  defendants'  agent  at 
a  cattle  show  at  Bedford,  where  the 
plaintiff  had  been  exhibiting  his 
samples,  and  where  the  defendants 
had  an  agent  and  office  on  the  show 
ground  for  the  purpose  of  seeking 
traffic.  The  evidence  as  to  the  terms 
of  the  contract  was  that  a  consign- 
ment note  was  filled  up  by  the  plaint- 
iff's son  consigning  the  goods  as 
"boxes  of  sundries"  to  "Simpson  & 
Co.,  the  sliow  ground,  Newcastle  on 
Tyne,"  and  that  he  indorsed  the  note 
•'  must  be  at  Newcastle  on  Monday 
certain,"  meaning  the  next  Monday, 
the  20th  July.  Nothing  was  expressly 
said  as  to  the  plaintiff's  intention  to 
exhibit  the  goods  at  Newcastle,  nor 
as  to  the  goods  being  samples.  They 
did  not  arrive  until  several  days  after 
time,  and  when  the  show  was  over. 
It  was  found  that  the  plaintiff  ob- 
tained custom  by  exhibiting  his 
samples  at  shows,  but  no  evidence 
was  given  as  to  his  prospects  with 
regard  to  the  Newcastle  show  in  par- 
ticular. A  verdict  by  consent  was 
entered  for  20/.  bej'ond  a  sum  which 
had  been  paid  in,  with  leave  to  move 
to  enter  the  verdict  for  the  defend- 
ants, if  the  court  should  be  of  opinion 
that  the  plaintiff  was  not  entitled  to 
recover  for  either  loss  of  time  in 
waiting  for  the  goods  or  loss  of  profits. 
It  was  held  that  the  plaintiff  was  en- 
titled to  the  verdict.  Cockburn,  C.  J., 
said:  "  The  law,  as  it  is  to  be  found 
in  the  reported  cases,  has  fluctuated; 
but  the  principle  is  now  settled  that, 
whenever  either  the  object  of  the 
sender  is  specially  brought  to  the  no- 


§  52.]       CONSEQUENTIAL    DAMAGES    FOB  BREACH  OF  CONTRACT.       1G3 

which  disclose  some  particular  ol)ject  different  from  or  [90] 
beyond  that  which  would  be  suggested  by  the  mere  words  of 
the  contract.^ 


tice  of  tlie  carrier,  or  circumstances 
are  known  to  the  carrier  from  which 
the  object  ought  in  reason  to  be  in- 
ferred, so  that  the  object  may  be 
taken  to  have  been  within  the  con- 
templation of  both  parties,  damages 
may  be  recovered  for  the  natural 
consequences  of  the  failure  of  that 
object."  See  Kennedy  v.  American 
Exp.  Co.,  22  Ont.  App.  278. 

In  Jameson  v.  Midland  R.  Co.,  50 
L.  T.  Rep.  42G,  tlie  plaintiff  delivered 
a  parcel  at  the  defendant's  office  ad- 
dressed to  M..  Stand  23,  Show  Ground, 
etc.;  nothing  was  said  by  him.  The 
label  so  addressed  was  sufificient  no- 
tice that  the  parcel  was  being  sent 
to  a  show,  and  the  defendant  was 
liable  for  the  loss  of  profits  and  ex- 
penses resulting  from  its  delay. 

In  Mayne  on  Dam.  (6th  ed.),  p.  41, 
the  author  says:  "In  the  present 
state  of  the  authorities,  therefore,  I 
would  suggest  that  in  place  of  the 
third  rule  supposed  to  be  laid  down 
by  Hadley  v.  Baxendale,  the  law  may 
perhaps  be  as  follows: 

"First  —  Where  there  are  special 
circumstances  connected  with  a  con- 
tract, which  may  cause  special  dam- 
ages to  follow  if  it  is  broken,  mere 
notice  of  such  circumstances  given 
to  one  party  will  not  render  him  lia- 
ble for  the  special  damage,  unless  it 
can  be  inferred  from  the  whole  trans- 
action that  he  consented  to  become 
liable  for  such  special  damage. 

"Secondly  —  Where  a  person  who 
has  knowledge  or  notice  of  such 
special  circumstances  might  refuse 
to  enter  into  the  contract  at  all,  or 
might  demand  a  higher  remunera- 
tion for  entering  into  it,  the  fact  that 
he  accepts  the  contract  without  re- 
quiring any  higher  rate  will  be  evi- 
dence, tliough    not  conclusive    evi- 


dence, from  which  it  may  be  inferred 
that  he  has  accepted  the  additional 
risk  in  case  of  breach. 

"Thirdly  —  Where  the  defendant 
has  no  option  of  refusing  the  contract 
and  is  not  at  liberty  to  require  a 
higlier  rate  of  remuneration,  the  fact 
that  he  proceeded  in  the  contract 
after  knowledge  or  notice  of  such 
special  circumstances  is  not  a  fact 
from  which  an  undertaking  to  incur 
a  liability  for  special  damages  can 
be  inferred. 

"  Fourthly  .— Even  if  there  were 
an  express  contract  by  the  defend- 
ant to  pay  for  special  damages,  under 
the  circumstances  last  supposed,  it 
might  be  questioned  whether  such  a 
contract  would  not  be  void  for  want 
of  consideration.  Take  the  case  of 
a  railway  passenger  who  buys  his 
ticket,  informing  the  clerk  of  some 
particular  loss  which  would  arise 
upon  his  being  late.  Suppose  the 
clerk  were  to  undertake  that  the 
company  should  be  answerable  for 
the  loss,  and  that  such  xmdertaking 
should  be  held  to  be  within  the 
sphere  of  his  duty.  Would  it  not  be 
purely  gratuitous?  The  considera- 
tion for  any  promise  by  the  com- 
pany, arising  from  the  payment  of 
the  fare,  would  be  exhausted  by 
their  carrying  the  passenger  to  his 
destination  or  paying  the  ordinary 
damages  for  failui-e  to  do  so.  What 
would  there  be  left  to  support  the 
special  undertaking  to  pay  an  excep- 
tional penalty?  Of  course,  it  would 
be  different  if  a  special  payment 
were  made  by  way  of  premium  for 
incurring  the  inci'eased  risk."  But 
see  Foster  v.  Cleveland,  etc.  R.  Co., 
56  Fed.  Rep.  434,  stated  in  g  51,  as  to 
the  last  suggestion. 

1  Booth  v.  Spuyten  Duyvil  Rolling 


164 


COMPENSATION. 


[§52. 


Doubtless  it  is  essential,  in  order  to  bring  within  the  contem- 
plation of  the  parties  damages  different  from  and  larger  in 
amount  than  those  which  usually  ensue,  that  the  special  cir- 
cumstances out  of  which  they  naturally  proceed  shall  have 


Mill  Co.,  60  N.  y.  487.  In  this  case 
Churoli,  C.  J.,  said,  referring  to  the 
English  cases:  "Some  of  the  judges 
in  commenting  upon  it  (the  doctrine 
under  consideration)  have  held  that 
a  bare  notice  of  special  circum- 
stances which  might  result  from  a 
breach  of  the  contract,  unless  under 
such  circumstances  as  to  imply  that 
it  formed  the  basis  of  the  agreement, 
would  not  be  sufficient.  I  concur 
with  the  view  expressed  in  tiiese 
cases,  and  I  do  not  think  that  the 
court  in  Hadley  v.  Baxendale  in- 
tended to  lay  down  any  different 
doctrine."  But  the  defendant  in  this 
case  was  held  to  be  liable  for  the  loss 
sustained  on  a  contract  which  the 
plaintiffs  had  with  the  New  York 
Central  Railroad  Co.,  by  reason  of 
the  defendant's'breach.  and  that  loss 
was  held  to  be  brought  within  the 
contemplation  of  the  parties  by  mere 
notice,  generally,  that  there  was  a 
contract  depending  on  the  defend- 
ant's performance. 

In  Liman  v.  Pennsylvania  R.  Co., 
4  N.  Y.  Misc.  539,  24  N.  Y.  Supp.  824, 
the  plaintiff  was  under  contract  to 
exhibit  one  R.  in  Chicago  for  two 
weeks,  and  four  days  before  the 
time  fixed  therefor  applied  to  the 
defendant  at  its  office  in  New  York 
and  stated  the  circumstances;  the 
defendant  agreed  to  deliver  to  R,  a 
railroad  ticket  to  Chicago,  but  failed 
to  do  .so.  Judgment  in  favor  of  the 
plaintiff  for  the  sum  paid  for  the 
ticket  and  profits  on  R.'s  engage- 
ment was  affirmed.  The  court  did 
not  interpret  Booth  v.  Spuyten  Duy- 
vii  Rolling  Mill  Co.,  swpra,  as  intend- 
ing that  a  contracting  party  may, 
notwithstanding  that  he  has  been 
sufficiently  informed   of  the  exist- 


ence of  a  certain  other  contract,  the 
performance  of  which  is  dependent 
upon  performance  of  the  proposed 
contract  with  him,  to  put  him  upon 
reasonable  inquiry  in  respect  thereto, 
shield  himself  against  consequential 
damages  by  wilfully  or  deliberately 
abstaining  from  the  inquiry.  If, 
under  such  circumstances,  a  party 
refrains  from  inquiry  he  cannot  set 
up  his  ignorance  to  limit  his  liability. 

A  manufacturer  contracted  to  fur- 
nish machinery  and  make  essential 
repairs  upon  the  plant  of  a  compress 
company  by  a  fixed  date,  which  was 
known  by  both  parties  to  be  the  be- 
ginning of  the  season  for  the  opera- 
tion of  the  plant,  which  could  only 
be  operated  during  a  part  of  the 
year;  both  parties  also  knew  that  it 
was  the  intention  to  have  the  plant 
in  readiness  for  the  opening  of  the 
season.  The  notice  to  the  defendant 
was  sufficient  to  make  it  liable  for 
special  damages  resulting  from  its 
delay.  Machine  Co.  v.  Compress  Co., 
105  Tenn.  187,  53  S.  W.  Rep.  270;  Neal 
V.  Pender-Hyman  Hardware  Co., 
122  N.  C.  104,  29  S.  E.  Rep.  96,  65  Am. 
St.  697. 

In  Snell  v.  Cottingham,  72  111.  161, 
it  was  held  that  a  contractor  who 
fails  to  finish  a  railroad  by  the  time 
limited  in  his  contract  cannot  be 
held  for  the  loss  occasioned  to  the 
owner  of  the  road  by  reason  of  an- 
other contract  between  him  and  a 
third  party,  for  the  use  of  the  road 
after  the  time  it  should  have  been 
completed,  even  though  he  may  have 
known  of  the  existence  and  the  terms 
of  such  other  contract  at  the  time  of 
entering  into  his  own,  unless  he  ex- 
pressl}'  agrees  to  such  a  rate  of  dam- 
ages.   A  similar  doctrine  is  laid  down 


§  52.]       CONSEQUENTIAL   DAMAGES    FOR   BREACH  OF  CONTRACT.       1G5 

been  known  to  the  party  sought  to  be  made  liable  in  such 
manner,  at  the  time  of  contracting,  as  to  make  it  manifest  to 
him  that  if  compensation  in  case  of  a  breach  on  his  part  is  ac- 
corded for  actual  loss  it  must  be  for  a  loss  resulting  from  that 
special  state  of  things  which  those  circumstances  portended. 
Damages  are  not  the  primary  purpose  of  contracts,  but  are 
given  by  law  in  place  of  and  as  a  compensation  and  equiva- 
lent for  something  else  which  had  been  agreed  to  be  done  and 
has  not  been  done.  What  the  damages  would  ordinarily  [91] 
be  on  such  a  default  is  immaterial  if  the  contracting  party  as- 
sume the  obligation  which  he  has  broken  with  a  knowledge  of 
a  peculiar  state  of  facts  connected  with  the  contract  which  in- 
dicated that  other  damages  would  result  from  a  breach,  and 
the  latter  are  claimed.  To  confine  the  injured  party's  recov- 
ery in  such  case  to  the  lighter  damages  which  usually  follow 
such  a  breach,  where  no  such  known  special  facts  exist,  and. 
exclude  those  which  were  thus  brought  within  the  contempla- 
tion of  the  parties,  would  be  to  sacrifice  substantial  rights  to 
arbitrary  rule;  to  set  aside  the  principle  which  entitles  a  party 
to  compensation  commensurate  with  his  injury  to  give  effect 
to  a  rule  formulated  to  render  that  principle  effectual;  it 
would  be  to  apply  a  subordinate  rule  where  it  has  no  applica- 
tion instead  of  the  principle,  which  is  paramount  and  always 
applicable.  What  are  the  usual  damages  which  result  from 
the  breach  of  a  contract?  There  is  certainly  no  customary 
amount,  nor  is  there  any  rule  of  damages  which  is  universal 

in  Bridges  v.  Stickney,  38  Me.  369;  days  would  be  most  disastrous.  Tiie 
Huut  V.  Oregon  Pacific  R.  Co.,  36  damages  insisted  upon  exceed  $44,000, 
Fed.  Rep.  481.  See  Clark  v.  Moore,  a  sum  enormously  out  of  all  propor- 
3  Mich.  55.  tion  to  the  amount  to  be  paid  for  the 
The  Illinois  case  is,  probably,  not  entire  work.  The  same  distinction 
to  be  taken  as  declaring  a  general  is  made  in  other  cases.  Thus,  it  is 
principle.  The  decision  was  doubt-  said  in  Booth  v.  Spuyten  Duy vil  Roll- 
less  influenced  by  the  damages  ing  Mill  Co.,  60  N.  Y.  487,  495:  It  is 
which  would  have  been  recovered  if  sufficient  to  hold,  what  appears  to 
the  rule  had  been  applied.  It  is  said  me  to  be  clearly  just,  that  he  is 
in  the  opinion:  Had  it  been  known,  bound  by  the  price  unless  it  is  shown 
that  it  was  expected  appellees  would  that  the  price  is  extravagant,  or  of 
be  held  responsible  for  such  extraor-  an  unusual  or  exceptional  character, 
dinary  damages,  it  is  hardly  prob-  See  Guetzkow  v.  Andrews,  92  Wis. 
able  that  they  would  have  entered  214,  53  Am.  St  909,  66  N.  W.  R«p. 
into  the  contract,  for  the  conse-  119. 
quences  of  a  failure  for  only  a  few 


166 


COMPENSATION, 


[§52. 


like  the  principle  for  allowance  of  due  compensation.  If  it  is 
a  contract  of  sale  and  the  vendor  refuses  to  complete  it,  one 
rule  is  to  ascertain  that  compensation  by  the  difference  be- 
tween the  contract  price  and  the  market  value,  because  if  the 
article  which  is  the  subject  of  the  contract  can  be  obtained  in 
market  at  a  market  price  the  vendee  is  thereby  enabled  to 
supply  him  without  loss  unless  the  market  price  has  increased. 
That  rule  goes  no  further,  but  the  principle  does.  Where  the 
vendee  cannot  obtain  the  article  in  the  market,  nor  at  all  if 
the  vendor  refuses  to  perform  his  contract,  that  rule  is  not  ap- 
[92]  plicable,  and  then  resort  must  be  had  to  other  elements 
of  value;  and  recourse  is  had  to  the  principle  to  determine  the 
measure  of  redress;  even  a  contract  of  resale  made  by  the  ven- 
dee and  of  which  the  vendor  had  no  notice  may  be  considered.^ 


1  France  v.  Gaudet,  L.  R.  6  Q.  B, 
199;  McHose  v.  Fulmer,  73  Pa.  365; 
Carroll-Porter  Boiler  &  Tank  Co.  v. 
Columbus  Machine  Co.,  5  C.  C.  A.  190, 
55  Fed.  Rep.  451;  Hockersmith  v. 
Han  ley,  29  Ore.  27,  44  Pac.  Rep.  497, 
citing  the  text. 

France  v.  Gaudet,  supra,  was  an 
action  for  the  conversion  of  the  prop- 
erty sold,  and  hence  is  not  to  be  con- 
sidered as  authority  to  the  full  extent 
of  the  pro|)Osition  to  which  it  is  cited. 
If  the  article  the  vendor  has  con- 
tracted to  supply  or  an  article  of  the 
same  quality  cannot  be  procured  in 
the  market,  it  is  presumed  that  such 
fact  was  within  the  contemplation 
of  the  parties  to  the  contract.  McHose 
V.  Fulmer,  supra.  But  this  rule  is 
denied  in  an  English  case  (Thol  v. 
Henderson,  8  Q.  B.  Div.  457).  There 
was  a  contract  to  deliver  goods  which 
were  not  obtainable  in  the  market; 
the  purchaser  had  entered  into  a  con- 
tract for  their  sale.  The  vendor  had 
DO  knowledge  of  the  particular  con- 
tract, but  was  aware  that  the  goods 
were  ordered  for  the  purpose  of  re- 
selling them.  Such  knowledge  was 
held  not  to  bring  the  case  within  the 
rule  of  Hadley  v.  Baxendale,  so  as  to 
allow  the  recovery  of  profits  which 


would  have  been  made  if  there  had 
not  been  a  breach  of  the  contract. 
This  is  too  strict  an  application  of  tlie 
rule,  because  it  was  immaterial  to  the 
vendor  who  his  purchaser's  customer 
was;  the  former  had  knowledge  suf- 
ficient to  act  as  an  incentive  to  the 
prompt  fulfillment  of  his  contract, 
and  to  apprise  him  of  the  fact  that 
its  breach  would  esi>ecially  damage 
the  vendee.  See  Loescher  v.  Dister- 
berg,  26  111.  App.  520,  which  is  in  har- 
mony with  McHose  v.  Fulmer,  supra. 
In  Hamilton  v.  Magill,  13  L.  R. 
Ire.  186,  one  of  the  points  especially 
relied  upon  by  the  defendant  was 
that  at  the  time  the  contract  in  suit 
was  made  the  plaintiff  had  not  actu- 
ally completed  his  contract  for  the 
sale  of  the  property  purchased,  and 
that  the  case  should  be  treated  as  if 
the  defendant  had  no  other  notice 
than  that  it  was  bought  for  resale 
generally.  The  answer  of  the  court 
was  that  it  appears  "illogical  and  con- 
trary to  principle  that  a  person  who, 
having  an  offer,  enters  into  a  contract 
with  another,  which  if  carried  out 
would  enable  him  to  accept  that  offer, 
but  refrains  from  actually  accepting 
it  until  he  has  entered  into  the  con- 
tract, should  be  in  a  worse  position 


i 


§  52.]       CONSEQUENTIAL  DAMAGES  FOR   BREACH    OF  CONTRACT.       167 

And  if  the  goods  were  not  bought  for  resale  and  had  no  mar- 
ket value,  but  were  intended  for  some  special  use,  the  dam- 
ages would  be  computed  according  to  the  value  for  the  use  to 
which  the  property  was  most  obviously  adapted  unless  the 
vendor  know  of  the  intention  to  apply  them  to  a  different  one.^ 
Their  delivery  in  the  case  where  a  contract  of  resale  existed 
would  have  enabled  the  vendee  to  obtain  the  reselling  price, 
and  in  the  other  to  avoid  the  loss  which  has  otherwise  resulted 
from  being  deprived  of  the  property.  Such  recoveries  are  not 
unusual.  It  may  be  said  that  sales  are  generallj''  made  of  arti- 
cles having  a  market  value.  True.  But  there  is  no  uniform 
relativeness  between  the  contract  and  market  prices.  The  de- 
faulting vendor  will  pay  nominal  damages  when  the  market 
price  is  less  than  the  contract  price,  and  substantial  damages, 
accordino'  to  the  excess  of  the  former  at  the  time  the  oroods 
should  have  been  delivered.  When  the  vendor  refused  to  de- 
liver ice  according  to  his  contract,  knowing  when  he  made  the 
agreement  that  it  was  wanted  as  a  means  of  preserving  fresh 
meat  in  the  prosecution  of  the  vendee's  business,  and  the  ice 
could  not  be  obtained  in  market,  what  should  be  deemed  the 
usual  damages  for  a  breach  of  the  contract  ?  Certainly  not 
what  had  been  the  market  price  when  ice  was  plenty  and 
could  be  had  from  other  sources;  but  its  value  when  it  should, 
according  to  the  contract,  have  been  delivered  and  when  the 
vendor,  as  the  fact  probably  may  be,  alone  could  supply  it, 
and  when  the  vendee  must  have  it  or  lose  a  certain  amount  of 
meat,  or  suspend  business,  notwithstanding  his  best  endeavors 
by  other  means  to  preserve  the  meat  or  continue  his  business.^ 
If  the  contract  is  made  to  serve  a  particular  purpose,  not 
communicated  and  known  to  both  parties,  nor  indicated  by 
the  subject-matter  of  the  contract,  and  the  loss  in  respect  to 
that  purpose  is  so  exceptional  as  neither  to  be  within  the  con- 
templation of  the  parties  at  the  making  of  the  contract,  nor 

than  one  who  makes  a  contract  for  i  Cory  v.  Thames  Iron  Works  Co., 

sale  on  the  chance  of  afterwards  pur-  L.  R.  3  Q.  B.   181;   Machine   Co.  v. 

chasing  from  another  the  goods  which  Compress  Co.,  105  Tenn.  187,  58  S. 

he  has  previously  contracted  to  sell.  W.  Rep.  270. 

To  establish  such  a  distinction  would  2  Hammer  v.  Schoenfelder,  47  Wis. 

place  the  speculator  in  a  more  ad-  455,  2  N.  W.  Rep.  1129;  Border  City 

vantageous  position  than  the  prudent  Ice  &  Coal  Co.  v.  Adams,  69  Ark.  219, 

merchant."  '  62  S.  W.  Rep.  591. 


168  COMPENSATION.  [§  52. 

[93]  within  the  first  branch  of  the  rule  laid  down  in  Hadley  v. 
Baxendale,  it  cannot  be  recovered;  but  where  the  injury  is 
within  the  contemplation  of  the  parties,  if  they  give  the 
subject  consideration  when  the  contract  is  made,  they  are 
admonished  by  the  prevalence  of  the  principle  of  compensa- 
tion in  the  law  that,  if  they  do  not  perform,  the  alternative  of 
making  reparation  on  the  scale  of  equivalence  to  the  actual 
injury  will  be  compulsorj'^;  and  there  is  no  need  of  an}'"  agree- 
ment to  submit  to  such  a  legal  consequence.  The  law  as  laid 
down  in  Hadley  v.  Baxendale  has  been  generally  accepted  in 
this  country ;  it  includes  all  such  damages  as  may  reasonably 
be  supposed  to  have  been  in  the  contemplation  of  both  parties 
at  the  time  the}''  made  the  contract  as  the  probable  result  of 
the  breach  of  it.^  And  in  accordance  with  the  doctrine  of 
that  case,  it  is  sufficient  if  the  special  circumstances  under 
which  the  contract  was  actually  made  were  communicated  to 
the  party  sought  to  be  charged,  and  the  damages  resulting 
from  the  breach  are  such  as  both  parties  would  reasonably 
contemplate  would  be  the  amount  of  the  injury  which  would 
ordinarily  follow  from  a  breach  under  those  circumstances. 
As  said  by  Selden,  J. :  "  The  broad  general  rule  ...  is 
that  the  party  injured  is  entitled  to  recover  all  his  damages, 
including  gains  prevented  as  well  as  losses  sustained;  and  this 
rule  is  subject  to  but  two  conditions.  The  damages  must  be 
such  as  may  fairly  be  supposed  to  have  entered  into  the  con- 
templation of  the  parties  when  they  made  the  contract ;  that 
is,  must  be  such  as  might  naturally  be  expected  to  follow  its 
violation;  and  they  must  be  certain  both  in  their  nature  and 
in  respect  to  the  cause  from  which  they  proceed."  ^  And  this 
leads  naturally  to  the  consideration  of  the  certainty  which  is 
necessary  to  warrant  the  recovery  of  damages. 

1 9  Ex.  358.  tended  for  the  rule  that  not  only 

^GrifiSn  v.  Colver,  16  N.   Y.   494;  must  the  parties  have  notice  of  the 

Savannah,  etc.  R  Co.  v.  Pritchard,  77  contract    for    the     furtherance    of 

Ga.  412,  418,  4  Am.  St.  92,  1  S.  E.  Rep.  wliich  the  plaintiff  made  the  con- 

261;  Benjamin  v.  Puget  Sound  Com-  tract  in  suit,  but  there  must  be  sorae- 

mercial  Co.,  12   Wash.   476.  41  Pac.  thing  in  the  terms  of  the  latter,  read 

Rep.  166,  quoting  the  text;  Collins  v.  in  the  light  of  surrounding  circum- 

Lavelle,  19  R  L  45,  31  Atl.  Rep.  434,  stances,  which    shows  an  intention 

citing  the  text.  on  the  part  of  the  vendor  to  assume 

In  a  late  case  the  defendant  con-  a  larger  engagement,  a   wider  re- 


§53.] 


KEQUIKED   CEKTAINTY   OF   DAMAGES. 


169 


Section  5. 

kequired  certainty  of  damages. 

§  53.  Must  be  certain  in  their  nature  and  cause.  [94] 
Damages  must  be  certain  both  in  their  nature  and  in  respect 
to  the  cause  from  which  they  proceed.  Judge  Selden  said  that 
the  requisite  that  the  damages  must  not  be  the  remote,  but  the 
proximate,  consequence  is  in  part  an  element  of  the  required 
certainty.^  In  the  preceding  pages  the  requirement  that  the 
damages  be  the  natural  and  proximate  result  of  the  act  com- 
plained of  has  been  discussed;  but  mainly  with  reference  to 
the  consequences  as  a  whole.  Now  it  remains  to  consider  the 
certainty  necessary  not  only  in  regard  to  the  consequences  as  a 
whole  but  also  in  detail.  A  fatal  uncertainty  may  infect  a  case 
where  an  injury  is  easily  provable,  but  the  alleged  responsible 
•cause  cannot  be  sufficiently  established  as  to  the  whole  or  some 
part  of  that  injury.-     So  it  may  exist  where  a  known  and 


sponsibility,  than  is  assumed  in  ordi- 
nary contracts  for  the  sale  and  deliv- 
ery of  merchandise.  The  answer 
was  that  where  notice  is  brought 
home  to  the  vendor  that  the  goods 
are  purchased  to  be  put  to  a  partic- 
ular use,  he  is  chargeable  with  the 
consequences  of  a  failure  to  perform, 
and  with  the  results  which  such  no- 
tice fairly  apprised  him  would  fol- 
low upon  his  default.  Industrial 
Works  V.  Mitchell,  114  Mich.  29,  72 
N.  W.  Rep.  25,  citing  Booth  v.  Spuy- 
ten  Duyvil  Rolling  Mill  Co.,  60  N.  Y. 
487;  Richardson  v.  Chynoweth,  26 
Wis.  656;  Illinois  Central  R.  Co.  v. 
Cobb,64  111.  128;  True  v.  International 
Tel.  Co.,  60  Me.  9.  11  Am.  Rep.  156. 

1  Griffin  v.  Colver.  16  N.  Y.  494. 

2  See  Beiser  v.  Grever  &  Twaite  Co., 
11  Ohio  Dec.  444. 

As  where  there  was  a  breach  of  a 
contract  to  elect  one  president  of  a 
bank  for  a  term  of  years  and  at  an 
agreed  annual  salary,  when  the  elec- 
tion, if  there  had  been  no  breach, 
could  have  been  for  only  one  year, 


to  which  time  the  recovery  of  the 
salary  was  limited.  There  could  be 
no  recovery  for  any  of  the  subse- 
quent years  within  the  contract  term 
because  the  damages  would  be  too 
remote  and  uncertain.  Witham  v. 
Cohen,  100  Ga.  670,  28  S.  E.  Rep.  505; 
Kenyon  v.  Western  U.  Tel.  Co.,  100 
Cal.  454,  35  Pac.  Rep.  75. 

Another  example  is  afforded  by  a 
contract  so  vague  and  indefinite  that 
it  does  not  furnish  a  safe,  satisfac- 
tory or  proper  basis  for  computing 
the  damages  caused  by  its  breach. 
Hart  V.  Georgia  R.  Co.,  101  Ga,  188,  28 
a  E.  Rep.  637.  See  Fletcher  v.  Jacob 
Dold  Packing  Co.,  41  App.  Div.  30, 
58  N.  Y.  Supp.  612. 

If,  in  an  action  of  tort,  it  be  impos- 
sible to  distinguish  between  the 
damage  arising  from  the  actionable 
injury  and  the  damage  which  has 
anotlier  origin,  the  jury  must  make 
the  best  estimate  in  their  power,  and 
award  compensation  for  the  action- 
able injury.  Jenkins  v.  Pennsylva- 
nia R  Co.,  67  N.  J.  L.  331.  51  Atl. 


170 


COMPENSATION. 


[§53. 


provable  wrong  or  violation  of  contract  appears,  but  the  alleged 
loss  or  injury  as  a  i^esult  of  it  cannot  be  certainly  shown.^ 
Many  of  the  illustrations  already  given  apply  to  the  first,  as 
where  the  injury  is  not  the  natural  or  proximate  result  of  the 
act  complained  of;  then  the  relation  of  cause  and  effect  does 
not  exist  between  the  alleged  cause  and  the  alleged  injury. 
This  uncertainty  may  be  further  illustrated  by  the  case  of  one 
who  complained  tliat  the  defendant  had  taken  his  flat  from 
bis  ferr}^  and  that  being  obliged  to  go  in  search  of  it  in  order 
to  cross  the  river  he  left  his  horses  attached  to  a  wagon  stand- 
ing on  the  bank,  and  while  he  was  gone  they  ran  into  the  river 
and  were  drowned,-  Their  loss  was  not  a  natural  consequence 
of  the  taking  of  the  flat  which  the  defendant  could  foresee  as  a 
probable  result  of  his  wrongful  act;  there  was  a  more  im- 
[95]  mediate  cause  in  the  negligence  of  the  owner;  and  after 
the  event  it  cannot  be  ascribed  with  the  requisite  certainty  to 
the  defendant's  act  although  it  was  the  beginning  of  the  series 
of  facts  which  culminated  in  that  loss.*  A  grantee  of  land 
cannot  recover  damages  for  the  breach  of  the  grantor's  cove- 
nant against  incumbrances  because  of  an  existing  inchoate  right 
of  dower  in  the  premises,  a  sum  paid  by  himself  to  an  auction- 


Rep.  704.  See  Ogden  v.  Lucas,  48 
111.  492:  Harrison  v.  Adamson,  86 
Iowa,  693,  58  N.  W.  Rep.  334;  Wash- 
burn V.  Gil  man,  64  Me.  163,  18  Am. 
Rep.  246;  Chicago  &  N.  R.  Co.  v. 
Hoag.  90  111.  339;  Mark  v.  Hudson 
River  Bridge  Co.,  103  N.  Y.  28,  8  N. 
E.  Rep.  243. 

1  As  where  there  has  been  a  breach 
of  contract  by  a  water  company  to 
supply  water  to  a  municipality  for 
extinguishing  fires.  Pothinger  v. 
Owensboro  Water  Co.,  6  Ky.  L.  Rep. 
453.  See  Pacific  Pine  Lumber  Co.  v. 
Western  U.  Tel.  Co.,  123  Cal.  428,  56 
Pac.  Rep.  103;  Kenyon  v.  Same,  100 
Cal.  454,  35  Pac.  Rep.  75. 

The  pecuniary  interest  which  a 
husband  has  in  the  chance  that  an 
embryo  not  quickened  into  life 
would  become  a  living  child  is  so 
absolutely  uncertain  that  the  loss  of 


that  chance  cannot  be  recovered  for. 
Butler  V.  Manhattan  R.  Co.,  143  N. 
Y.  417,  38  N.  E.  Rep.  454,  42  Am.  St. 
738,  26  L.  R.  A.  46. 

2  Gorden  v.  Butts.  2  N.  J.  L.  334. 

3  See  Walker  v.  Goe,  3  H.  &  N.  395, 

4  id.  350;  Dubuque  Ass'n  v.  Du- 
buque, 30  Iowa,  176;  Hofnagle  v. 
I^ew  York,  etc.  R.,  55  N.  Y.  608;  Da- 
vis V.  Fish,  1  G.  Greene,  406,  48  Am. 
Dec.  387;  Lewis  v.  Lee,  15  Ind,  499; 
Ashley  v.  Harrison,  1  Esp.  49;  Barber 
V.  Lesiter,  7  C.  B.  (N.  S.)  175;  Collins  v. 
Cave,  4  H.  &  N.  225:  Everard  v. 
Hopkins,  2  Bulst.  332:  Walker  v. 
Moore.  10  B.  &  C.  416;  Hayden  v.  Ca- 
bot, 17  Mass.  169;  Green  v.  Mann,  11 
111.  613;  Hargous  v.  Ablon,  3  Denio, 
406,  45  Am.  Dec.  481;  Brayton  v. 
Chase,  3  Wis.  456;  Chatter  ton  v.  Fox^ 

5  Duer,  64. 


§  53.1  EEQUIRED    CERTAINTY    OF   DAMAGES.  171 

eer  for  selling  tbom  to  a  person  who  refuses  to  complete  the 
purchase  on  discovering  the  incumbrance.^ 

In  an  action  for  the  wronfrful  revocation  of  an  agreement 
to  subfhit  a  controversy  to  arbitration  the  plaintiff  is  not  en- 
titled to  recover  damages  for  the  trouble  and  expense  incurred 
in  making  the  agreement;  but  he  can  recover  for  his  loss  of 
time,  and  for  his  trouble  and  necessary  expenses  in  preparing 
for  a  hearing,  such  as  employing  counsel,  taking  depositions, 
paying  witnesses  and  arbitrators,  so  far  as  such  preparations 
are  not  available  for  a  subsequent  trial  in  court,^  "Where  it 
was  agreed  that  a  pending  action  between  the  parties  should 
be  discontinued  and  submitted  to  arbitration,  and  one  of  them 
subsequently  revoked  the  submission,  the  other  recovered  the 
costs  and  expenses  he  incurred  in  the  discontinued  suit.*  And 
•where  one  of  the  parties  had  released  a  cause  of  action  against 
a  third  person  upon  the  agreement  of  the  other  to  pay  such  a 
sum  as  should  be  awarded,  the  one  who  revoked  the  submis- 
sion w^as  liable  for  the  costs  of  the  other  incurred  in  the  arbi- 
tration, and  also  for  the  amount  of  his  claim  for  the  loss  of  his 
cause  of  action.*  The  Yermont  cases  cited  are  distinguished 
from  one  in  which  the  contract  to  arbitrate  was  wholly  exec- 
utory when  the  breach  occurred.  "Where  nothing  has  been 
done  in  partial  execution  of  the  covenant,  and  the  covenant 
does  not  fix  anything  b3''  way  of  penalty  or  liquidated  dam- 
ages, the  loss  arising  from  a  refusal  to  fulfill  is  usually  wholly 
conjectural  because  it  is  impossible  to  prove  that  the  party 
would  have  profited  by  the  arbitration.^ 

A  defendant  chartered  the  plaintiff's  vessel  from  Liverpool 
to  Puerto  Cabello  at  a  stipulated  freight;  a  clause  was  after- 

1  Harrington  v.  Murphy,  109  Mass.     ment,  a  pledge  has  been  deposited 
299.  to  secure  the  paj^ment  of  the  award, 

2  Pond  V.  Harris,  113  Mass.  114.  it  may  be  foreclosed  to  the  extent  of 

3  Hawley  v.  Dodge,  7  Vt.  237.  the  damages  fixed  by  statute  for  the 
*Day   V.   Essex  County  Bank,  13    revocation    of    a    submission.     The 

Vt.  97.  damages  so  fixed  for  preparing  for 

*Munson  v.  Straits  of  Dover  S.  S.  and  conducting  the  arbitration  may 

Co.,  43  C.  C.  A.  57,  103  Fed.  Eep.  926.  be   recovered    notwithstanding  the 

When  a  party  to    a    submission  submission  provides  that  the  fees  of 

agreement  has  covenanted  therein  arbitrators  and   witnesses  shall  be 

to  pay  the  award  by  revoking  the  paid  equally  by  the  parties.     Union 

submission   he  breaches  the    cove-  Ins.  Co.  v.  Central  Trust  Co..  157  N. 

nant,  and  if,  pursuant  to  the  agree-  Y.  633,  52  N.  K  Rep.  671. 


172  COMPENSATION.  [§  54. 

wards  added  to  the  charter-party  allowing  the  defendant  to 
send  on  a  part  of  the  cargo  to  jNIaracaibo,  with  a  proviso  that 
any  expense  incurred  by  so  doing  sliould  be  borne  by  the  char- 
terer. Under  pretense  of  an  attempt  by  the  master  to  evade 
the  customs  on  the  part  so  shipped,  the  custom-house  authori- 
ties at  Puerto  Cabello  Avrongl'uUy  imposed  a  line  of  $500  on 
him,  and  detained  the  vessel  for  several  months;  but  would 
have  allowed  her  to  depart  if  the  fine  had  been  paid,  which 
the  master  had  not  the  means  to  pay  and  did  not.  The  gov- 
ernment agreed  afterwards  to  pay  the  master  |5,000  for  the 
wrongful  detention,  but  did  not.  It  was  held  that  the  owner 
of  the  vessel  could  recover  from  the  charterer  neither  the  loss 
[96]  sustained  by  the  detention  nor  the  expense  incurred  in 
repairing  the  damage  to  the  ship  in  consequence  thereof,  nor 
for  the  costs  of  legal  proceedings  taken  by  him  in  respect  to 
the  ship,  nor  for  the  fine.^  "Where  the  object  of  a  bonus  con- 
tract providing  for  the  erection  of  a  mill  was  to  enhance  the 
value  of  the  property  in  the  place  in  which  the  mill  was  to  be, 
the  damao'es  resulting'  from  the  sale  of  the  mill  without  re- 
quiring  the  vendee  to  bind  himself  to  fulfill  the  conditions  of 
the  original  contract,  as  it  stipulated  for  if  a  sale  should  be 
made,  and  the  burning  of  the  mill,  without  any  obligation  on 
the  vendee's  part  to  rebuild  and  operate  it  for  the  period  re- 
quired, are  not  clearly  ascertainable  in  their  nature  and  origin, 
but  are  speculative.-  One  named  as  a  director  of  a  proposed 
corporation  persuaded  others  so  named  and  others  who  ex- 
pected to  become  members  of  it  not  to  do  so.  For  the  mis- 
representations made  to  accomplish  such  result  the  person 
making  them  was  not  liable  to  those  who  were  proposed  as 
directors  for  the  loss  of  the  profits  resulting  from  the  failure 
to  organize  the  corporation.^ 

§  54.  Liability  for  the  principal  loss  extends  to  details 
and  incidents.  Where  the  alleged  wrong  or  breach  of  con- 
tract is  shown  with  the  requisite  certainty  to  be  the  cause  of 
the  injur}'^  in  question  it  is  also  to  be  deemed  the  cause  of  all 
its  concomitant  and  incidental  details  which   are  constituent 

1  Sully  V.  Duranty,  33  L.  J.  (Ex.)  3  Martin  v.  Deetz,  102  Cal.  55,  86 
319.  Pac.  Rep.  368,  41  Am.  St.  151. 

2  Hudson  V.  Archer,  9  S.  D.  240,  68 
N.  W.  Rep.  54] 


§    5i.l  REQUIRED    CERTAINTY    OF   DAMAGES.  173 

parts  of  the  injury,  including  necessary  and  judicious  expend- 
itures made  to  stay  or  efface  the  wrong  or  limit  its  conse- 
quences.' A  riparian  owner  brought  an  action  for  polluting 
the  waters  of  a  stream  running  through  his  farm.  He  recov- 
ered for  the  loss  of  an  opportunity  of  renting  his  grist-mill, 
the  diminution  in  the  rental  value  of  his  farm,  and  the  incon- 
veniences he  was  put  to  in  the  use  of  the  same,  resulting  di- 
rectly from  the  conduct  of  the  defendant.-  A  plaintiff's  house 
was  injured  by  the  partial  falling  in  of  the  partition  wall  be- 
tween it  and  the  defendant's  house,  which  was  caused  by  dig- 
ging too  near  the  wall  for  the  purpose  of  deepening  the  cellar 
under  it.  Xo  notice  was  given  by  the  defendant  of  his  inten- 
tion to  deepen  his  cellar,  and  evidence  was  offered  to  show 
that  the  excavation  was  done  in  a  careless  and  negligent  man- 
ner, and  also  to  show  that  the  business  of  the  plaintiff,  who 
kept  an  ice-cream  saloon  and  made  cakes  and  other  articles  in 
that  line,  was  interrupted  for  several  days.  The  court  held 
that  the  plaintiff  was  entitled  to  such  damages  as  would  be 
sufficient  to  reinstate  the  wall  and  the  house  in  as  good  con- 
dition as  they  were  prior  to  the  injury,  and  to  compensate 
him  for  the  loss  consequent  upon  the  interruption  of  his  busi- 
ness; and  to  show  the  latter,  he  might  prove  its  usual  profits 
prior  to  the  wrong.^    If  a  collision  between  vessels  results  in 

1  McDaniel  v.  Crabtree,  21  Ark.  the  water  to  flow  back  upon  the 
431;  Smith  v.  Condry,  1  How.  35;  mill,  and  rendering  it  incapable  of 
Loker  v.  Damon,  17  Pick.  384;  Chalice  being  used.  The  plaintiffs  were  held 
V.  Witte,  80  Mo.  App.  84,  95,  quoting  entitled  to  recover  the  value  of  the 
the  text.     See  §  26.  use  of  their  mill   during  the  time 

2  Gladfelter  v.  Walker,  40  Md.  3.  they  were  necessarily  deprived  of  its 

3  Brown  v.  Werner,  40  Md.  15;  use,  and  the  amount  which  it  was 
White  V.  Moseley,  8  Pick.  356;  Sim-  permanently  diminished  in  value  by 
mons  V.  Brown,  5  R.  I.  299,  73  Am.  the  erection  of  the  dam;  but  could 
Dec.  66;  Allison  v.  Chandler,  11  not  recover  the  amount  of  a  loss 
Mich.  543;  Collins  v.  Lavelle,  19  R.  I.  upon  saw  logs  on  hand  at  the  time 
45,  31  Atl.  Rep.  434,  citing  the  text,  of  the  injury,  sustained  either  in 
See  §  70.  consequence    of  a  deterioration   in 

Walrath  v.  Redfield,  11   Barb.  368  their  value  or  by  a  depression  in  the 

(see  s.  C,  18  N.  Y.  457),  was  an  action  market  price.     The  damages  in  re- 

on    the    case   for   damages    to    the  spect  to  the  logs  were  too  speculative, 

plaintiffs'  saw-mill  and  other  prop-  uncertain,  remote  and  contingent  to 

erty,   occasioned  by  the  defendant  be  allowed  even  upon  proof  that  the 

in  constructing  a  dam  and  dike  be-  plaintiffs  could  not,  by  the  use  of  or- 

low  such  mill,  and  thereby  causing  dinary  diligence,  have  procured  the 


174 


COMPENSATIOX. 


[§5i. 


clisablino-  one  of  them  so  that  her  owners  cannot  use  her  for  a 
voyage  for  which  she  has  been  engaged,  though  no  regular 
charter-party  has  been  entered  into,  the  damages  resulting 
from  the  loss  of  the  profits  of  such  vo3'^age  are  the  result  of  the 
collision.^  If  logs  are  deliberately  stored  in  a  stream,  which 
is  navigable  for  their  transportation,  so  as  to  prev^ent  the  entry 
of  logs  owned  by  another,  and  in  a  stream  which  empties  into 
the  one  so  blocked,  the  person  who  is  responsible  therefor  is 
liable  to  the  other  for  the  wages  and  board  of  the  latter's  men 
while  waiting  a  reasonable  time  to  get  his  logs  out,  for  the  ex- 
pense of  moving  one  crew  of  men  out  and  another  in,  for  the 
increased  cost  of  driving  the  logs  the  next  season,  and  for  in- 
terest on  the  contract  price  for  making  the  drive  during  such 
time  as  the  payment  thereof  was  delayed;  but  not  for  the  loss 
of  supplies  left  in  the  woods.- 


logs  to  be  sawed  elsewhere,  and  could 
not  have  disposed  of  them  before 
sawing.  In  actions  of  tort,  where 
there  has  been  no  wilful  injury,  the 
plaintiff  can  only  recover  the  dam- 
ages necessarily  resultmg  from  the 
act  complained  of,  and  he  cannot 
conduct  himself  in  such  a  manner  as 
to  make  them  unnecessarily  burden- 
some. 

A  more  reasonable  rule  and  one 
in  better  accord  with  the  principle 
of  holding  a  wrong-doer  liable  for 
such  consequences  as  would  natu- 
rally and  in  the  usual  course  of 
things  result  from  his  conduct  was 
laid  down  in  McTavish  v.  Carroll,  17 
Md,  1,  an  action  for  damages  for  ob- 
structing a  right  of  way  for  repairing 
a  mill-race.  The  declaration  alleged 
that  the  obstruction  prevented  the 
repair  of  the  race,  whereby  the  mill 
became  idle  and  could  not  be  worked, 
and  the  plaintiff  lost  the  custom  and 
trade  thereof,  "  and  the  use  of  the 
same  for  grinding  his  own  grain,  and 
was,  therefore,  at  great  expense, 
obliged  to  carry  it  to  other  mills." 
Held,  that  under  this  declaration, 
evidence  that  the  plaintiff  was  owner 
of  a  large  body  of  land  around  his 


mill,  and  was  accustomed  to  grind 
the  grain  raised  thereon  at  this  mill 
for  his  cattle,  horses,  hands  and 
family,  and  in  consequence  of  its 
stoppage  had  been  compelled  to  carry 
his  grain  to  another  mill,  at  a  greater 
distance,  is  admissible.  Hinckley  v. 
Beckwith,  13  Wis.  31. 

But  in  such  a  case  there  can  be  no 
recovery  for  diminished  profits  aris- 
ing from  the  manufacture  of  flour. 
Todd  V.  Minneapolis,  etc.  R  Co.,  39 
Minn.  186,  39  N.  W.  Rep.  818. 

A  more  satisfactory  rule  is  sus- 
tained by  Terre  Haute  v.  Hudnut, 
113  Ind.  542,  13  N.  E.  Rep.  686,  where 
the  operations  of  a  mill  which  had 
an  established  business  were  sus- 
pended by  an  overflow,  and  machin- 
ery in  it  was  damaged  to  such  an 
extent  as  to  make  repairs  necessary. 
The  net  earnings  of  the  past  and 
present  were  proven  as  a  basis  of 
estimating  the  damages. 

1  Owners  of  The  Gracie  v.  Owners 
of  The  Argentiuo,  14  App.  Cas.  519; 
affirming  The  Argentine,  13  Prob. 
Div.  191. 

'^  McPheters  v.  Moose  River  Log 
Driving  Co.,  78  Ma  329,  5  AtL  Rep. 
270. 


^    55.]  KEQUIRED    CKKTAINTY    OF    DAMAGES.  175 

§  55.  Only  tlie  items  which  are  certain  rccoverahle.  [97] 
The  charterer  of  a  vessel  who  was  suhjectod  to  expense  in  get- 
ting- her  off  from  a  gas  pipe  which  wasanunhiwful  obstruction 
to  the  navigation  of  a  river,  and  upon  which  she  caught  in 
passing  while  navigating  with  due  care,  may  maintain  an  ac- 
tion against  those  who  laid  the  pipe  to  recover  for  such  expense, 
hut  for  not  for  any  delay  in  his  business  or  other  consequential 
damages.'  "Where  the  defendant  was  enjoined  from  removing 
his  negroes,  and  upon  an  order  of  seizure  they  were  taken  out 
of  his  possession  and  a  decree  subsequently  rendered  in  his 
favor,  it  w^as  held  bis  damages  would,  ordinarily,  be  what  their 
labor  would  have  been  worth  had  they  continued  in  his  posses- 
sion. But  he  would  also  be  entitled  to  damages  for  any  [98] 
loss  that  was  the  direct,  proximate  and  natural  consequence  of 
the  removal  of  the  negroes  out  of  his  possession,  which  were 
not  remote  and  speculative,  involving  inquiries  collateral  to 
the  consideration  of  the  wrongful  act.  And  so  he  could  not 
recover  as  damages  counsel  fees  incurred  in  defending  the  suit 
nor  expenses  involved  in  employing  an  agent  to  attend  to  his 
other  business  whilst  he  was  engaged  in  such  defense;  nor 
what  would  or  might  have  been  the  profits  of  his  business  had 
not  his  possession  of  the  negroes  been  interrupted.^  The  plaint- 
iff's oxen  were  stolen  in  Yermont  and  taken  to  the  defendant, 
and  being  found  in  his  possession  in  New  York  were  demanded 
and  refused.  The  plaintiff  then  resorted  to  legal  process  to 
gain  possession,  and  succeeded,  but  incurred  expense  therein. 
He  was  held  not  entitled  to  recover  such  expense  as  part  of  his 
damages  for  the  conversion,  in  a  subsequent  action.^  These 
expenses  were  not  rejected  because  a  remote  or  uncertain  in- 
cident of  the  wrong,  but  because  they  were  costs  of  a  judicial 
proceedmg  in  which  such  allowable  expenses  are  collectible, 
and  if  not  thus  compensated  cannot  be  recovered.  The  ex- 
pense of  regaining  property  tortiously  taken  is  a  part  of  the 
injury  and  recoverable.*  "Where  goods  wrongfully  seized  are 
taken  from  the  wrong-doer  by  another,  their  owner  may,  in  an 
action  against  the  former,  recover  the  amount  paid  the  other 
wrong-doer  to  get  them  back.*     In  an  action  upon  an  attach- 

1  Benson  v.  Walden,  etc.  Gas    L.  *  Bennett  v.  Lockwood,  20  Wend. 

€o..  G  Allen,  149.  223,  32  Am.  Dec.  532. 

^  McDaniel  v,  Crabtree,  21  Ark.  431.  *  Keene  v.  Dilke,  4  Ex.  388. 
3  Harris  v.  Eldred,  42  Vt.  39. 


1T6  COMPENSATION.  [§  56. 

ment  bond  the  rule  restricting  the  recovery  to  the  natural  and 
proximate  damages  Avill  exclude  any  claim  for  injuries  to  credit 
and  business,^  and  for  mental  suffering.^  But  where  a  party 
took  a  lease  of  a  ferry,  and  covenanted  to  maintain  and  keep 
the  same  in  good  order,  but  instead  of  doing  so  diverted  trav- 
elers from  the  usual  landing  to  another  landing  owned  by  him- 
self, by  means  whereof  a  tavern-stand  belonging  to  the 
plaintiff  situate  on  the  first  landing  was  so  reduced  in  business 
[1)0]  as  to  become  tenantless,  it  was  held  in  an  action  by  the 
landlord  for  breach  of  the  contract  that  he  might  assign,  and 
was  entitled  to  recover  as  damages,  the  loss  of  rent  on  the 
tavern-stand.^  Where  a  negro  was  hired  to  make  a  crop  and 
was  taken  away  by  the  owner  in  the  middle  of  the  year, 
whereby  the  crop  was  entirely  lost,  it  was  held  that  the  proper 
measure  of  damages  was  the  hire  of  the  negro  paid  in  advance, 
the  rent  of  the  land  and  the  expenses  incurred  for  the  purpose 
of  making  the  crop.* 

§  56.  Recovery  for  successive  consequences.  Where  the 
injury  to  be  recovered  for  consists  of  several  items,  variously 
related  consequentially  to  the  alleged  cause,  the  right  to  each 
must  be  decided  upon  the  same  principles  as  where  only  one 
inseparable  injurious  effect  is  in  question.  It  may  happen  that 
such  items  are  successive,  and  the  first  may  in  some  sort  oper- 
ate as  cause  in  respect  to  later  effects.  When  this  is  the  case 
a  recovery  for  items  subsequent  to  the  first  will  depend  on 
whether  the  act  complained  of  is  the  efiicient  cause  of  the  en- 
tire damage  as  represented  by  all  such  items,  and  whether 
they  are  consequences  which  ought  reasonably  to  have  been 
contemplated  to  ensue,  or,  in  case  of  contract,  whether  they 
may  fairly  be  supposed  to  have  been  within  the  contemplation 
of  the  parties  at  the  time  of  contracting.  This  is  well  illus- 
trated by  an  English  case.  The  defendant  contracted  to  de- 
liver a  threshing  machine  to  the  plaintiff,  a  farmer,  within 
three  weeks.     It  was  the  latter's  practice,  known  to  the  de- 

1  State  V.  Thomas,  19  Mo.  613,  61  69  Ala.  373,  44  Am.  Rep.  519.    See  ch. 

Am.  Dec.  580;  Weeks  v.  Prescott,  53  25. 

Vt.  57,  74;  Braunsdorf  v.  Fellner,  76        2TisdaIe  v.  Major,  106  Iowa,  1,  75 

Wis.  1,  45  N.  W.  Rep.  97;  Anderson  N.  W.  Rep.  663,  citing  this  section. 
V.  Sloane,  73  Wis.  566,  78  Am.  St.  885,  3  Dewint  v.  Wiltse.  9  Wend.  325. 
40  N.  W.  Rep.  214;  Pollock  v.  Gautt,        ^Hobbs  v.  Davis,  30  Ga.  423. 


§  57.]  REQUIRED    CERTAINTY    OF    DAMAGES.  177 

fenclant,  to  thresh  his  wheat  in  the  field  and  send  it  thence 
direct  to  market.  At  the  end  of  three  weeks  plaintiff's  wheat 
was  ready  in  the  field  for  threshing,  and,  on  his  remonstrating 
at  the  delay  in  the  delivery  of  the  machine,  the  defendant 
several  times  assured  him  it  should  be  sent  forthwith.  The 
plaintiff,  having  unsuccessfully  tried  to  hire  another  machine, 
was  obliged  to  carry  home  and  stack  the  wheat,  which,  while 
so  stacked,  was  damaged  by  rain.  The  machine  was  afterwards 
delivered  and  the  contract  price  paid.  The  wheat  was  then 
threshed,  and  it  was  found  necessary,  owing  to  its  deterioration 
by  rain,  to  kiln-dry  it.  When  dried  and  sent  to  market  it  sold 
for  a  less  price  than  it  would  have  fetched  had  it  been  threshed 
at  the  time  fixed  by  the  contract  for  the  delivery  of  the  ma- 
chine, and  then  sold,  the  market  price  of  wheat  having  mean- 
while fallen.  It  was  held,  in  an  action  for  the  non-  [100] 
delivery  of  the  machine,  that  the  plaintiff  was  entitled  to  re- 
cover for  the  expense  of  stacking  the  wheat,  the  loss  from  the 
deterioration  by  the  rain  and  the  expense  of  kiln-drying  it, 
but  not  for  the  loss  by  the  fall  in  the  market,  the  latter  being 
too  uncertain  to  have  been  contemplated  and  not  the  natural 
result  of  the  breach.^  There  is  much  reason  for  holding  that 
the  latter  loss  was  also  recoverable.^  The  case  referred  to  is 
much  more  satisfactory  than  a  number  of  American  cases 
which  hold  that  a  farmer  cannot  recover  damages  resulting  to 
his  crops  from  delayed  delivery  or  the  failure  to  work  as  war- 
ranted of  a  harvesting  machine  which  was  sold  with  knowledge 
that  it  was  to  be  used  in  securing  the  purchaser's  grain.* 

§  57.  Illustrations  of  the  rule  of  the  preceding  section. 
In  an  action  for  negligent  driving,  whereby  the  plaintiff's 
horse  was  injured,  it  appeared  that  the  horse  was  sent  to  a 

iSmeed  v.  Foord,  1  E.  &  E.  603.  3  Fuller  v,  Curtis,  100  Ind.  237,  50 

2Wardv.  New  York  Central  R.  Co.,  Am.  Eep.  786;  Prosser  v.  Jones,  41 

47  N.  Y.  29;  Sturgess  v.  Bissell,  46  Iowa,  674;  Wilson  v.  Reedy,  32  Minn. 

N.  Y.  462;  Scott  v.   Boston,  etc.  Co.,  256,  20  N.  W.  Rep.  153;  Osborne  v. 

106  Mass.  468;  Sisson  v.  Cleveland,  Poket,  33  Minn.  10,  21  N.  W.  Rep, 

etc.  R.  Co.,  14  Mich.  489;  Collard  v.  752;  Brayton  v.   Chase,  3  Wis.   456, 

Southeastern  R,  Co.,  7  H.  &  N.  79;  probably  overruled  by  cases  referred 

Weston  V.  Grand  Trunk  R  Co.,  54  to  in  Thomas,  etc.  Manuf.  Co.  v.  Wa- 

Me.  376,  92   Am.  Dec.  552;  Peet  v.  bash,  etc.  R.  Co.,  62  id.  642,  650,  51 

Chicago,  etc.  R  Co.,  20  Wis.  594,  91  Am.  Rep.  725,  23  N.  W.  Rep.  827. 
Am.  Dec.  446. 

Vol.  1  —  13 


178  COMPENSATION.  [§  57 

farrier  for  six  weeks  for  the  purpose  of  being  cured,  and  at  the 
end  of  that  time  it  was  ascertained  that  it  was  damaged  to  the 
extent  of  201.  It  was  held  that  the  plaintiff  was  entitled  to 
recover  for  the  keep  of  the  horse  at  the  farrier's,  the  amount 
of  the  farrier's  charges,  and  the  difference  in  its  value  at  the 
time  of  the  accident  and  at  the  end  of  the  six  weeks,  but  not 
for  the  hire  of  another  horse  during  that  period.^  Had  a  claim 
been  made  for  the  loss  of  the  use  of  the  injured  horse  during 
his  treatment  at  the  farrier's  it  would  have  been  a  proper  item 
of  damages.^  If  a  horse  and  vehicle  are  injured  through  a 
defect  in  a  highway  and  in  consequence  thereof  the  horse  be- 
comes frightened  and  unmanageable,  continues  to  be  a  kicker 
and  becomes  spoiled  for  driving,  there  may  be  a  recovery  for 
the  depreciation  in  his  value  as  well  as  for  the  damage  done 
the  vehicle  by  the  kicking  and  by  the  defect.^  A  tradesman 
took  a  ticket  to  go  from  L.  to  H.  On  arriving  at  an  inter- 
mediate station  he  found  no  train  ready  to  take  him  to  H.  the 
same  night,  as  there  should  have  been  according  to  the  pub- 
lished time-bill.  He  slept  at  that  place  and  in  the  morning 
paid  Is.  4:d.  fare  to  H.  In  consequence  of  the  delay  he  failed 
to  keep  appointments  with  his  customers,  and  was  detained  for 
many  days.  The  latter  was  deemed  within  the  contemplation 
of  the  parties.  The  court  told  the  jury  that  the  plaintiff  would 
[101]  have  been  entitled  to  charge  the  company  with  the  ex- 
pense of  getting  to  H.,  but  he  had  no  right  to  cast  upon  it  the 
remote  consequences  of  remaining  the  night  at  the  intermediate 
place.  He  was  entitled  to  the  fare  thence  to  H.,  and  perhaps 
the  2s.  for  his  bed  and  refreshments.  A  motion  for  a  new  trial 
on  the  ground  of  misdirection  was  refused.  Pollock,  C.  B., 
said :  "  In  actions  for  breach  of  contract  the  damages  must  be 
such  as  are  capable  of  being  appreciated  or  estimated.  Mr. 
Wilde  was  invited  at  the  trial  to  state  what  were  the  damages 

1  Hughes  V.  Quentin,  8  C.  &  P.  703;  3  English  v.  Missouri  Pacific  R.  Co., 
Glare  v.  Maynard,  7  C.  &  P.  741.  73  Mo.  App.  232.     See  §  26. 

2  Albert  v.  Bleecker  Street,  etc.  R,  One  of  the  New  York  county- 
Co.,  3  Daly,  393;  Bennett  v.  Lock-  courts  has  denied  the  right  to  recover 
wood,  20  Wend.  223, 33  Am.  Dec.  532;  for  the  depreciation  in  the  value  of 
Walrath  v.  Redfield,  11  Barb.  368;  a  horse  caused  by  fright.  Nason  v. 
Gillett  V.  Western  R,  Co.,  8  Allen,  West,  31  N,  Y.  Misc,  583,  65  N,  Y. 
560;   The    Glaucus,   1    Lowell,    366;  Supp.  651. 

Sweeney    v.   Port  Bur  well  Harbor 
o„  17  Up.  Can.  C.  P.  574. 


§  57.]  REQUIRED   CERTAINTY    OF   DAMAGES.  179 

to  which  the  plaintiff  was  entitled.  lie  said  general  damages. 
The  plaintiff  is  entitled  to  nominal  damages  at  all  events,  and 
such  other  damages  of  a  pecuniary  kind  as  he  may  have  really 
sustained  as  a  direct  consequence  of  the  breach  of  the  contract. 
Each  case  of  this  description  must  be  decided  with  reference 
to  the  circumstances  peculiar  to  it;  but  it  may  be  laid  down 
as  a  rule  that,  generally,  in  actions  upon  contracts  no  damages 
can  be  given  which  cannot  be  stated  specifically,  and  that  the 
plaintiff  is  entitled  to  recover  whatever  damages  naturally  re- 
sult from  the  breach  of  contract,  but  not  damages  for  the  disap- 
pointment of  mind  occasioned  by  the  breach  of  contract."  ^  A 
subsequent  English  case  was  decided  by  the  queen's  bench  in 
1S75  on  this  state  of  facts:  The  plaintiff,  wife  and  two  chil- 
dren of  five  and  seven  years  old  respectively,  took  tickets  on 
the  defendant's  railway  from  W.  to  H.  by  the  midnight  train. 
They  got  into  the  train  but  it  did  not  go  to  H.,  but  along  an- 
other branch  to  E.  where  the  party  were  compelled  to  get  out. 
It  being  late  at  night  the  plaintiff  was  unable  to  get  a  convey- 
ance or  accommodation  at  an  inn;  and  the  party  walked  to  his 
house,  a  distance  of  between  four  and  five  miles,  where  they 
arrived  at  about  three  o'clock  in  the  morning.  It  was  a  drizzling 
night  and  the  wife  caught  cold  and  was  laid  up  for  some  time, 
and  unable  to  assist  her  husband  in  his  business  as  before,  and 
expenses  were  incurred  for  medical  attendance.^  Three  items 
of  loss  and  injury  came  under  consideration:  first,  the  incon- 
venience, as  it  was  called,  of  having  to  walk  home;  second, 
the  expense  of  the  wife's  sickness;  and  third,  the  loss  of  her 
services.  The  last  two  items  being  coincident  in  time  [102] 
and  relation  to  the  defendant's  breach  of  contract  were  con- 
sidered together.  Only  the  first  was  allowed.  It  was  remarked 
that  the  plaintiffs  did  their  best  to  diminish  the  inconvenience 
to  themselves,  and  they  had  no  alternative  but  to  w^alk;  that 
it  was  not  to  be  doubted  that  the  inconvenience  was  the  im- 
mediate and  necessary  consequence  of  the  breach  of  the  de- 
fendant's contract  to  convey  them  to  H.  Cockburn,  C.  J.,  said : 
"I  am  at  a  loss  to  see  why  that  inconvenience  should  not  be 

1  Hamlin  v.  Great  Northern  R.Co.,        2  jjobbs  v.  London,  etc.  R.  Co.,  L. 
3  H-  &  N.  40a    See  Denton  v.  Same,    R  10  Q.  B.  111. 
5  El.  &  BL  860. 


180  COMPENSATION.  [§  ^7 

compensated  by  damages  in  such  an  action  as  this.  ...  If 
the  jury  are  satisfied  that  in  the  particular  instance  personal 
inconvenience  or  suffering  has  been  occasioned,  and  that  it  has 
been  occasioned  as  the  immediate  effect  of  the  breach  of  con- 
tract, I  can  see  no  reasonable  principle  why  it  should  not  be 
compensated  for."  And  again:  " So  far  as  the  inconvenience 
of  the  walk  is  concerned,  that  must  be  taken  to  be  reasonably 
within  the  contemplation  of  the  parties;  because  if  a  carrier 
engages  to  put  a  person  down  at  a  given  place  and  does  not 
put  him  down  there  but  puts  him  down  somewhere  else,  it 
must  be  in  the  contemplation  of  everybody  that  the  passen- 
ger put  down  at  the  wrong  place  must  go  to  the  place  of  his 
destination  somehow  or  other.  If  there  are  means  of  convey- 
ance for  getting  there  he  may  take  those  means  and  make  the 
company  responsible  for  the  expense;  but  if  there  are  no  means 
I  take  it  to  be  law  that  the  carrier  must  compensate  him  for  the 
personal  inconvenience  which  the  absence  of  those  means  has 
necessitated.  That  flows  out  of  the  breach  of  contract  so  im- 
mediately that  the  damage  must  be  admitted  to  be  a  fair  sub- 
ject-matter of  damages.  But  in  this  case  the  wife's  cold  and 
its  consequences  cannot  stand  upon  the  same  footing  as  the 
personal  inconvenience  arising  from  the  additional  distance 
which  the  plaintiffs  had  to  go.  It  is  an  effect  of  the  breach  of 
contract  in  a  certain  sense,  but  removed  one  stage;  it  is  not 
the  primary  but  the  secondary  consequence  of  it."  The  ob- 
jection to  what  is  termed  the  "  secondary  consequence "  is 
that  it  is  not  a  consequence  so  certain  to  occur  as  to  be  among 
those  to  be  anticipated  from  such  a  breach,  it  happening  from 
other  than  the  usual  state  of  the  weather;  but  it  was  not  any 
more  a  secondary  consequence  than  is  the  burning  of  a  second 
building  by  a  continuous  fire,  or  the  injury  to  the  grain  by 
[103]  rain  in  Smeed  v.  Foord.  It  is  said  in  the  same  opinion 
already  quoted  from  that  "  the  nearest  approach  to  anything 
like  a  fixed  rule  is  this:  That  to  entitle  a  person  to  damages 
by  reason  of  a  breach  of  contract,  the  injury  for  which  com- 
pensation is  asked  should  be  one  that  may  fairly  be  taken  to 
have  been  contemplated  by  the  parties  as  the  possible  result 
of  the  breach  of  contract.  Therefore  you  must  have  something 
immediately  flowing  out  of  the  breach  of  contract  complained 
of,  something  immediately  connected  with  it,  and  not  merely 


§57.] 


KEQUIEED    CERTAINTY    OF    DAMAGES. 


181 


connected  with  it  through  a  series  of  causes  intervening  be- 
tween the  immediate  consequence  of  the  breach  of  contract 
and  the  damage  or  injury  complained  of.  To  illustrate  that  I 
cannot  take  a  better  case  than  the  one  now  before  us:  Suppose 
that  a  passenger  is  put  out  at  a  wrong  station  on  a  wet  night 
and  obliged  to  walk  a  considerable  distance  in  the  rain,  catch- 
ing a  violent  cold  which  ends  in  a  fever,  and  the  passenger  is 
laid  up  for  a  couple  of  months,  and  loses  through  this  illness 
the  offer  of  an  employment  which  would  have  brought  him  a 
handsome  salary^.  No  one  I  think  who  understood  the  law 
would  say  that  the  loss  so  occasioned  is  so  connected  with  the 
breach  of  contract  as  that  the  carrier  breaking  the  contract 
could  be  held  liable."  True,  there  the  sickness  would  be  the 
cause  of  an  accidental  loss,  but  in  the  case  under  discussion  the 
question  was  not  of  such  a  loss.  On  the  contrary  it  was  the 
expense  and  loss  of  time  incident  to  the  sickness  itself.  AVas 
not  that  "  a  result  of  the  breach  "  which  was  natural  and  proxi- 
mate, and  to  be  contemplated  under  the  other  circumstances 
of  the  breach  for  which  the  defendant  was  held  responsible  ?  ^ 


1  Blackburn,  J. :  "  It  is  a  contract 
by  which  the  railway  company  had 
undertaken  to  carry  four  persons  to 
Hampton  Court,  and  in  fact  that 
contract  was  broken  when  they 
landed  the  passengers  at  Esher  in- 
stead of  Hampton  Court.  The  con- 
tract was  to  supply  a  conveyance  to 
Hampton  Court,  and  it  was  not  sup- 
I)lied.  Where  there  is  a  contract  to 
supply  a  thing  and  it  is  not  supplied, 
the  damages  are  the  difference  be- 
tween that  which  ought  to  have  been 
supplied  and  that  which  you  have  to 
pay  for,  if  it  be  equally  good;  or,  if 
the  thing  is  not  obtainable,  the  dam- 
ages would  be  the  difference  between 
the  thing  which  you  ought  to  have 
had  and  the  best  substitute  you 
can  get  upon  the  occasion  for 
the  purpose.  .  .  .  When  he  is 
not  able  to  get  a  conveyance  at 
all,  but  has  to  make  the  jour- 
ney on  foot,  I  do  not  see  how  you  can 
have  a  better  rule  than  that  which 


the  learned  judge  gave  to  the  jury 
here,  namely,  that  the  jury  were  to 
see  what  was  the  inconvenience  to 
the  plaintiffs  in  having  to  walk,  as 
they  could  not  get  a  carriage."  As 
to  damages  being  recoverable  for  the 
illness  of  his  wife,  he  said:  **I  think 
they  are  not,  because  they  are  too  re- 
mote. On  the  principle  of  what  is 
too  remote,  it  is  clear  enough  that  a 
person  is  to  recover  in  the  case  of  a 
breach  of  contract  the  damages  di- 
rectly proceeding  from  that  breach 
of  contract  and  not  too  remotely. 
Although  Lord  Bacon  had,  long  ago, 
referred  to  this  question  of  remote- 
ness, it  has  been  left  in  very  great 
vagueness  as  to  what  constitutes  the 
limitation,  and  therefore  I  agree  with 
what  my  lord  has  said  to-day,  that 
you  make  it  a  little  more  definite  by 
saying  such  damages  are  recover- 
able as  a  man,  when  making  a  con- 
tract, would  contemplate  would  flow 
from  a  breach  of  it.     For  my  own 


182 


COMPENSATION. 


[§  5S. 


One  who  has  been  injured  may  recover  for  the  injury  though 
in  his  care  of  himself  thereafter,  he  may  have  misjudged  as  to 
the  proper  treatment.  In  such  an  event  he  is  not  a  volunteer 
in  the  case  of  his  ailment;  that  was  caused  by  the  defendant, 
and  the  plaintiff's  honest  misjudgmentis  not  negligence.  The 
negligence  of  the  defendant  began  a  sequence  of  harmful  effects ; 
an  intervening  innocently  misjudged  act  of  the  injured  person 
aggravated  them;  but  the  latter  act  would  have  been  harmless 
if  the  original  wrong  were  not  still  operative.  It  continues  to 
operate  more  harshly,  and  it  is  from  such  operation  that  the 
plaintiff  suffers.  The  original  cause  continues,  and  accom- 
plishes the  whole  result.^ 

[lOi]  §  58.  Same  subject.  In  an  action  under  the  code  it 
appeared  that  the  defendant  delivered  tickets  to  the  plaintiff 
about  the  1st  of  March,  1S52,  for  transportation  from  XewYork 
to  San  Francisco;  one  entitled  him  to  a  passage  to  Graytown, 
at  the  mouth  of  Nicaragua  river,  in  a  specified  ship  which  was 
to  sail  on  the  5th  of  that  month;  another  entitled  him  to  a 
passage  up  that  river  and  through  the  lake  of  that  name  to 
San  Juan  del  Sur,  on  the  Pacific  ocean ;  and  the  other  from 
the  latter  place  to  his  destination,  on  a  steamer  named,  which 


part,  I  do  not  feel  that  I  can  go 
further  than  that.  It  is  a  vague  rule, 
and  as  Bramwell,  B.,  said,  it  is  some- 
thing like  laaving  to  draw  a  line  be- 
tween night  and  day;  there  is  a 
great  duration  of  twilight  when  it 
is  neither  night  or  day;  but  on  the 
question  now  before  the  court, 
though  you  cannot  draw  the  precise 
line,  you  can  say  on  which  side  the 
line  the  case  is."  Mellor,  J.:  "I 
quite  agree  .  .  .  that  for  the 
mere  inconvenience,  such  as  annoy- 
ance and  loss  of  temper  or  vexation, 
or  for  being  disappointed  in  a  par- 
ticular thing  which  you  have  set 
your  mind  upon,  without  real  phys- 
ical inconvenience  resulting,  you 
cannot  have  damages.  That  is  surely 
sentimental,  and  not  a  case  where 
the  word  inconvenience,  as  I  here 
use  it,  would  apply.  But  I  must  say, 
if  it  is  a  fact  that  vou  arrived  at  a 


place  where  you  did  not  intend  to  go 
to,  where  you  are  placed  by  reason 
of  the  breach  of  contract  of  the  car- 
riers at  a  considerable  distance  from 
your  destination,  the  case  may  be 
otherwise.  It  is  admitted  that  if 
there  be  a  carriage  you  may  hire  it 
and  ride  home,  and  charge  expenses 
to  the  defendant.  The  reason  why 
you  may  hire  a  carriage  and  charge 
the  expense  to  the  company  is  with 
a  view  simply  of  mitigating  the  in- 
convenience to  which  you  would 
otherwise  be  subject;  so  that  where 
the  inconvenience  is  real  and  sub- 
stantial, arising  from  being  obliged 
to  walk  home,  I  cannot  see  why  that 
should  not  be  capable  of  being  as- 
sessed as  damages  in  respect  of  in- 
convenienca" 

i  Hope  V.  Troy  &  L.  R.  Co.,  40  Hun, 
438,  affirmed  without  opinion,  110 
N.  Y.  64a 


§  58.]  EEQUIKED    CERTAINTY   OF   DAMAGES.  183 

was  advertised  to  leave  about  fifteen  days  after  th?  plaintiff 
would  arrive  at  the  starting  port  according  to  the  usual  course 
of  conveyances.  The  plaintiff  was  carried  on  his  first  [105] 
ticket,  and  arrived  at  Graytown  March  15th,  where  he  was  de- 
tained eleven  days.  He  then  started  for  San  Juan  del  Sur. 
He  arrived  at  a  place  on  the  way  on  the  31st  of  March  when 
he  was  taken  sick.  There  he  received  news  that  the  steamer 
on  which  he  was  entitled  to  take  passage  under  his  third  ticket 
was  lost  on  the  27th  of  the  previous  month,  but  the  fact  was 
not  known  to  the  defendant  at  the  time  of  selling  the  tickets 
nor  until  about  the  20th  of  ApTil.  The  plaintiff  arrived  at  San 
Juan  del  Sur  on  the  4:th  of  April  and  remained  there  until  the 
9th  of  May,  endeavoring,  but  unsuccessfully,  to  procure  a  pas- 
sage to  San  Francisco.  He  then  returned  to  New  York,  and 
remained  sick,  until  long  after  he  returned  home,  with  a  fever 
peculiar  to  the  climate  of  Nicaragua.  It  was  held  that  the 
time  he  lost  by  reason  of  his  detention  on  the  isthmus,  his  ex- 
penses there,  and  of  his  return  to  New  York,  the  time  he  lost 
by  reason  of  his  sickness  after  he  returned  home  and  the  ex- 
penses of  such  sickness,  so  far  as  the  same  were  occasioned  by 
the  defendant's  negligence  and  breach  of  duty,  as  well  as  the 
amount  originally  paid  for  his  passage,  were  damages  which 
the  plaintiff  was  entitled  to  recover.^ 

The  damages  which  are  recoverable  for  breach  of  contract 
are  limited  to  the  direct  and  immediate  consequences ;  but  the 
right  to  indemnity  is  not  satisfied  by  compensation  for  the 
first  item  of  loss  if  there  are  others  so  identified  with  it  that 
the  injury  as  a  whole  naturally  comprehends  all  and  they  to- 
gether constitute  the  immediate  consequence.  A  party  whose 
breach  of  contract  leaves  the  other  party  in  such  a  situation 
that  sickness  is  its  natural,  immediate  and  probable  conse- 
quence causes  by  the  same  act  the  direct  pecuniary  losses  which 
are  its  usual  and  natural  concomitants,  as  loss  of  time  and  the 
expense  of  medical  and  other. attendance.  If  by  reason  of  the 
sickness  some  extraordinary  or  unusual  loss  occurs  for  want  of 
ability  on  his  part  to  attend  to  his  affairs  it  is  a  loss  which  can- 

1  Williams  v.  Vanderbilt,  28  N.  Y.  v.  Pacific  Mail  S.  S.  Co.,  1  Cal.  353; 

217,  84  Am.  Dec.  333;  Heirn  v.  Mc-  Pearson  v.  Duane,  4  Wall  605;  The 

Caughan,  32  Miss.  17 ;  Porter  v.  Steam-  Zenobia,  1  Abb.  Adm.  80;  The  Cana- 

boat  New  England,  17  Mo.  290;  Yonge  dian,  1  Brown  Adm.  11. 


184 


COMPENSATION. 


[§58. 


not  be  considered  as  having  entered  into  the  contemplation  of 
[100]  the  parties;  and  the  same  must  be  the  conclusion,  if  the 
sickness  were  not  the  natural  and  probable  consequence  of  the 
act  complained  of,  but  the  result  of  some  other  or  secondar}'' 
cause.  Where  sickness  is  the  direct  or  proximate  consequence 
of  a  wrongful  act,  the  pain  and  suffering  are  also  elements  of 
the  injury  for  which  compensation  may  be  recovered.^ 

The  earlier  cases,  especially  in  jurisdictions  in  which  exem- 
plary damages  are  recoverable,  generally  held  that  the  person 
whose  breach  of  contract,  fraud  or  other  wrongful  act  causes 
another  to  be  sued,  under  such  circumstances  that  the  suit  is 
an  injurious  consequence  for  which  he  is  liable,  is  bound  to  re- 
spond in  damages  for  the  expenses  which  are  the  necessary 
and  legal  incidenits  of  the  suit.^  But  not  in  the  absence  of 
such  circumstances.^  As  given  in  a  late  case,  the  reason  for 
denying  counsel  fees  where  the  circumstances  do  not  warrant 
the  imposition  of  exemplary  damages  is  that  the  law  prescribes 
what   costs   shall    be    taxed   and  what  shall   be   therein   in- 


1  Fillebrown  v.  Hoar,  124  Mass.  580; 
Meagher  v.  Driscoll,  99  Mass.  281; 
Pennsylvania  R.  Co.  v.  Books,  57  Pa. 
339,  98  Am.  Dec.  229;  Ward  v.  Van- 
derbilt,  4  Abb.  App.  Dec.  521;  In- 
dianapolis,  etc.  R.  Co.  v.  Birney,  71 
111.  391;  Klein  v.  Jewett,  26  N.  J.  Eq. 
474;  Ransom  v.  New  York,  etc.  R. 
Co.,  15  N.  Y.  415;  Ohio,  etc.  R.  Co.  v. 
Dickerson,  59  Ind.  317;  Whalen  v. 
St.  Louis,  etc.  R.  Co.,  60  Mo.  323; 
Pittsburg,  etc.  R.  Co.  v.  Andrews,  89 
Md.  329;  Johnson  v.  Wells,  eta  Co., 
6  Nev.  224,  3  Am.  Rep.  245.  See 
§§  1242-1245. 

2Philpot  V.  Taylor,  75  IlL  309,  20 
Am.  Rep.  241 ;  Dixon  v.  Fawcus,  3  El. 

6  El.  537;  Collen  v.  Wright,  7  El.  & 
B.  301;  Randell  v.  Trimen,  18  C.  B. 
786;  Anderson  v.  Sloane,  72  Wis.  566, 

7  Am.  Sfc.  885,  40  N.  W.  Rep.  214; 
Stevens  v.  Handley,  Wright,  121; 
Roberts  v.  Mason,  10  Ohio  St.  277; 
Peckham  Iron  Co.  v.  Harper,  41  Ohio 
St  100:  Parsons  v.  Harper,  16  Gratt. 
64;  Marshall  v.  Betner,  17  Ala.  832; 
Lawrence  v.  Hagerman,  56  IlL  68;  8 


Am.  Rep.  674;  Ziegler  v.  Powell,  54 
Ind.  173;  Closson  v.  Staples,  42  Vt. 
209, 1  Am.  Rep.  316;  Eastin  v.  Bank 
of  Stockton,  66  CaL  123,  56  Am.  Rep. 
77, 4  Pac.  Rep.  1106;  Magmer  v.  Renk, 
65  Wis.  364,  27  N.  W.  Rep.  26;  Greg- 
ory v.  Chambers,  78  Mo.  294;  Bolton 
v.  Vellines,  94  Va.  793,  26  S.  E.  Rep. 
847;  First  Nat.  Bank  v.  Williams,  63 
Kan.  431,  63  Pac.Rep.  744;  Stevenson 
V.  Whitesell,  10  Pa.  Super.  Ct.  306; 
Winkler  v.  Roeder,  23  Neb.  706,  37  N. 
W.  Rep.  607,  8  Am.  St.  155. 

3  Burruss  v.  Hines,  94  Va,  413,  26  S. 
E.  Rep.  875;  St.  Peter's  Church  v. 
Beach,  26  Conn.  355;  Henry  v.  Davis, 
123  Mass.  345;  Warren  v.  Cole,  15 
Mich.  265;  Young  v.  Courtney,  13  La. 
Ann.  193;  Flanders  v.  Tweed,  15  WalL 
450;  Oelrichs  v.  Spain,  13  How.  363; 
Yarbrougb  v.  Weaver,  7  Tex.  Civ. 
App.  215,  25  S.  W.  Rep.  468;  Landa 
v.  Obert,  45  Tex.  542;  Winstead  v. 
Hulme,  32  Kan.  568,  4  Pac.  Rep.  994; 
Bull  V.  Keenan,  100  Iowa,  144,  69  N. 
W.  Rep.  433;  Gibney  v.  Lewis,  6!» 
Conn.  392,  36  Atl.  Rep.  799. 


§  58.]  EEQUIKED    CERTAINTY    OF   DAMAGES.  185 

eluded  as  the  fee  of  the  successful  party.  In  such  case  no 
greater  fee  should  be  allowed  to  be  recovered.  The  litigants 
should  be  placed  on  an  equality.  If  the  defendant  should  be 
successful  it  is  clear  that  he  cannot  recover  from  the  plaintiff, 
in  addition  to  the  taxable  costs,  the  fee  paid  by  him  to  his  at- 
torney; nor  should  the  plaintiff,  if  successful,  recover  from  the 
defendant  the  fee  he  may  have  paid  or  become  liable  for  to 
his  attorney.^  Counsel  fees  paid  in  the  conduct  of  an  unsuc- 
cessful suit  against  lot-owners  to  recover  the  amount  of  an  as- 
sessment assigned  by  a  city  to  such  party  in  payment  for  the 
construction  of  a  sewer,  which  suit  failed  because  the  assess- 
ment was  invalid,  are  not  recoverable  in  an  action  subsequently 
brought  against  the  city  for  damages  for  the  violation  of  its  • 
contract  though  the  city  had  stipulated  that  the  assessment 
should  be  valid.^  The  weight  of  authority  is  to  the  effect  that 
counsel  fees  and  court  costs  made  necessary  in  the  prosecution 
or  defense  of  suits  occasioned  by  the  breach  of  contracts  are 
not  recoverable  in  actions  ex  contractu.  There  are  some  excep- 
tions, such  as  actions  on  injunction,'  and  attachment  bonds,'' 
and  the  like,  and  actions  on  covenants  of  warranty  or  of 
seizin,^  where  there  has  been  an  eviction  reasonably  resisted 
by  the  grantee.     "Expenditures  of  this  class,  though  growing 

1  Buriuss  V.  Hines,  94  Va.  413,  26  S.  One    •who    has  succeeded    in    an 

E.  Rep.  875.  action  cannot    recover  in  a  subse- 

A  recovery  of  attorney's  fees  has  quent  action  the  expense  of  the  first, 

been  denied  in  an  action  by  a  stock-  Lowell  v.  House  of  Good  Shepherd, 

holder  to  compel  the  officers  of  a  cor-  14  Wash.  211,  44  Pac.  Rep.  253;  Mar- 

poration  to  allov?  an  inspection  of  its  vin  v.  Prentice,  94  N.  Y.  295. 

books.     Clason  v.  Nassau  Ferry  Co.,  Where  provision  is  made  by  statute 

20  N.  Y.  Misc.  315,45  N.  Y.  Supp.  675.  for  a  reasonable  attorney's  fee  to  be 

And  in  an  action  against  an  execu-  fixed  by   the   court,  and  the  court 

tor  de  son  tort  for  wrongfully  with-  makes  an  allowance,   it  is  error  to 

holding  property  and  resisting  pro-  allow  in  addition  the  statutory  fee 

ceedings  to  punish  him  for  contempt,  provided  for  the  successful  party  as 

Bishop  V.  Hendrick,  83  Hun,  323,  31  part    of    the    costs.     Montesano    v. 

N.  Y.  Supp.  502, 146  N.  Y.  398,  42  N.  E.  Blair,  13  Wash.    188,   40  Pac.    Rep. 

Rep.  542,     And  against  the  usurper  731. 

of  an   oflSoe.     Palmer   v.   Darby,   3  2  Gates  v.  Toledo,  57  Ohio  St.  105, 

Ohio,  N.  P.  416,  1  Ohio  Dec.  48.  48  N.  E.  Rep.  500. 

A  plaintiff  can  recover  attorney's  ^  See  §  524. 

fees  as  damages  only  when  permitted  *  See  §  512. 

by  statute.     Spencer  v.    Murphy,  6  6  See  ^§  617-619;  also  §§83,  84. 
Colo.  App.  453,  41  Pac,  Rep.  841. 


186  COMPENSATION.  [§  59 

out  of  the  alleged  breach,  in  the  sense  that  bad  there  been  no 
breach  the  occasion  for  them  would  not  have  arisen,  are  yet 
too  remote  to  have  been  in  the  contemplation  of  the  parties, 
and  hence  do  not  constitute  an  element  of  legal  damage  when 
the  suit  is  on  the  contract,  though  the  rule  might  be  otherwise 
were  it  in  case,  setting  out  the  contract  as  inducement  merely.^ 

If  one's  property  is  taken,  injured  or  put  in  jeopardy  by  an- 
other's neglect  of  duty  imposed  by  contract,  or  by  his  wrong- 
ful act,  any  necessary  expense  incurred  for  its  recovery,  repair 
or  protection  is  an  element  of  the  injury.  It  is  often  the  legal 
duty  of  the  injured  party  to  incur  such  expense  to  prevent  or 
limit  the  damages ;  and  if  it  is  judicious  and  made  in  good  faith, 
it  is  recoverable  though  abortive.^ 

§  59.  Required  certainty  of  anticipated  profits.  In  an- 
other class  of  cases  the  question  of  the  certainty  of  damages  is 
more  distinctly  involved.  They  are  cases  in  which  the  act 
complained  of  is  plainly  actionable  and  easy  of  proof,  and  the 
actual  injury  occasioned  thereby  consists  in  destroying  or  im- 
pairmg  arrangements  from  which  it  is  alleged  that  pecuniary 
advantages  would  have  resulted.  Such  effects  may  be  pr©- 
[107]  duced  by  the  refusal  of  a  party  to  fulfill  his  contract,  or 
by  tortious  acts  by  which  some  business  scheme  is  frustrated. 
The  pecuniary  advantages  which  would  have  been  realized 
but  for  the  defendant's  act  must  often  be  ascertained  without 
the  aid  which  their  actual  existence  would  afford.  The  plaint- 
iff's right  to  recover  for  such  a  loss  depends  on  his  proving 
with  sufficient  certainty^  that  such  advantages  would  have  re- 

i.Burton  v.  Henry,  90  Ala.  281,  7  So.  lin  v.  Great  Northern  R.  Co.,  1  H.  & 

Rep.  925:  Marvin  v.  Prentice,  94  N.  Y.  N.  408;  Mailler  v.  Express  Propeller 

295;    Copeland  v.    Cunningham,  63  Line,  61  N,  Y.  312;  Smeed   v.  Foord. 

Ala.  394.  IE.  &E.  602;  Clark  v.  Russell,  110 

2Nading  v.  Dennison,  32  Tex.  Civ.  Mass.  133;  James  v.  Hodsden,  47  Vt. 

App.  173,  54  S.  W.  Rep.  412,  quoting  127;  First  Nat.  Bank  v.  Williams,  62 

the  text;   Nashville  v.   Sutherland,  Kan.  431,   63  Pac.  Rep.  744,  quoting 

94Tenn.  356,  29S.  W.  Rep.  228;  Wat-  the  text.     See  §  88. 

son  v.  Lisbon  Bridge,    14   Me.    201;  3  "The  rule  that  damages  which 

Hughes  V.  Quentin,  8  C.  &  P.  703;  are  uncertain  or  contingent  cannot 

Gillet  V.  Western  R  Co.,  8  Allen,  580;  be  recovered  does    not  embrace  an 

Emery    v.    Lowell,   109    Mass.    197;  uncertainty  as  to  the  value  of  the 

Hoffman  v.  Union  Ferry  Co.,  68  N.  benefit  or  gain  to  be  derived  from 

Y.  385;  Jutte  v.  Hughes,  67  N.  Y.  268;  the  performance  of  the  contract,  but 

Loker  v.  Damon,  17  Pick.  284;  Ham-  an  uncertainty  or  contingency  as  tO' 


§  59.]  REQDIEED    CERTAINTY    OF    DAMAGES.  187 

suited,  and,  therefore,  that  the  act  complained  of  prevented 
them.' 

The  grounds  upon  which  is  founded  the  general  rule  of  ex- 
cluding profits  in  estimating  damages  are,  (1)  that  in  the  greater 
number  of  cases  such  profits  are  too  dependent  upon  numerous 
and  changing  contingencies  to  constitute  a  definite  and  trust- 
worthy measure  of  damages;  (2)  because  such  loss  of  profits  is 
ordinarily  remote  and  not  the  direct  and  immediate  >result  of 
a  non-fulfillment  of  the  contract;  (3)  the  engagement  to  pay 
such  loss  of  profits,  in  cases  of  default  in  performance,  does 
not  form  a  part  of  the  contract,  nor  can  it  be  said,  from  its 
nature  and  terms,  that  it  was  within  the  contemplation  of  the 
parties.  Cases  arise,  however,  in  which  loss  of  profits  is  said 
to  be  clearly  within  the  contemplation  of  the  parties,  although 
not  provided  for  by  the  terms  of  the  contract,  and  where  such 
profits  are  not  open  to  the  objection  of  uncertainty  or  remote- 
ness. An  instance  of  the  latter  kind  is  where  the  contract  is 
entered  into  for  the  purpose,  in  part  at  least,  of  enabling  the 
party  to  fulfill  a  collateral  agreement  from  which  profits  would 
arise,  of  the  existence  of  which  he  informed  the  other  party 
prior  to  the  making  of  the  contract.  In  such  cases  the  loss  of 
profits  from  the  collateral  agreement  is  clearly  within  the  con- 
templation of  the  parties,  and  is  not  remote  or  speculative.'^ 

whether  such  gain  or  benefit  would  injured  from  giving  attention  totlie 
be  derived  at  all.  It  only  applies  to  business  in  which  he  is  engaged,  it  is 
such  damages  as  are  not  the  certain  error  to  receive  testimony  of  the 
result  of  the  breach,  and  not  to  such  average  profits  made  therein  as  a 
as  are  the  certain  result  but  uncer-  basis  for  estimating  damages.  Bier- 
tain  in  amount."  In  the  latter  case  bach  v.  Goodyear  Rubber  Co.,  54 
the  law  will  adopt  that  mode  of  es-  Wis.  208,  41  Am.  Rep.  19,  11  N.  W. 
timating  the  damages  which  is  most  Rep.  514;  Masterton  v.  Mount  Ver- 
certain  and  definite.  Blagen  v.  non,  58  N.  Y.  391;  Blair  v.  Mil wau- 
Thompson,  23  Ore.  239,  254,  18  L.  R.  kee,  etc.  R.  Co.,  20  Wis.  262.  This 
A.  315,  31  Pac.  Rep.  647.  rule  is  disapproved  of  in  Terre  Haute 

"  Certainty  "  means  reasonable  cer-  v.  Hudnut,  112  Ind.  542,  552, 13  N.  E. 

tainty.     Baltimore  &   O.   R    Co.   v.  Rep.  686,   and  the  New  York  case 

Stewart,  79  Md.  487,  29  Atl.  Rep.  964;  cited  pronounced   not  in   harmony 

Stewart  v.  Patton,  65  Mo.  App.  21.  with  later  cases  in  that  state.     See 

1  Myerle  v.  United  States,  33  Ct.  of  Wakeman  v.  Wheeler  &  W.  Co.,  101 

Cls.  1,  26,   quoting  the  text;  Fell  v.  N.  Y.  205,  54  Am.  Rep.  676,   4  N.  E. 

Newberry,  106  Mich.  542,  64  N.  W.  Rep.  264;  §  1246. 

Rep.  474.     See  §  78.  2  Per  Parker,  Ch.  J.,  in  Witherbee 

In  actions  to  recover  for  personal  v.  Meyer,  155  N.  Y.  446,  453,  50  N.  E. 

injuries  which  disqualify  the  person  Rep.  85. 


188 


COMPENSATION. 


[§59. 


If  a  vendor  fails  to  deliver  property  pursuant  to  his  contract, 
the  vendee,  having  paid  for  it,  is  deprived  of  such  benefit  as 
such  sale  completed  would  have  conferred,  which  is  a  loss 
equal  to  the  value  of  the  property  at  the  time  it  should  have 
been  delivered,  with  interest  from  that  time.  This  value  can 
generally  be  proved  with  certainty.  If  the  property  has  not 
been  paid  for,  the  compensation  is  still  adjusted  with  reference 
to  the  value,  and  is  the  difference  between  the  contract  price 
and  the  value.  Thus,  the  vendee  is  entitled  to  recover  accord- 
ing to  the  advantage  he  would  have  derived  from  performance 
of  the  contract,  namely,  the  profit  he  could  have  made  by  the 
bargain.  He  is  entitled  to  such  sum  as  would  enable  him  to 
obtain  the  property  if  it  is  obtainable.^  On  the  other  hand, 
where  a  vendee  breaks  his  contract,  the  property  is  left  on  the 
[108]  vendor's  hands;  his  loss  is  equal  to  the  difference  be- 
tween the  contract  price  and  any  less  sum  the  property  is 
worth  when  the  vendee  was  bound  to  take  and  pay  for  it.  The 
loss  he  suffers  is  the  profit  he  would  have  made  by  the  com- 
pletion of  the  sale.2 


1  In  Haskell  v.  Hunter,  23  Mich. 
305,  an  action  was  brought  for  dam- 
ages for  breach  of  a  contract  to  sell 
and  deliver  lumber,  and  it  appeared 
that  a  portion  of  the  lumber  had 
been  delivered  to  the  plaintiffs  at  a. 
place  other  than  that  specified  in  the 
contract,  and  subject  to  a  heavy  bill 
of  freight  in  consequence  thereof. 
In  the  absence  of  any  proof  that  the 
plaintiffs  had  accepted  the  same  in 
satisfaction  to  that  extent  of  the 
contract,  or  had  waived  their  right 
to  compensation  to  that  extent  for 
the  breach  thereof.it  was  not  proper 
to  deduct  the  amount  so  delivered 
from  the  whole  amount  to  be  de- 
livered. An  instruction  to  the  jury 
that  the  proper  measure  of  damages 
is  the  difference  between  the  con- 
tract price  of  the  lumber  not  deliv- 
ered and  the  wholesale  price  at  the 
place  of  delivery  was  held  to  be 
erroneous.  The  true  measure  is  the 
difference    between     the     contract 


price  and  what  it  would  have  cost 
the  plaintiffs  to  procure,  at  the  place 
of  delivery,  and  at  the  time  or  times 
when  it  was  reasonable  and  proper 
for  them  to  supply  themselves  with 
lumber  of  the  kind  and  quality  they 
were  to  receive  on  the  contract:  and 
if  it  were  impracticable  to  supply 
themselves,  except  at  retail  rates, 
they  were  entitled  to  demand  those 
rates  of  the  defendants. 

2  Gordon  v.  Norris,  49  N.  R  376; 
Haines  v.  Tucker,  50  N.  H.  307;  Col- 
lins V.  Delaporte,  115  Mass.  159; 
Ullmanv.  Kent,  60111.  271;  Sanborn 
V.  Benedict,  78  IlL  310;  Camp  v. 
Hamlin,  55  Ga.  259;  McCracken  v. 
Webb,  36  Iowa,  551;  Dustan  v.  Mc- 
Andrew,  44  N.  Y.  72;  Hay  den  v. 
Demets,  53  N.  Y,  426;  Beardsley  v. 
Smith,  61  111.  App.  340. 

The  loss  of  profits  based  upon  the 
sale  of  town  lots  at  prices  beyond 
their  value  and  which  are  dependent 
upon  the  working  up  of  a  boom  can- 


§  60.]  KEQUIEED    CERTAINTY    OF   DAMAGES.  189 

§  60.  Same  subject.  In  many  cases  the  sum  which  shall 
represent  the  value  to  a  vendee  who  has  been  disappointed  in 
the  receipt  of  property  bargained  for  cannot  be  ascertained 
from  proof  of  a  market  value,  either  because  the  article  is  not 
obtainable  in  market  or  because  it  is  contracted  for  and  must 
be  obtained  from  the  vendor  to  answer  a  particular  purpose, 
and  not  for  resale.  Then,  in  applying  the  general  rule  that 
the  damages  for  breach  of  contract  are  to  be  measured  by  the 
benefits  which  would  have  been  received  if  the  contract  had 
been  performed,  resort  must  be  had  to  the  known  or  custom- 
ary use  of  the  property  and  such  practical  elements  of  value 
as  the  case  presents.  If  the  sale  is  made  with  a  warranty,  ex- 
press or  implied,  that  the  article  is  of  a  particular  description 
or  suitable  for  a  designated  use,  on  a  breach  by  the  vendor  the 
damages  are  properly  computed  according  to  the  actual  loss 
in  respect  to  that  object.  The  ascertainment  of  the  damages 
may  involve  an  inquiry  into  the  advantages  derivable  from 
the  delivery  of  articles  of  the  required  description  or  suitable 
for  the  contemplated  use,  and  of  losses  occasioned  by  the 
breach  with  reference  to  the  particular  purpose  of  the  contract 
as  known  to  the  parties.  In  such  cases  the  same  degree  of 
certainty  is  not  always  attainable  and  there  is  much  conflict 
of  authority  as  to  the  proper  scope  of  inquiry.  The  same  con- 
siderations apply  to  the  question  of  the  proper  mode  of  arriv- 
ing at  the  amount  of  damage  whatever  be  the  nature  of  the 
contract.  The  injured  party  is  entitled  to  gains  prevented 
and  losses  sustained  if  he  can  prove  them  with  sufficient  cer- 
tainty.^    In   Fletcher  v.   Tayleur^   the  action   was   brought 

not  be    recovered.      Carbondale  In-  A.  R.  Co.,  128  Mo.  224,  27  S.  W.  Rep. 

vestment  Co.  v.  Burdick,  58  Kan.  517,  568;  Stewart  v.  Patton,  65  Mo.  App. 

50  Pac.  Rep.  442.  21;   Wittenberg  v.    Mollyneaux,   60 

iHoge    V.    Norton,   22  Kan.    374;  Neb.  583,  83  N.  W.  Rep.  842,  59  Neb. 

Brown  v.  Had  ley,  43   Kan.   267,  23  203,   80  N.   W.    Rep.    824;    Lakeside 

Pac.  Rep.  493;  Arkansas  Valley  Town  Paper    Co.   v.   State,    45   App.    Div. 

&  Land  Co.  v.  Lincoln,  56  Kan.  145,  112,  60  N.  Y.  Supp.  1081;  Burruss  v. 

43  Pac.  Rep.  706;  New  Market  Co.  v.  Hines,  94  Va.  413,  26  S.  E.  Rep.  875; 

Embry,  20  Ky.  L.  Rep.  1130,  48  S.  W.  Carroll-Porter  Boiler  &  Tank  Co.  v. 

Rep.  980;  Washington  County  Water  Columbus  Machine  Co.,  5  C.  C.  A. 

Co.  V.  Garver,  91  Md.  398,  46  Atl.  Rep.  190,  55  Fed.  Rep.  451 ;  Hitchcock  v. 

979;  Wiggins  Ferry  Co.  v.  Chicago  &  Anthony,  28  C.  C.  A.  80,  83  Fed.  Rep. 

217  C.  B.21. 


190 


COMPENSATION. 


[§60. 


af^amst  a  ship-builder  to  recover  damages  for  non-delivery  of 
an  iron  ship  at  the  time  appointed  in  the  contract.  The  ship 
[109]  was  intended  by  the  plaintiffs  and  from  the  nature  of  her 
fitting's  the  defendant  must  have  known  she  was  intended  for 


779;  Safety  Insulated  Wire  &  Cable 
Co.  V.  Mayor,  13  C.  C.  A.  375,  66  Fed. 
Eep.  140;  Fontaine  v.  Baxley,  90  Ga. 
41G,  17  S.  E.  Rep.  1015;  Border  City 
Ice  &  Coal  Co.  v.  Adams,  69  Ark.  219, 
62  S.  W.  Rep.  591. 

In  an  action  brought  to  recover 
the  price  of  nine  and  one-half  tons 
of  fertilizer  the  defendant  set  up  that 
the  plaintiff  agreed  to  sell  and  deliver 
to  him  twenty  tons  of  fertilizer  at  a 
stipulated  price,  with  notice  that  it 
was  intended  for  use  on  the  defend- 
ant's cotton  crop.  The  defendant 
was  unable  to  buy  the  remaining 
quantity  elsewhere,  and  the  plaintiff 
refused  to  deliver  it.  The  land  upon 
which  the  fertilizer  was  designed  to 
be  used  was  cultivated  in  a  farmer- 
like manner.  Upon  a  portion  the 
fertilizer  delivered  was  used.  This 
portion  produced  between  three  hun- 
dred and  four  hundred  pounds  of 
seed  cotton  per  acre  more  than  that 
adjoining,  which  was  also  planted  in 
cotton  —  the  quality  and  cultivation 
of  each  part  being  precisely  the  same. 
The  court  say:  "The  true  rule  seems 
to  be  that  [the  loss  of] 'profits  which 
have  been  sustained  as  the  natural 
consequence  of  the  breach  or  the 
wrongful  act  complained  of  are  re- 
coverable unless  they  are  objection- 
able either  on  the  ground  of  remote- 
ness or  of  uncertainty.  Those  profits 
are  usually  considered  too  remote, 
among  many  others,  which  are  not 
the  immediate  fruits  of  the  princi- 
pal contract,  but  are  dependent  upon 
collateral  engagements  and  enter- 
prises not  brought  to  the  notice  of 
the  contracting  parties,  and  not 
therefore  brought  within  their  con- 
templation or  that  of  the  law.  Those 
are  considered  uncertain  which  are 


purely  speculative  in  their  nature, 
and  depend  upon  so  many  incalcula- 
ble contingencies  as  to  make  it  im- 
practicable to  determine  them  defi- 
nitely by  any  trustworthy  mode  of 
computation.  We  would  not  be 
willing  to  say  that  the  damages  here 
claimed  by  the  defendant  by  waj^  of 
lost  profits  would  have  been  recover- 
able if  their  ascertainment  had  been 
left  to  mere  conjecture.  The  amount 
of  cotton  or  other  crops  which  land 
produces  is  dependent  upon  so  many 
varying  contingencies  as  to  render 
it  very  indeterminata  It  will  vary 
with  the  seasons,  the  adaptation  of 
soil  and  climate,  and  its  compara- 
tive exemption  from  the  ravages  of 
worms  or  other  destructive  insects. 
Speculative  opinions  of  witnesses  as 
to  the  probable  influences  of  these 
operative  causes  would  be  a  poor 
criterion  for  the  measure  of  values. 
In  this  case,  however,  these  diflicul- 
ties  are  entirely  removed.  The  char- 
acter of  the  season  is  absolutely 
known.  So  is  the  precise  effect  of 
the  fertilizer  used  during  this  par- 
ticular season.  No  speculation  is 
needed  as  to  how  much  rain  and 
how  much  sunshine  were  requisite 
to  produce  a  given  amount  of  crops 
to  the  acre,  nor  as  to  the  probable 
effect  of  the  fertilizer  upon  the  differ- 
ent kinds  of  soil,  or  even  the  propor- 
tion of  it  best  suited  to  the  land,  and, 
therefore,  what  would  necessarily 
have  been  produced  on  the  remain- 
der, which  is  shown  to  have  been  in 
precisely  the  same  state  of  cultiva- 
tion, and  similar  in  quality  of  soil." 
Bell  V.  Reynolds,  73  Ala.  511.  See 
Goodsell  V.  Western  U.  Tel.  Co.,  53 
K  Y.  Super.  Ct  46,  58  id.  26,  9  N-  Y. 
Supp.  425. 


g  GO.]  KEQUIKED    CEKTAINTY    OF    DAMAGES.  191 

a  passenger  ship  in  the  Australian  trade.  The  witnesses  called 
on  the  part  of  the  plaintiff  stated  that  the  vessel  would,  in  all 
probability,  have  obtained,  if  completed  by  the  time  men- 
tioned in  the  contract,  at  the  then  current  rates,  an  outward 
freight  of  about  7,000^.,  and  a  gross  freight  home  of  about 
9,500^.,  and  that,  allowing  for  the  necessary  outlay  and  ex- 
penses, the  profits  would  in  all  probability  have  been  a  sum 
somewhat  exceeding  7,000^.  The  amount  of  freight  received 
by  the  plaintiffs  when  the  ship  sailed  was  4,280^.  The  court 
submitted  the  case  to  the  jury,  to  be  decided  by  the  rule  laid 
down  in  Hadley  v.  Baxendale,  and  the  jury  returned  a  verdict 
in  favor  of  the  plaintiffs  for  2,7501.,  which  was  sustained. 
Under  the  particular  circumstances  it  is  to  be  inferred  that 
the  data  for  ascertaining  what  the  ship  would  have  earned  if 
she  had  been  finished  at  the  proper  time  were  not  purely  con- 
jectural, but  were  nearly  as  reliable  as  is  the  proof  of  market 
values. 

But  while  this  case  on  its  facts  is  quite  satisfactory  and  no 
doubtful  principles  are  announced  in  it,  the  damages  were  ar- 
rived at  in  a  manner  which  the  courts  in  this  country  have  gen- 
erally refused  to  adopt;  that  is,  where  there  is  any  other  and 
more  certain  method  of  ascertaining  the  damages  they  will 
not  generally  attempt  to  ascertain  what  profits  could  be  real- 
ized by  conducting  a  business.^  In  actions  for  damages  for 
not  fulfilling  in  time  contracts  for  particular  works  to  be  com- 
pleted at  a  stipulated  date,  the  plaintiff  cannot  recover  dam- 
ages estimated  on  the  value  of  profits  which  would  have  been 
realized  by  the  use  of  the  works  if  the  contract  had  been  per- 
formed. The  value  of  such  use  for  general  purposes  to  which 
they  are  adapted  or  some  known  use  for  which  they  were  in- 
tended, during  the  delay,  with  any  expenses  which  have  to  be 

1  Taylor  V.   Maguire,    12  Ma  313;  Rep.  799;  Douglas  v.  Railroad  Co.,  51 

Blanchard    v.    Ely,    21    Wend.   342;  W.  Va.  523,  41  S.  E.  Rep.  911;  Central 

Walker  v.  Ellis,  1  Sneed,  515;  Porter  Coal   &  Coke  Co.   v.    Hartman,    111 

V.  Woods,  3  Humph.  56,  39  Am.  Dec.  Fed.  Rep.  96, 49  C.C.  A.  244;  Armistead 

153;  Singer  v.  Farnsworth,  2  Ind.  597;  v.  Shreveport,  etc.  R.  Co.,  —  La.  — , 

Glidden   v.  Pooler,  50  111.  App.  36;  32  So.  Rep.  456;  Asher  v.  Staoey,  23 

Lanahan  v.   Heaver,  79    Md.  413,  29  Ky.  L.  Rep.  1586,  65  S.  W.  Rep.  603; 

Atl.  Rep.  1036;  Delp  v.  Edlis,  190  Pa.  Silurian  Mineral  Spring  Co.  v.  Kuhn, 

25,  42  Atl.  Rep.  462;  Sharpe  v.  South-  —  Neb.  — ,  91  N.  W.  Rep.  508. 
ern  R.   Co.,  130   N.  C.  613.  41  S.  E. 


192  COMPENSATION.  [g  60. 

incurred  in  the  meantime,  is  usually  the  measure  of  damages.^ 
Where  the  plaintiff  took  possession  of  a  store  under  a  contract 
of  purchase  and  carried  on  a  profitable  business  in  it  for  sev- 
eral months  and  was  then  ejected  by  the  defendant  and  kept 
out  of  possession,  the  latter  was  liable  for  the  value  of  the 
business  lost,  which  was  provable  by  evidence  of  the  profits 
made.^  On  the  breach  of  a  contract  for  the  loan  of  money  to 
be  used  in  erecting  houses,  none  of  which  were  built  until 
three  years  after  its  breach,  there  cannot  be  a  recovery  for  the 
loss  of  their  rental  value.  The  fact  that  the  plaintiff  was  un- 
able during  that  time  to  borrow  the  money  from  any  other 
source  on  the  same  security  offered  the  defendant,  and  which 
he  did  not  impair,  was  taken  as  evidence  of  the  uncertainty 
and  speculative  character  of  the  anticipated  profits.' 

[110]  In  particular  cases  there  may  be  losses  in  outlays 
made  by  the  injured  party  in  anticipation  of  the  performance 
by  the  other  party,  and  actual  loss  of  wages  of  men  kept  idle, 
and  various  other  like  items  which  are  easily  proved ;  these, 
with  the  rental  value  of  the  agreed  structure,  enable  the  court 
to  ascertain  the  damages  with  more  certainty  than  by  con- 
sideration of  profits  to  be  made  in  conducting  a  business  where 
nearly  all  the  factors  in  the  calculation  are  supposititious.*  But 

1  Griffin  v.  Colver,    16  N.   Y.  489;  ham,  14  Neb.   369,45  Am.    Rep.  121, 

Taylor  V.  Bradley,  39  N.  Y.  129;  Mcv  15  N.    W.   Rep.   704;   Witherbee  v. 

Boyle  V.  Reeder,  1  Ired.   607;  Benton  Meyer,  155  N.  Y.  446,  50  N.  E.  Rep. 

V.  Fay,  64   III   417;   Green  v.  Mann,  85;    Rogers  v.   Bemus,   69  Pa.  432; 

11  IlL  614;  Priestly  v.  Northern  I.  &  Pennypacker  v.  Jones,  106  Pa.  237; 

C.  R   Co.,  26   111.    207,   71  Am.  Dec.  Finnegan  v.  Allen.  60  111.  App.  354; 

369;  Strawn  v.  Coggswell,  23  111.  461;  Paola   Gas  Co.  v.  Paola  Glass  Co.,  56 

Fleming  v.  Beck,  48  Pa.  309;   Lewis  Kan.  614,  54  Am.  St.  598,  44Pac.  Rep. 

V.  Atlas  Mut.  L.  Ins.  Co.,  61  Mo.  534;  621;  Williams  v.  Island  City  Milling 

Green  v.  Williams,  45  111.  206;  Dean  Co.,  25  Ore.  573,  37  Pac.  Rep.  49,  cit- 

V.    White,   5   Iowa,    266;   Rogers  v.  ing  the  text;  Watson  v.  Kirby,  112 

Beard,  36  Barb.  31;  Snell  v.  Cotting-  Ala.  436,  20  So.  Rep.  624;  Atlantic  & 

ham,  72  111.  161;  Cassidy  v.  Le  Fevre,  D.  R.  Co.  v.  Delaware  Construction 

45  N.  Y.    562;   Parker  v.  Gilliam,  1  Co.,  98  Va.   503,   37   S.   E.    Rep.  13; 

Ired.  545;  Lecroy  v.  Wiggins,  31  Ala.  Sharpe  v.  Southern  R.  Co.,  130  N.  C. 

13;  Pettee  v.  Tennessee Manuf.  Co.,  1  613,  41  S.  E.  Rep.  799. 

Sneed.  381;  Heard  v.  Holman,  19  C.  2  Collins  v.  Lavelle,  19  R.  L  45,  31 

B.  (N.  S.)  1;  Davis  V.  Cincinnati,  etc.  Atl.  Rep.  434. 

R.  Co.,  1  Disney,  23;  Blair  v.  Kilpat-  3  j^yinski   v.  Middlesex  Banking 

rick,  40Ind.  312;  Thompson  v.  Shat-  Co.,  34  C.  C.  A.  452,  92  Fed.  Rep.  449. 

tuck.  2  Met  615;  Corbet  v.  Johnson,  <  Gates  v.  Northern  Pacific  R.  Co., 

10  Ont.    App.    564;   Bridges  v.  Lan-  64  Wis.  64,  24  N.  W.  Rep.  494;  United 


§  CO.]  REQUIRED    CERTAINTY    OF   DAMAGES.  193 

where  there  is  not  such  a  certain  mode  of  estimating  damages, 
the  court  will  not  dismiss  the  injured  party  with  nominal  dam- 
ages, unless  the  case  is  such  there  is  no  certainty  that  he  has 
suffered  actual  injury.  In  a  suit  by  an  agent  against  a  life 
insurance  company  for  damages  resulting  from  hrs  discharge 
during  the  term  of  his  engagement,  his  measure  of  damages  is 
the  amount  he  has  lost  in  consequence.  And  testimony  of 
actuaries  as  to  the  probable  value  of  renewals  for  the  remain- 
der of  his  term  on  policies  already  obtained  is  competent  to 
assist  in  arriving  at  the  result.^  J3ut  an  estimate  of  the  prob- 
able earnings  thereafter,  derived  from  proof  of  the  amount  of 
his  collections  and  commissions  before  the  breach,  without 
other  proof  relating  thereto,  was  held  too  speculative  to  be 
admissible.- 

In  estimating  the  damages  sustained  bj'  a  company  for  the 
laying  out  of  a  highway  across  its  railroad  or  for  permitting 
another  railroad  to  cross  it  at  grade,  the  jury  have  no  right  to 
take  into  consideration  any  supposed  future  damage  to  it,  from 
a  probable  increase  in  the  expense  of  doing  business  in  conse- 
quence of  the  establishment  of  the  new  highway  or  crossing; 
and  evidence  of  payments  of  money  on  account  of  accidents  at 
the  several  crossings,  and  of  the  comparative  profit  of  travel 
over  the  railroad  between  different  stations,  is  inadmissible;  it 
is  too  uncertain  and  contingent.^  The  conjectural  or  pos-  [111] 
sible  profits  of  a  whaling  or  other  voyage  cannot  be  taken  into 
consideration  in  estimating  the  damage  against  a  master  for 
running  away  with  the  vessel  and  abandoning  the  voyage.* 

states  V.  Behan,  110  IT.  S.  338,  4  Sup.  2  Lewis  v.  Atlas  Mut  L.  Ins.  Co., 

Ct.   Rep.   81;   Taylor   Manuf,   Co.  v.  61  Mo.  534. 

Hatcher  Manuf.    Co.,    39   Fed.  Rep.  3 Boston,  etc.  R.  Co.  v.  Middlesex,  1 

440;   Mandia  v.  McMahon,    17  Ont.  Allen,  324;  Portland  &  R.  R.  Co.  v. 

App.  34;  cases  cited  in  n.  1,  p.  192.  Deering,  78  Me.  61,  57  Am.  Rep.  784, 

The  right  to  be  reimbursed  for  out-  2  Atl.  Rep.  670;  Massachusetts,  etc. 

lay  and  expenses   does  not   depend  R.   Co.   v.    Boston,   etc.   R.   Co.,   121 

upon  proof  of  the  right  to  recover  Mass.  124;  Chicago  &  A.  R.  Co.   v. 

profits.     United     States  v.    Behan,  Joliet,  etc.  R.  Co.,  105  111.  388, 44  Am. 

Taylor  Manuf.  Co.  V.  Hatcher  Manuf.  Rep.   799;  Boston   &    M.    R    Co.   v. 

Co.,  supra.  County   Com'rs,  79  Me.  386,  10  Atl. 

i^tna    L.  Ins.  Co.  v.  Nexsen,  84  Rep.  113.     See  §  1077  ei  seg. 

Ind.  347:  Lewis  v.  Atlas  Mut.  L.  Ins.  *  Brown  v.   Smith,   12  Cush.  366; 

Co.,  61  Mo.  534;  Tilles   v.  Mutual  L.  Schooner  Lively,  1  Gall.  314;  Boyd  v. 

Ins.  Co.,  1  Mart.  Ch.  Dec.  313.    See  §69.  Brown,  17  Pick.  453;  The  Anna  Maria, 
Vou  I  — 13 


194:  COMPENSATION.  [§  60. 

Where  there  was  a  breach  of  a  contract  to  give  a  theatrical 
performance  on  one  occasion  only,  proof  of  the  leading  actor's 
repute  and  popularity,  that  during  the  previous  year  he  had 
played  to  a  large  house  in  the  same  place,  the  inhabitants  of 
which  largely  patronized  such  performances,  and  the  testimony 
of  the  plaintiff,  based  upon  experience  in  the  management  of 
the  theater  in  which  the  play  was  to  have  been  rendered,  of 
the  cash  receipts  of  similar  plays  given  there,  as  to  what  the 
receipts  might  have  been  if  the  play  had  been  given,  was  in- 
sufficient to  sustain  a  judgment  for  substantial  damages.^  And 
where  the  breach  was  of  a  theatrical  "  sharing  terms  "  agree- 
ment, which  contemplated  a  considerable  period  for  its  execu- 
tion, the  loss  of  profits  was  not  shown  by  the  previous  receipts 
of  the  plaintiff's  theater  and  by  proof  of  the  success  of  the  play, 
which  was  to  have  been  given  therein,  in  other  cities.-  The 
damages  which  will  result  from  a  contemplated  advance  in  the 
price  of  real  estate  because  of  the  proposed  erection  and  opera- 
tion of  a  factory  on  adjoining  land  cannot  be  recovered  in  an 
action  for  the  breach  of  a  contract  for  the  erection  and  opera- 
tion thereof.^  But  if  lands  are  exchanged  with  an  agreement 
as  part  of  the  consideration  by  one  of  the  parties  that  he  will 
make  valuable  improvements  upon  the  tract  conveyed  by  him, 
the  damages  resulting  from  his  breach  are  not  too  uncertain  if 
the  complaint  alleges  the  difference  between  the  value  of  the 
tracts  at  the  time  the  exchange  was  made.*  In  a  Wisconsin 
case  there  was  a  breach  of  contract  to  purchase  and  work  a 
stone  quarry,  of  which  the  plaintiff  was  to  have  one-half  of  the 
net  profits  so  long  as  it  could  be  profitably  worked.  The  de- 
fendant refused  to  perform  before  any  profits  were  realized.  It 
was  proven  that  the  quarry  had  been  worked  at  a  profit  for 
three  years  preceding  the  trial,  and  an  estimate  was  made  of 
profits  based  in  part  on  earnings  for  another  year.  The  court 
considered  the  loss  of  profits  sufficiently  established,  and  held 

2  Wheat.  337;  Del  Col  v.  Arnold,  3  Cutting  v.  Miner,  30  App.  Div.  457,52 

Dall.  333.  N.  Y.  Supp.  288,  which  see. 

1  Todd  V.  Keene,  167  Mass.  157,  45  3  DuUea  v.  Taylor,  35  Up.  Can.  Q.  B. 

N.  E.  Rep.  81.  395;  Rock  ford,  etc.  R.  Co.  v.  Becke- 

2 Moss  V.Tompkins,  69  Hun,  288,  23  meier,  72  111.  267;  Waterson  v.  Alle- 

N.   Y.   Supp.  623,  aflfiirnied   without  ghany  Valley  R.  Co.,  74  Pa.  208. 

opinion,  144  N.  Y.  659;  approved  in  ■*  Wilson  v.  Yocum,  77  Iowa,  569,42 

N.  W.  Rep.  446. 


§  61.]  EEQUIKED    CERTAINTY    OF    DAMAGES.  195 

that  the  time  during  which  a  recovery  might  be  had  therefor 
■was  for  the  jury.' 

§  61.  Warranties  of  seeds  and  breeding  quality  of  animals, 
etc.  Where  a  vendor  falsely  warranted  that  seed  sold  would 
produce  Bristol  cabbages  the  damages  recoverable  were  the 
value  of  a  crop  of  Bristol  cabbages  such  as  would  ordinarily 
have  been  produced  that  year,  deducting  the  expense  of  rais- 
ing it  and  the  value  of  the  crop  actually  raised.-  What  would 
have  been  produced  from  other  seed  and  of  the  kind  warranted, 
of  course,  could  not  be  proved  directly,  and  it  was  not  at- 
tempted; but  the  regularity  of  production  under  usual  condi- 
tions is  such  that  a  judicial  conclusion  may  be  based  upon  it  as 
sufficiently  certain.  Mere  speculative  profits,  such  as  might 
be  conjectured  would  be  the  probable  result  of  an  adventure 
xlefeated  by  the  breach  of  contract,  the  gains  from  which  are 
entirely  conjectural  and  with  respect  to  which  no  means  exist 
of  ascertaining  even  approximately  the  probable  results,  cannot 
under  any  circumstances  be  brought  within  the  range  of  damages 
recoverable.  In  Georgia  the  rule  is  that  for  the  breach  of  an  im- 
plied warranty  of  the  merchantable  quality  of  seed  for  planting 
the  damages  are  limited  to  the  purchase-money  with  interest 
thereon  and  expenses  incurred  in  planting  and  preparing  for 
the  planting  of  the  seed.^  In  Tennessee  only  the  difference  in 
value  between  the  seed  purchased  and  that  delivered  can  be  re- 
covered.* The  cardinal  rule  in  relation  to  the  damages  to  be 
compensated  on  the  breach  of  a  contract  is  that  the  plaintiff 
must  establish  the  quantum  of  his  loss  by  evidence  from  which 
the  jury  will  be  able  to  estimate  the  extent  of  his  injury;  this 
will  exclude  all  such  elements  of  damage  as  are  incapable  of 
being  ascertained  by  the  usual  rules  of  evidence  to  a  reason- 

1  Treat  v.  Hiles,  81  Wis.  280,  50  N.  Pavey,  8  C.  &  P.  769;  Randall  v. 
W.  Rep.  896,  approved  in  Hitchcock  Raper,  96  Eng.  C.  L.  82:  Flick  v, 
V.  Supreme  Tent  Knights  of  Macca-  Weatheibee,  20  Wis.  392;  Wagstaff 
bees,  100  Mich.  40,  58  N.  W.  Rep.  640,  v.  Short  Horn  Dairy  Co.,  1  Cab.  &  E. 
and  in  Schumaker  v.  Heinemann,  99  324;  Phelps  v.  Eyria  Milling  Co.,  13 
Wis.  251,  74  N.  W.  Rep.  785.  Ohio  Dec.  692,  quoting  the  text.  See 

2  Piissinger  v.  Tiiorburn,  34  N.  Y.  Reiger  v.  Worth,  127  N.  C.  230,  37  S. 
634;  Wolcott   v.  Mount,  36  N.  J.    L.  E.  Rep.  217,  52  L.  R  A.  362. 

262.  13  Am.  Rep.  438;  Van  Wyck  v.  3  Butler  v.    Moore,  68   Ga.   780,  45 

Allen,  69  N.  Y.  61,  25  Am.  Rep.  136;  Am.  Rep.  508. 

White  V,  Miller,  71  N.  Y.  133;  Ferris  *  Hurley  v.  Buchi,  10  Lea,  346. 
V.  Comstock,  33  Conn.   513;  Page  v. 


196 


COMPENSATION. 


[§61. 


1112]  able  degree  of  certainty.^  Instances  of  such  uncertain 
damages  are  profits  expected  from  a  whaling  voyage  and  the 
gains  which  depend  in  a  great  measure  upon  chance;  they  arQ 
too  purely  conjectural  to  be  capable  of  entering  into  compen- 
sation for  non-performance  of  a  contract.-  For  a  similar  rea- 
son the  loss  of  the  value  of  a  crop  for  which  seed  had  been 
sown,  the  yield  of  which  would  depend  upon  the  contingencies 
of  weather  and  season,  would  be  excluded  as  incapable  of  esti- 
mation with  the  degree  of  certainty  which  the  law  exacts  in 
the  proof  of  damages.^  The  loss  of  profits  following  the 
breach  of  a  contract  to  publish  an  advertisement  have  been 
held  to  be  incapable  of  being  estimated;*  a  conclusion  which 
has  been  denied  in  a  recent  English  case.^     The  damages  re- 


1  Wolcott  V.  Mount.  36  N.  J.  L.  271, 
13  Am.  Rep.  438;  Brigham  v.  Carlisle, 
78  Ala,  243,  56  Am.  Rep.  28,  quoting 
the  text;  Hair  v.  Barnes,  26  111.  App. 
580. 

2  Wolcott  V.  Mount,  supra. 

3  Injuries  done  to  growing  crops 
must  be  estimated  with  reference  to 
their  condition  at  the  time  they  are 
inflicted.  Their  value  cannot  be 
proven  by  showing  the  worth  of  sim- 
ilar crops  which  matured.  Drake  v. 
Chicago,  etc.  R.  Co.,  63  Iowa,  302,  50 
Am.  Rep.  746,  19  N.  W.  Rep.  215;  Sa- 
bine, etc.  R.  Co.  V.  Joaciiim.  58  Tex. 
456;  Texas,  etc.  R.  Co.  v.  Young,  60 
id.  201;  G.,  C.  &  S.  F.  R.  v.  HoUiday. 
65  id.  512:  Jones  v.  George,  61  id.  345, 
48  Am.  Rep.  280,  56  Tex.  149;  Gres- 
ham  V.  Taylor,  51  Ala,  505.  Contra, 
Payne  v.  Railroad,  etc.  Co..  38  La. 
Ann.  164.  168,  58  Am.  Rep.  174. 

And  on  account  of  the  uncertainty 
involved  in  the  maturing  of  crops 
the  damage  sustained  by  injuries 
done  thereto  cannot  be  reduced  by 
efforts  to  show  what  might  have 
been  realized  if  another  crop  had 
been  planted  on  the  land  on  which 
that  injured  was  growing.  G.,  C.  & 
S.  F.  R.  V.  HoUiday,  supra. 

*  Tribune  Co.  v.  Bradshaw,  20  111. 
App.  1. 


The  damages  for  the  breach  of  an 
agreement  to  advertise  certain  rem- 
edies over  the  name  of  a  druggist 
who  gives  an  order  for  such  remedies 
are  too  speculative  to  permit  of  a 
recovery.  Stevens  v.  Gale,  113  Mich. 
680,  72  N.  W.  Rep.  5. 

^  The  plaintiff,  on  beginning  busi- 
ness as  a  ladies'  tailor,  made  a  con- 
tract with  the  defendant  for  the 
insertion  of  an  advertisement  in  a 
special  place  in  a  newspaper.  The 
publication  was  made  for  only  a 
part  of  the  stipulated  time.  The 
jury  was  instructed  as  to  the  meas- 
ure of  damages  according  to  the  rule 
of  Hadley  v.  Baxendale,  and  returned 
a  verdict  for  substantial  damages. 
Kennedy,  J.,  said:  The  defendant 
knew  the  object  of  the  advertise- 
ment. If  it  be  material,  I  think  he 
ought  to  be  taken  to  have  known  at 
the  time  that  if  he  broke  the  con- 
tract the  result  would  be,  as  a  nat- 
ural consequence,  loss  to  the  plaint- 
iff in  his  business.  The  plaintiff 
said  he  suffered  loss  to  the  extent  of 
£100,  which  he  attributed  to  the  loss 
of  the  advertisement.  No  sugges- 
tion was  made  by  the  defendant  as 
to  any  other  cause  for  the  loss  of 
business.  The  defendant  knew  that 
the  plaintiff  could  not  get  the  adver- 


§  62.]  REQUIRED    CERTAINTY    OF   DAMAGES.  197 

suiting  from  the  breach  of  a  warranty  of  the  breeding  qualities 
of  an  animal  are  too  contingent  and  uncertain  to  support  a  re- 
covery when  compensation  for  the  services  he  renders  is  to  be 
paid  only  when  the  animals  served  actually  foal.^  The  same 
is  true  of  the  reduction  of  the  number  of  members  in  a  given 
class  in  a  mutual  benefit  society,  the  effect  being  that  the 
amount  realized  by  the  beneficiary  under  a  certificate  is  thereby 
lessened.  What  the  result  would  have  been  if  the  chanere 
which  brought  about  such  reduction  had  not  been  made  is  a 
mere  matter  of  speculation.^  But  if  a  vessel  is  under  charter 
or  engaged  in  a  trade  the  earnings  of  which  can  be  ascertained 
by  reference  to  the  usual  schedule  of  freights  in  the  market, 
or  if  a  crop  has  been  sown  and  the  ground  prepared  for  culti- 
vation, and  the  complaint  is  that  because  of  the  inferior  qual- 
ity of  the  seed  a  crop  of  less  value  is  produced,  by  these  cir- 
cumstances the  means  would  be  furnished  to  enable  the  jury 
to  make  a  proper  estimate  of  the  injury  resulting  from  the 
loss  of  profits  of  this  character.' 

§  62.  Prospective  growth  of  orchard  aiul  of  animals.  An 
instructive  case  arose  in  Ohio  involving  this  question  of  un- 
certainty.*    The  action  was  on  a  contract  by  which  the  de- 

tisement  inserted  in  a  journal  of  3  Wolcott  v.  Mount,  36  N.  J.  L.  271, 
such  unique  position  in  such  a  place  13  Am.  Rep.  438;  Owners  of  The  Gra- 
ss he  had  contracted  to  give  him.  I  cie  v.  Owners  of  The  Argentino,  14 
am  of  opinion  that  the  evidence  of  App.  Cas.  519,  affirming  The  Argen- 
loss  of  business  was  proper  for  the  tino,  13  Prob.  Div.  191;  Bell  v.  Rev- 
consideration  of  the  jury  in  assess-  nolds,  78  Ala.  511,  56  Am.  Rep.  52, 
ing  tlie  damages.  Marcus  v.  Myers,  quoted  from  in  note  to  preceding 
11  T.  L.  Rep.  327  (1895).  section. 

Where  there  was  a  breach   of  a  *  Rhodes  v.  Baird,  16  Ohio,  573.  'It 

contract  to  permit  a   party  to  put  is  said  of  this  case  that  if  it  goes  so 

up  signs  at    drinking    stations    on  far  as  to  hold  that  deprivation  of 

the  grounds  of  the  Columbia  expo-  future  profits  cannot  be  ground  for 

sition    advertising    a    water    filter,  damages,  it  is  not  in  accord  with 

testimony  of  qualified  witnesses  giv-  the  current  of  authority.     See  §  107. 

ing  opinions  as  to  the  value  of  the  The  case  in  which  this  observation 

right  under  that  contract  was  ad-  was  made  ruled  that  evidence  of  the 

niissible.     World's  Columbian  Expo-  value  of  an  orchard  at  the  time  of 

sition    Co.   v.   Pasteur-Chamberland  trial,  in  the  prospective  profits  of 

Filter  Co.,  82  III.  App.  94.  which   the  plaintiff  was  interested, 

^  Connoble   v.  Clark,  38  Mo.  App.  was  admissible,  and  it  was  not  to  be 

476.  presumed  in  favor  of  a  wrong-doer 

2  Supreme  Lodge  Knights  of  Pyth-  that  such   value   will   become   less. 

ias  V.    Knight,  117   ind.  489,  500,  20  Slioemaker  v.  Acker,  110  Cal.  239,  4a 

N.  E.  Rep.  479,  3  L.  R.  A.  409.  Pac.  Rep.  62. 


19S  COMPENSATION.  [§   G2. 

fendant  agreed  to  make  a  lease  to  the  plaintiff  for  the  term  of 
ten  years  of  certain  lands  on  which  to  plant  and  cultivate  a 
peach  orchard.  The  breach  consisted  in  the  failure  to  make 
a  lease  and  in  defendant  causing  the  plaintiff,  within  two  years 
from  his  taking  possession,  and  after  the  peach  trees  were 
planted,  to  be  evicted  from  the  premises.  On  the  trial  the 
plaintiff  was  permitted  to  give  evidence  of  the  probable  profits 
that  might  in  the  future  be  realized  from  the  orchard,  judging 
from  the  number  of  crops  and  the  prices  of  peaches  in  th& 
county  for  the  last  ten  or  fifteen  years.  This  testimony  was 
held  by  the  appellate  court  to  be  incompetent,  because  too  un- 
certain and  speculative:  "To  the  extent  that  the  damages  de- 
pended on  the  loss  of  the  use  of  the  propertj',  its  market  value 
at  the  time  of  the  eviction,  subject  to  the  performance  of  the 
contract  on  the  part  of  the  plaintiff,  furnished  the  standard 
for  assessing  the  damages.  If  it  had  no  general  market  value 
its  value  should  have  been  ascertained  from  the  witnesses 
[113]  whose  skill  and  experience  enabled  them  to  testify  di- 
rectly to  such  value  in  view  of  the  hazards  and  chances  of  the 
business  to  which  the  land  was  to  be  devoted.^  This  would 
only  be  applying  the  same  principle  for  ascertaining  the  value 
of  property  which,  by  reason  of  its  limited  use,  had  no  mar- 
ket value,  which  is  adopted  with  reference  to  proving  the 
present  worth  of  the  future  use  of  property  which,  by  reason 
of  its  being  in  greater  demand,  has  a  market  value.  In  the 
case  of  property  of  the  former  description,  the  range  for  ob- 
taining testimony  as  to  the  value  is,  of  course,  more  circum- 
scribed than  it  is  in  the  case  of  property  of  the  latter  descrip- 
tion. But  in  either  case  the  proving  of  the  value  of  the 
property  by  witnesses  having  competent  knowledge  of  the 
subject  is  more  certain  and  direct  than  to  undertake  to  do  so 
by  submitting  to  the  jury,  as  grounds  on  which  to  make  up 
their  verdict,  the  supposed  future  profits.  The  profits  testified 
to  .  .  .  were  remote  and  contingent,  depending  on  the 
character  of  the  future  seasons  and  markets,  and  a  variety  of 
other  causes  of  no  certain  and  uniform  operation."  Where 
the  plaintiff  sought  to   recover  the  value  of  his  stock  in  a 

1  Gritfin  v.  Colver,  16  N.  Y.  489;  Giles  v.  O'Toole,  4  Barb.  261;  Newbrough 
V.  Walker.  8  Gratt.  16,  56  Am.  Dec.  127. 


§  03.]  KEQUIRED    CERTAINTY    OF    DAMAGES.  199 

green-house,  which  was  damaged  or  destroyed  by  a  defective 
heating  apparatus,  he  was  permitted  to  show  the  value  of  the 
plants  by  testifying  as  to  the  number  of  flowers  cut  from  them 
the  year  previous,  he  having  had  long  experience  in  cultivat- 
ing plants  by  artificial  heat  and  knowing  how  many  flowers 
could  be  produced  from  a  plant.'  The  damages  resulting 
from  the  failure  to  furnish  an  agreed  number  of  steers  to  be 
cared  for  and  sold  at  a  profit,  the  plaintiff  to  be  compensated 
for  his  services  by  a  share  of  the  profits  resulting  from  their 
improvement  in  condition,  are  not  too  uncertain.  In  the  ab- 
sence of  any  agreement  as  to  the  weight  or  age  of  the  steers  it 
was  assumed  that  they  were  such  as  were  ordinarily  purchased 
for  feeding  purposes  in  the  community.^ 

g  63.  Profits  of  special  contracts.  The  liability  for  the 
profits  which  w^ould  have  resulted  from  the  performance  of  a 
contract  is  co-extensive  with  the  power  to  contract;  and  the 
government  is  liable  therefor  to  the  same  extent  as  an  indi- 
vidual.^ The  right  of  a  party  to  recover  the  profits  he  would 
have  made  in  fulfilling  a  contract  depends  solely  upon  the  fault 
of  the  other  party  to  it,  and  plaintiff's  ability  to  show  that 
the  profits  claimed  were  reasonably  certain  to  have  been  real- 
ized but  for  the  wrongful  act  complained  of.*  It  is  not  an  in- 
superable objection  to  their  recovery  that  they  cannot  be 
directly  and  absolutely  proved.  The  general  uncertainty  at- 
tending human  life  and  the  special  contingencies  as  to  its  du- 
ration on  account  of  the  physical  condition  of  an  individual 
whose  rights  are  involved  do  not  prevent  the  recovery  of 
damages  for  causing  his  death  or  injuring  his  person.  An 
agreement  by  one  person  to  support  another  during  life  is  an 
entire  continuing  contract  upon  the  total  breach  of  which  the 
obligor  is  liable  for  full  and  final  damages  estimated  to  the 

1  Laufer  v.  Boynton  Furnace  Co.,  81  Wis.  280,  50  N.  W.  Rep.  896;  Amer- 
84  Hun,  311,  32  N.  Y.  Supp.  363.  icau  Contract  Co.  v.  Bullen  Bridge 

2  Rule  V.  McGregor, Iowa,  — ,  Co.,  29  Ore.  549,  561,  46  Pac.  Rep.  138, 

90    N.   W.   Rep.    811;    Schrandt    v.  citing  the  text;  Rule  v.  McGregor, 

Young,  89  N.  W.  Rep.  607  (Neb.).  Iowa,  ,  90  N.  W.  Rep.  811; 

3  Danolds  v.  State,  89  N.  Y.  36,  42  Schrandt  v.  Young,  89  N.  W.  Rep.  607 
Am.  Rep.  277.  (Neb.):  Farmers'  Loan  &  Trust  Ca 

*  Schumaker  v.  Heinemann,  99  Wis.     v.  Eaton,  114  Fed.  Rep.  14,  51  C.  C.  A. 
251, 74  N.  W.  Rep.  785;  Treat  v.  Hiles,    640. 


200 


COMPENSATION. 


[§63. 


time  the  person  who  was  to  bo  supported  would  probably  die.' 
It  is  the  constant  practice  to  so  assess  damages  in  actions  to 
recover  for  personal  injuries.  In  the  nature  of  things  where 
performance  has  been  prevented  the  proof  of  profits  cannot 
be  direct  and  absolute.  The  injured  party  must,  however,  in- 
troduce evidence  legally  tending  to  establish  damage  and  suf- 
ficient to  warrant  a  jury  in  coming  to  the  conclusion  that  the 
damages  they  find  have  been  sustained;  but  no  greater  degree 
of  certainty  in  this  proof  is  required  than  of  any  other  fact 
which  is  essential  to  be  established  in  a  civil  action.  If  there 
is  no  more  certain  method  of  arriving  at  the  amount  the  in- 
jured party  is  entitled  to  submit  to  the  jury  the  particular 
facts  which  have  transpired  and  to  show  the  whole  situation 
which  is  the  foundation  of  the  claim  and  expectation  of  profit, 
so  far  as  any  detail  offered  has  a  legal  tendency  to  support 
such  claim.^     The  law  does  not  require  that  the  party  seeking 


iSchell  V.  Plumb,  55  N.  Y.  592; 
First  Nat.  Bank  v.  St.  Cloud,  73  Minn. 
219,  75  N.  W.  Rep.  1054;  Ironton 
Land  Co.  v.  Butchart,  73  Minn.  39, 
75  N.  W.  Rep.  749;  Morrison  v.  Mc- 
Atee,  23  Ore.  530,  32  Pac.  Rep.  400; 
Freeman  v.  Fogg.  82  Me.  408,  19  Atl. 
Rep.  907. 

2  Griffin  v.  Colver,  16  N.  Y.  489; 
Giles  V.  O'Toole,  4  Barb.  261;  New- 
brough  V.  Walker,  8  Gratt.  16,  56 
Am.  Dec.  127;  Taylor  Manuf.  Co.  v. 
Hatcher  Manuf.  Co..  39  Fed.  Rep.  440, 
446,  3  L.  R.  A.  587,  quoting  the  text; 
Brewing  Co.  v.  McCann,  118  Pa.  314, 
12  Atl.  Rep.  445;  Dart  v.  Laimbeer, 
107  N.  Y.  664,  14  N.  E.  Rep.  291; 
Wakeman  v.  Wheeler  &  W.  Manuf. 
Co.,  101  N.  Y.  205,  217,  54  Am.  Rep. 
676,  4  N.  E.  Rep.  264,  quoting  the  text; 
Shoemaker  v.  Acker,  116  Cal.  239,  48 
Pac.  Rep.  62;  Lavens  v.  Lieb,  12  App. 
Div.  487. 42  N.  Y.  Supp.  901 ;  Dickinson 
V.  Hart,  1 42  N.  Y.  183, 36  N.  E.  Rep.  801 ; 
United  States  Trust  Co.  v.  O'Brien, 
143  N.  Y.  284,  38  N.  E.  Rep.  266;  Skin- 
ner  v.  Shew.  [1894]  2  Ch.  581. 

The  difficulty  of  fairly  estimating 
the  injury  done  an  unknown  author 
by  the  breach  of  a  contract  to  pub- 


lish his  first  book  is  not  necessarily 
insuperable.  Gale  v.  Leckie,  2  Stark. 
107;  Bean  v.  Carleton,  51  Hun,  318, 
4  N.  Y.  Supp.  61.  Compare  Bean  v. 
Carleton,  12  N.  Y.  Supp.  519.  Nor  the 
net  proceeds  which  might  have  been 
derived  from  the  sale  of  tickets  to 
hear  a  noted  lecturer.  Savery  v.  In- 
gersoll,  46  Hun,  176.  This  is  a  very 
doubtful  proposition  in  the  absence 
of  proof  of  an  advance  sale  of  tickets. 
See  Bernstein  v.  Meech,  130  N.  Y.  354, 
29  N.  E.  Rep.  255,  and  §  60.  Nor  the 
damages  resulting  to  a  hotel  from 
the  violation  of  a  contract  to  main- 
tain a  depot  at  a  certain  point.  Hous- 
ton, etc.  R.  V.  Molloy,  64  Tex.  607. 
But  it  is  otherwise  with  the  breach 
of  a  contract  to  furnish  a  mule  for 
the  cultivation  of  laud;  in  such  case 
the  damage  resulting  to  crops  is  too 
uncertain.  Harper  v.  Weeks,  89  Ala. 
577,  8  So.  Rep.  39;  Luce  v.  Hoising- 
ton,  56  Vt.  436. 

The  damages  following  the  breach 
of  a  contract  to  issue  an  annual  rail- 
way pass  during  the  life  of  a  party 
are  not  too  uncertain  to  be  recovered. 
Curry  v.  Kansas,  etc.  R.  Co.,  58  Kan. 
6,  48  Pac.  Rep.  579. 


^G3.] 


KEQUIRED    CERTAINTY    OF    DAMAGES. 


201 


to  recover  for  gains  prevented  shcill  furnish  data  from  which 
they  can  be  mathematically  computed.  "  When  one  breaks  a 
contract  which  the  other  party  has  partly  performed,  and  the 
violator  then  performs  the  work  himself,  from  which  he  reaps 
the  profits  which  the  (fther  party  might  have  made,  he  cannot 
escape  liability  for  damages  if  such  other  party  can  show  the 
profits  made  while  he  was  executing  it,  and  the  benefits  re- 
ceived from  its  subsequent  completion.^ 


'  Hitchcock  V.  Supreme  Tent 
Knights  of  Maccabees,  100  Mich.  40, 
58  N.  W.  Rep.  C40. 

Where  the  plaintiff  was  permitted 
to  sink  but  one  of  five  wells  which 
he  had  contracted  to  sink  not  less 
than  two  hundreJ  feet  in  depth  and 
five  hundred  feet  if  practicable  and 
jiossible  in  the  defendant's  judg- 
ment, it  was  sufficient  to  show  as  a 
basis  for  damages  what  profit  was 
made  in  sinking  other  wells  in  the 
vicinity  of  an  average  depth  of  four 
hundred  feet.  Sanford  v.  East  River- 
side Irrigation  District,  101  Cal.  275, 
o5  Pac.  Rep.  805. 

If  the  trial  does  not  occur  until 
long  after  the  cause  of  action 
arose  and  the  contract  contemplated 
a  long  period  for  its  performance, 
the  plaintiff  may  show  the  facts  as 
they  then  exist.  Shoemaker  v.  Acker, 
1 1(5  Cal.  239, 48  Pac.  Rep.  62.  See  §  107. 

There  are  some  cases  in  Michigan 
which  are  not  in  harmony  with  the 
principle  stated  in  the  text  nor  with 
tlie  current  of  modern  authority.  In 
McKiunon  v.  McEwan,  48  Mich.  106, 
there  was  a  breach  of  a  contract  to 
furnish  boilers  at  the  time  agreed 
upon.  The  purchaser  alleged  that 
the  boilers  were  to  be  used  in  his 
steam  mill  and  salt  block  for  running 
and  operating  the  same;  that  they 
were  the  only  boilers  he  would  have 
to  furnish  steam;  that  the  capacity 
of  his  salt  block  was  two  hundred 
barrels  per  day;  that  without  the 
boilers  he  could  not  manufacture  any 
salt, —  all  of  which  facts  were  known 


to  the  vendor.  The  purchaser  sought 
to  recoup,  as  damages  resulting  from 
inability  to  prosecute  his  business, 
what  he  might  have  made  from  the 
use  of  the  boilers.  The  court,  by 
Marston,  J.,  said:  "In  the  present 
case  the  contract  is  silent  as  to  the 
particular  business  which  was  to  be 
carried  on  in  the  use  of  these  boilers. 
That,  it  is  said,  was  well  known  to 
both  the  contracting  parties.  But  ad- 
mitting all  this,  would  not  the  profits 
to  be  made  in  the  manufacture  of  salt 
be  dependent  upon  many  other  things 
besides  the  performance  of  this  con- 
tract—  a  necessary  supply  of  fuel, 
which  the  defendant  claims  to  have 
had,  of  brine,  of  machinery  for  pump- 
ing the  same,  of  proper  vats,  of  grain- 
ers,  pipes  and  other  things  necessary 
to  carry  on  successfully  and  profit- 
ably the  manufacture  of  that  com- 
modity, the  certainty  or  probability 
even,  even  if  all  these  things  did  exist 
and  were  in  proper  order,  of  their  re- 
maining in  like  condition?  But  sup- 
posing the  party  had  completed  the 
boilers  and  had  put  them  in  place, 
but  liad  failed  to  make  all  the  neces- 
sary connections;  no  use  could  be 
made  of  the  boilers  in  such  a  con- 
dition; would  the  damages  be  the 
same  ?  In  other  words,  •  where  the 
chattel  was  itself  only  part  of  some- 
thing else,  which* was  rendered  use- 
less for  want  of  it,  should  the  profit 
of  the  entire  chattel  be  recovered? 
If  a  vessel  were  delayed  in  port  for 
want  of  a  bowsprit,  should  a  loss  of 
freight,   to  the  amount  perhaps  of 


202 


COMPENSATION. 


[§64. 


§  61.  Same  subject;  Masterton  v.  Mayor.  In  the  leading 
[114]  case  inNew  York,^  which  has  been  extensively  cited  and 
approved,  the  plaintiffs  agreed  to  furnish  and  deliver  marble 
wrought  in  a  particular  manner,  from  a  designated  quarry,  for 


thousands  of  pounds,  be  obtained  in 
damages?'  Very  many  questions 
similar  to  this  might  be  put,  and  if 
the  I'ule  contended  for  by  plaintiff 
in  error  were  to  prevail,  in  many 
cases  the  breach  of  a  very  simple 
contract,  or  failure  in  some  part, 
might  bring  ruin  upon  the  parties 
failing,  where  no  such  loss  was  con- 
templated. The  adoption  of  such  a 
rule  would  be  extremely  dangerous. 
If  such  consequences  are  to  follow, 
it  is  much  better  that  the  parties, 
when  contracting,  expressly  provide 
for  such  enlarged  responsibility. 
Where  the  damages  claimed,  as  in 
this  case,  largely  exceed  the  contract 
price  of  the  materials  and  labor  to 
be  furnished  and  performed  by  the 
party  in  default,  we  may  well  ques- 
tion the  justice  of  such  a  conclusion 
in  the  absence  of  a  clear  showing 
that  such  a  result  was  anticipated 
by  the  parties." 

In  AUis  V.  McLean,  48  Mich.  428, 
12  N.  W.  Rep.  640  (cited  approvingly 
in  Williams  v.  Island  City  Milling 
Co.,  25  Ore.  573.  590,  37  Pac.  Rep.  49), 
the  vendor  sold  machinery  for  use 
in  connection  with  a  saw-mill.  When 
the  contract  was  made  he  was  noti- 
fied that  one  condition  of  the  pur- 
chase was  that  the  machinery  was 
to  be  received  on  a  day  certain,  and 
notice  was  given  that  for  every  day's 
delay  the  purchaser  would  be  dam- 
aged $150.  Cooley,  J.,  speaking  for 
the  court,  said:  "The  profits  of  run- 
ning a  saw-mill  are  proverbially  un- 
certain, indefinite   and    contingent. 


They  depend  upon  many  circum- 
stances, among  which  are  capital, 
skill,supplyof  logs,  supply  and  steadi- 
ness of  labor;  and  one  man  may  fail 
while  another  prospers,  and  the  same 
man  may  fail  at  one  time  and  pros- 
per at  another,  though  the  prospect- 
ive outlook  seems  equally  favorable 
at  both  times.  Estimates  of  profits 
seldom  take  all  contingencies  into 
the  account,  and  are  therefore  sel- 
dom realized;  and  if  damages  for 
breach  of  contract  were  to  be  de- 
termined on  estimates  of  probable 
profits,  no  man  could  know  in  ad- 
vance the  extent  of  his  responsibil- 
it}'.  It  is  therefore  very  properly 
held,  in  cases  like  the  present,  that 
the  party  complaining  of  a  breach  of 
contract  must  point  out  elements  of 
damage  more  certain  and  more  di- 
rectly traceable  to  the  injury  than 
prospective  profits  can  be.  Fleming 
V.  Beck,  48  Pa.  309;  Pittsburg  Coal 
Co.  V.  Foster,  59  id.  365;  Strawn  v. 
Coggswell,  28  111.  457;  Frazer  v. 
Smith,  60  id.  145;  Howe  Machine  Co. 
V.  Bryson,  44  Iowa,  159.  But  this 
case  is  thought  to  be  different  be- 
cause here  the  fair  rental  value  of 
the  mill  is  proved,  and  it  is  said  that 
this  was  certainly  lost.  But  we  do 
not  know  that  that  was  the  case.  If 
tlie  mill  had  been  in  condition  to 
rent  at  that  time,  there  may  have 
been  no  customer  for  it  on  terms  the 
owner  would  have  consented  to 
grant;  and  if  customers  were  abun- 
dant and  satisfactory,  it  cannot  be 
assumed  that  the  whole  rental  value 


1  Masterton  v.  Mayor,  7  Hill,  61. 
See  Jones  v.  Judd,  4  N.  Y.  411;  Dan- 
olds  v.  State,  89  id.  36,  42  Am.  Rep. 
277;  Taft  v.  Tiede,  55  Iowa,  370,  7  N. 


W.  Rep.  617;  Bernstein  v.  Meech,  130 
N.  Y.  354,  29  N.  E.  Rep.  255;  James  H. 
Rice  Co.  v.  Penn  Plate  Glass  Co.,  88 
111.  App.  407. 


§C4.J 


EEQUIKED    CERTAINTY    OF    DAMAGES. 


2Uc 


a  public  building.  The  quantity  necessary  to  fill  their  contract 
was  eighty-eight  thousand  eight  hundred  and  nineteen  feet,  for 
which  they  were  to  be  paid  a  specified  price.  They  afterwards 
contracted  with  the  proprietors  of  that  quarry  for  the  marble. 


is  lost  when  a  mill  stands  idle.  The 
vveai"  and  tear  of  machinery  and 
buildings  in  use  is  something,  and  it 
is  not  improbable  that  the  landlord 
would  take  this  among  other  things 
into  account  in  determining  what 
should  be  the  rent.  But  in  this  case 
it  does  not  appear  that  rent  was  lost 
or  could  have  been  lost,  for  it  is  not 
shown  that  defendants  desired  to 
rent  or  would  have  consented  to  do 
so  if  a  customer  had  offered."  To 
the  same  effect  are  Talcott  v.  Crip- 
pen,  52  Mich.  633,  18  N.  W.  Rep.  392; 
Petrie  v.  Lane,  67  Mich.  454,  35  N.  W. 
Rep.  70.  Talcott  v.  Crippen,  supra, 
is  limited  in  Leonard  v.  Beaudry,  68 
Mich.  318,  36  N.  W.  Rep.  88;  Fell  v. 
Newberry.  106  Mich.  542,64  N.  W.  Rep. 
474;  and  Barrett  v.  Grand  Rapids 
Veneer  Works,  110  Mich.  6,  67  N.  W. 
976.  See  First  Nat.  Bank  v.  Thurman, 
69  Iowa,  693,  25  N.  W.  Rep.  909.  Allis 
V.  McLean,  supra,  is  approved  in 
Moulthrop  V.  Hyett,  105  Ala.  493,  17 
So.  Rep.  32,  and  followed  in  John 
Hutchinson  Manuf.  Co.  v.  Pinch,  91 
Mich.  156,  51  N.  W.  Rep.  930.  The 
latter  modifies  Allis  v.  McLean  as  to 
the  recovery  of  rental  value. 

It  is  conceded  by  the  writer  of  the 
opinion  in  McKinnon  v.  McEwan, 
supra,  that  profits  vphich  would 
arise  as  the  direct  result  of  work 
done  at  the  contract  price  may  be 
recovered,  and  that  they  may  be  re- 
covered in  cases  of  torts.  Both  these 
propositions  are  established  in  Mich- 
igan. Burrell  v.  New  York,  etc. 
Salt  Co.,  14  Mich.  39:  Allison  v. 
Chandler,  11  id.  558;  Mueller  v. 
Bethesda  Spring  Co.,  88  Mich.  390,  50 
N.  W.  Rep.  319;  Oliver  v.  Perkins, 
92  Mich.  304,  52  N.  W.  Rep.  609.  ^It  is 
also  admitted  that  there  is  another 


class  of  cases,  within  which  the  case 
before  the  court  came,  where  the 
authorities  differ  as  to  the  right  of 
the  injured  party  to  recover  such 
profits  as  were  claimed.  The  infer- 
ence from  these  statements  is  that 
the  court  did  not  intend  to  hold  that 
profits  are  never  recoverable.  This 
is  made  more  clear  by  the  observa- 
tions of  Cooley,  J.,  in  Ailis  v.  McLean, 
supra.  But  it  is  not  clear  from  both 
cases  that  their  result  is  not  to  estab- 
lish the  rule  that  profits  are  not  re- 
coverable for  the  breach  of  a  con  tract, 
unless  it  is  so  stipulated  therein  or 
the  article  which  is  the  subject  of 
the  contract  is  one  which  "at  all 
times  finds  a  ready  sale  at  a  current 
market  price,"  or  unless  contracts 
are  dependent  one  upon  another,  in 
which  case,  if  the  second  contract 
is  broken,  "the  loss  of  definite  and 
fixed  profits  under  the  other  is  a 
necessary  and  immediate  conse- 
quence." Allis  V.  McLean,  supra. 
See  Industrial  Works  V.Mitchell,  114 
Mich.  29,  72  N.  W.  Rep.  25. 

In  McKinnon  v.  McEwan,  Mars- 
ton,  J.,  said  that  in  Hadley  v.  Baxen- 
dale  "the  court  held  the  loss  of 
profits  while  the  mill  was  kept  idle 
could  not  be  recovered,  because  it 
did  not  appear  the  carrier  knew  that 
the  want  of  the  shaft  was  the  only 
thing  which  was  keeping  the  mill 
idle.  The  court  also  intimated  that 
a  different  rule  might  have  pre- 
vailed had  the  facts  been  fully 
known  to  the  carrier.  Of  course,  no 
such  question  was  before  the  court 
in  that  case,  and  intimations  given 
upon  facts  tliat  may  perhaps  appear 
in  some  future  case  are  not  usually 
relied  upon."  The  opinion  lays  stress 
on  the  fact  that  the  contract  was 


204 


COMPENSATION. 


[§  64. 


When  the  plaintiffs  had  delivered  fourteen  thousand  seven 
hundred  and  seventy-nine  feet  and  had  on  hand  at  the  quarry 
three  thousand  three  hundred  and  eight  feet  ready  for  deliv- 
ery,  the  defendants  suspended  the  performance  of  the  con- 
tract without  any  fault  of  the  plaintiffs.  They  sought  to  re- 
cover the  profits  of  the  contract  and  also  the  damages  to 
which  they  were  subjected  for  the  consequent  violation  of 


silent  as  to  the  business  to  be  carried 
on  with  the  boilers  which  were  to  be 
furnished,  and  the  knowledge  of  the 
parties  was  not  regarded  as  material. 
It  is  conceded  by  Cooley,  J.,  in  Allis 
V.  McLean,  that  the  machinery  was 
purchased  with  a  view  to  the  profits 
which  its  use  was  expected  to  pro- 
duce, and  that  "the  contract"  to 
furnish  it  "would  not  be  entered 
into  if  the  profits  were  not  expected 
and  counted  upon."  It  necessarily 
results,  according  to  the  general  rule 
established  by  the  authorities,  that 
whei'e  the  vendor  has  knowledge  of 
the  use  to  which  the  article  he  sells 
is  to  be  put,  though  the  written  con- 
tract is  silent,  that  he  contemplates 
the  injury  which  the  vendee  will 
sustain  from  his  failure  to  comply 
with  his  agreement.  The  test  which 
Judge  Marston  lays  down  that  "the 
profits  to  be  recovered  must  not  be 
conjectural  or  speculative  in  their 
nature  or  dependent  upon  the 
chances  of  business  or  other  contin- 
gencies, and  must  have  reference  to 
the  nature  of  the  contract  and  breach 
complained  of,"  is  as  to  the  second 
alternative  too  latitudinarian,  and, 
strictly  applied,  is  not  consistent 
with  the  recoveiy  of  profits  in  any 
case.  Profits  are  the  result  of  busi- 
ness; the  desire  for  them  is  the  cause 
of  business.  It  is  true  that  profits 
will  not  be  recoverable  as  a  measure 
nor  as  an  element  of  damages  if 
they  are  purely  conjectural,  nor  if 
they  are  .speculative  in  th'^  sense  of 
depending  on  contingencies  whicli 
are  possible  and  not  probable.     The 


chances  of  business  include  many 
things,  both  sufficiently  certain  as  a 
basis  for  the  administration  of  jus- 
tice and  too  uncertain  therefor.  The 
authorities  cited  in  the  discussion 
devoted  to  this  subject,  and  espe- 
cially the  more  recent  ones,  are  op- 
posed to  the  view  taken  by  the 
Michigan  court  in  both  the  cases 
considered.  The  uncertainty  con- 
nected with  the  profits  claimed  was 
magnified.  Damages  resulting  from 
the  discontinuance  or  interruption 
of  an  established  business  are  proved 
with  sufficient  certainty  by  showing 
what  the  profits  of  the  business 
have  been.  See  Oliver  v.  Perkins,  92 
Mich.  304,  53  N.  W.  Rep.  609.  Of 
course,  if  there  has  been  a  change  in 
the  conditions  it  is  taken  into  ac- 
count. Cases  in  which  damages  are 
allowed  for  the  breach  of  partner- 
ship agreements  are  an  example. 
There  are  three  recent  and  well  con- 
sidered cases  in  Wisconsin  which 
are  in  harmony  with  the  writer's 
view  of  the  law,  and  which  are  not 
materially  difl'erent  in  their  facts 
from  the  Michigan  cases  considered. 
Jones  V.  Foster,  67  Wis.  296,  30  N.  W. 
Rep.  697;  Cameron  v.  White,  74  Wis. 
425,  43  N.  W.  Rep.  155,  5  L.  R.  A.  493; 
Treat  v.  Hiles.  81  Wis.  280,  50  N.  W. 
Rep.  896. 

The  profits  lost  to  a  mill  owner  be- 
cause of  the  non-delivery  of  logs  as 
contracted  for,  to  be  manufactured 
into  lumber  at  a  fixed  price,  are  not 
too  speculative.  Barrett  v.  Grand 
Rapids  Veneer  Works,  110  Mich.  6, 
67  N.  W.  Rep.  976. 


§  Gi.]  KEQUIKED    CEKTAIXTY    OF    DAMAGES.  205 

their  subcontract  for  the  marble  at  the  quarry,  Kelson,  C.  J., 
said:  "  It  is  not  to  be  denied  that  there  are  profits  or  gains 
derivable  from  a  contract  which  are  uniformly  rejected  as  too 
contingent  and  speculative  in  their  nature  and  too  dependent 
upon  the  fluctuation  of  the  markets  and  chances  of  business 
to  enter  into  a  safe  or  reasonable  estimate  of  damages.  Thus 
any  supposed  successful  operation  the  party  might  have  made 
if  he  had  not  been  prevented  from  realizing  the  proceeds  of 
the  contract  at  the  time  stipulated  is  a  consideration  not  to 
be  taken  into  the  estimate.  Besides  the  uncertain  and  con- 
tingent issue  of  such  an  operation  in  itself  considered  it  has 
no  legal  or  necessary  connection  with  the  stipulations  between 
the  parties  and  cannot,  therefore,  be  presumed  to  have  en- 
tered into  their  consideration  at  the  time  of  contracting.  It 
has  accordingly  been  held  that  the  loss  of  any  speculation  or 
enterprise  in  which  a  party  may  have  embarked,  relying  on 
the  proceeds  to  be  derived  from  the  fulfillment  of  an  existing 
contract,  constitutes  no  part  of  the  damages  to  be  recovered 
in  case  of  breach.^  So,  a  good  bargain  made  by  a  vendor,  in 
anticipation  of  the  price  of  the  article  sold ;  or  an  advantageous 
contract  of  resale  made  by  a  vendee  confiding  in  the  vendor's 
promise  to  deliver  the  article,  are  considerations  excluded 
as  too  remote  and  contingent  to  affect  the  question  of  dam- 
ages. .  .  .  When  the  books  and  cases  speak  of  the  profits 
anticipated  from  a  good  bargain  as  matters  too  remote  and 
uncertain  to  be  taken  into  account  in  ascertaining  the  true 
measure  of  damages  they  usually  have  reference  to  de-  [115] 
pendent  and  collateral  engagements  entered  into  on  the  faith 
and  in  expectation  of  the  performance  of  the  principal  con- 
tract. The  performance  or  non-performance  of  the  latter  may, 
and  doubtless  often  does,  exert  a  material  influence  upon  the 
collateral  enterprises  of  the  party;  and  the  same  may  be  said 
as  to  his  general  affairs  and  business  transactions.  But  the  in- 
fluence is  altogether  too  remote  and  subtle  to  be  reached  by 
legal  proof  or  judicial  investigation.  And  besides,  the  conse- 
quences, when  injurious,  are  as  often,  perhaps,  attributable  to 
the  indiscretion  and  fault  of  the  party  himself  as  to  the  con- 
duct of  the  delinquent  contractor.     His  condition,  in  respect 

1  Shoemaker  v.  Acker,  116  Cal.  239,  245,  48  Pac  Rep.  62.    See  §  47. 


•20G  COMPENSATION.  [§  64. 

to  the  measure  of  damages,  ought  not  to  be  worse  for  having 
failed  in  his  engagement  to  a  person  whose  affairs  are  embar- 
rassed than  if  it  had  been  made  with  one  in  prosperous  or  af- 
fluent circumstances.^  But  profits  or  advantages  which  are  the 
direct  and  immediate  fruits  of  the  contract  entered  into  be- 
tween the  parties  stand  upon  a  different  footing.  These  are 
part  and  parcel  of  the  contract  itself,  entering  into  and  con- 
stituting a  portion  of  its  very  elements ;  something  stipulated 
for,  the  right  to  the  enjo3'ment  of  which  is  just  as  clear  and 
plain  as  to  the  fulfillment  of  any  other  stipulation.  They  are 
presumed  to  have  been  taken  into  consideration  and  deliberated 
upon  before  the  contract  was  made,  and  formed,  perhaps,  the 
only  inducement  to  the  arrangement.^  The  parties  may  have 
entertained  different  opinions  concerning  the  advantages  of 
the  bargain,  each  supposing  and  believing  that  he  had  the  best 
of  it ;  but  this  is  mere  matter  of  judgment,  going  to  the  for- 
mation of  the  contract,  for  which  each  has  shown  himself  will- 
ing to  take  the  responsibility,  and  must,  therefore,  abide  the 
hazard."  Applying  these  principles  to  the  case  the  learned 
judge  said:  "  The  plaintiffs' claim  is  substantially  one  for  not 
accepting  goods  bargained  and  sold ;  as  much  so  as  if  the  sub- 
ject-matter of  the  contract  had  been  bricks,  rough  stones  or 
other  article  of  commerce  used  in  the  process  of  building.  The 
only  difficulty  or  embarrassment  in  applying  the  general  rule 
grows  out  of  the  fact  that  the  article  in  question  does  not  ap- 
pear to  have  any  well-ascertained  market  value.  But  this  can- 
not change  the  principle  which  must  govern,  but  only  [116] 
the  mode  of  ascertaining  the  actual  value,  or  rather  the  cost  to 
the  party  producing  it.  AVhere  the  article  has  no  market 
value  an  investigation  into  the  constituent  elements  of  the 
cost  to  the  party  who  has  to  furnish  it  become  necessary,  and 
that,  compared  with  the  contract  price,  will  afford  the  meas- 

1  Dom.,  B.  3,  tit.  5,  §  2,  art.  4.  Treat  v.  Hiles,  81  Wis.  280,  50  N.  W. 

2  Shoemaker  v.  Ackei",  supra,qnot-  Rep.  896;  Anvil  Mining  Co.  v.  Burn- 
ing the  text;  Goldhammer  v.  Dyer,  ble,  153  U.  S.  540,  14  Sup.  Ct.  Rep. 
7  Colo.  App.  29,  42  Pac.  Rep.  177;  876;  Farmers'  Loan  &  Trust  Co.  v. 
Paola  Gas  Co.  v.  Paola  Glass  Co.,  56  Eaton,  114  Fed.  Rep.  14,  51  C.  C.  A. 
Kan.  614,  633,  44  Pao.  Rep.  631,  54  640;  Owensboro-Harrison  Telephone 
Am.  St.  598;  Hirschhorn  v.  Bradley,  Co.  v.  Wisdom,  23  Ky.  L.  Rep.  97,  63 
Iowa,   — ,  90  N.   W.  Rep.  592;  S.  W.  Rep.  529. 


§  64.]  EEQUIRED   CERTAINTY    OF    DAMAGES.  207 

ure  of  damages.  The  jury  will  be  able  to  settle  this  upon  evi- 
dence of  the  outlays,  trouble,  risk,  etc.,  which  enter  into  and 
make  up  the  cost  of  the  article  in  the  condition  required  by  the 
■contract  at  the  place  of  delivery.  ...  It  has  been  ar- 
gued that,  inasmuch  as  the  furnishing  of  the  marble  would 
have  run  through  a  period  of  five  years  —  of  which  about  one 
year  and  a  half  only  had  expired  at  the  time  of  the  suspension — 
the  benefits  which  the  party  might  have  realized  from  the  ex- 
ecution of  the  contract  must  necessarily  be  speculative  and  con- 
jectural ;  the  court  and  jury  having  no  certain  data  upon  which 
•to  make  the  estimate.  If  it  were  necessary  to  make  the  esti- 
mate upon  any  such  basis  the  argument  woukl  be  decisive  of 
the  present  claim.  But  in  my  judgment  no  such  necessity  ex- 
ists. When  the  contract,  as  in  this  case,  is  broken  before  the 
arrival  of  the  time  for  full  performance,  and  the  opposite  party 
elects  to  consider  it  in  that  light,  the  market  price  on  the  day 
of  the  breach  is  to  govern  in  the  assessment  of  damages.  In 
other  words,  the  damages  are  to  be  settled  and  ascertained  ac- 
cording to  the  existing  state  of  the  market  at  the  time  the 
cause  of  action  arose  and  not  at  the  time  fixed  for  full  per- 
formance. ...  It  will  be  seen  that  we  have  laid  alto- 
gether out  of  view  the  subcontract  .  .  .  and  all  others  that 
may  have  been  entered  into  by  the  plaintiffs  as  preparatory 
and  subsidiary  to  the  fulfillment  of  the  principal  one  with  the 
defendants.  Indeed,  I  am  unable  to  comprehend  how  these 
can  be  taken  into  the  account,  or  become  the  subject-matter 
p\  consideration  at  all  in  settling  the  amount  of  damages  to  be 
recovered  for  a  breach  of  the  principal  contract.  The  defend- 
ants had  no  control  over  or  participation  in  the  making  of  the 
subcontracts,  and  are  certainly  not  to  be  compelled  to  assume 
them  if  improvidently  entered  into.  On  the  other  hand,  if 
they  were  made  so  as  to  secure  great  advantages  to  the  plaint- 
iffs, surely  the  defendants  are  not  entitled  to  the  gains  which 
might  be  realized  from  them.  In  any  aspect,  therefore,  [117] 
these  subcontracts  present  a  most  unfit  as  well  as  unsatisfac- 
tory basis  upon  which  to  estimate  the  real  damages  and  loss 
occasioned  by  the  default  of  the  defendants.  .  .  .  And  yet, 
the  fact  that  these  subcontracts  must  ordinarily  be  entered 
into  preparatory  to  the  fulfillment  of  the  principal  one  shows 
-the  injustice  of  restricting  the  damages  m  cases  like  the  pres- 


208  COMPENSATION.  [§  G5. 

ent  to  compensation  for  the  work  actually  done,  and  the  item 
of  the  materials  on  hand.  AYe  should  thus  throw  the  whole 
loss  and  damage  that  ^vould  or  might  arise  out  of  contracts 
for  further  materials,  etc.,  entirely  upon  the  party  not  in  de- 
fault. If  there  was  a  market  value  of  the  article  in  this  case, 
the  question  would  be  a  simple  one.  As  there  is  none,  how- 
ever, the  parties  will  be  obliged  to  go  into  an  inquiry  as  to  the 
actual  cost  of  furnishing  the  article  at  the  place  of  delivery; 
and  the  court  and  iurv  should  see  that  in  estimatinfj  this 
amount  it  be  made  upon  a  substantial  basis,  and  not  left  to 
rest  upon  loose  and  speculative  opinions  of  witnesses.  The 
constituent  elements  of  the  cost  should  be  ascertained  from 
sound  and  reliable  sources;  from  practical  men,  having  experi- 
ence in  the  particular  department  of  labor  to  which  the  con- 
tract relates.  It  is  a  very  easy  matter  to  figure  out  large 
profits  upon  paper;  but  it  will  be  found  that  these,  in  a  great 
majority  of  the  cases,  become  seriously  reduced  when  sub- 
jected to  the  contingencies  and  hazards  incident  to  actual  per- 
formance. A  jury  should  scrutinize  with  care  and  watchful- 
ness any  speculative  or  conjectured  account  of  the  cost  of 
furnishing  the  article  that  would  result  in  a  very  unequal  bar- 
gain between  the  parties,  by  which  the  gains  and  benefits,  or, 
in  other  words,  the  measure  of  damages  against  the  defend- 
ants, are  unreasonably  enhanced.  They  should  not  overlook 
the  risks  and  contingencies  which  are  almost  inseparable  from 
the  execution  of  contracts  like  the  one  in  question,  and  which 
increase  the  expense  independently  of  the  outlay  in  labor  and 
capital." 

§  65.  Tiolation  of  contract  to  lease.  The  plaintifi'  agreed 
with  the  defendant  to  take  a  lease  of  premises  belonging  to 
the  latter  for  the  purpose,  as  he  knew,  of  carrying  on  a  trade 
wdiich  plaintiff  was  about  to  commence.  The  defendant  wil- 
fully refused  to  carry  out  his  agreement,  and  plaintiff  was 
unable  for  fifteen  weeks  to  commence  business.  Specific  per- 
formance of  the  agreement  was  decreed  and  damages  were 
awarded  for  loss  of  profit.^     The  damages  resulting  from  the 

1  Jaques  v.  Millar,  6  Ch.  Div.  153.  36  Ark.  518;  Beidler  v.  Fish,  14  111. 
Alexander  v.  Bishop,  59  Iowa,  572,  13  App.  623,  are  not  in  accord  with  the 
N.  W.  Rep.  714;  Brock  way  v.  Thomas,     English  case. 


I  CO.]  KEQUIEED   CERTAINTY    OF    DAMAGES.  209 

failure  to  perform  a  contract  to  rent  premises  is  tlie  difference 
between  what  they  were  worth  and  the  rent  agreed  upon.^ 
Where  the  lease  of  a  farm  which  was  to  be  worked  on  shares 
for  several  years  stipulated  that  if  the  owner  exercised  his  re- 
served right  to  sell  the  farm  during  the  term  he  should  pay 
any  damages  which  the  lessee  sustained  by  giving  up  posses" 
sion,  the  latter's  rights  are  the  same  as  they  would  have  been 
if  the  sale  had  been  made  wrongfully;  he  was  entitled  to  re- 
cover the  value  of  his  contract  —  what  the  privilege  of  occu- 
pying and  working  the  farm  was  worth,  subject  to  the  terms 
of  the  contract  and  under  all  the  contingencies  liable  to  affect 
the  result.^  But  time  spent  by  the  person  who  was  to  be  the 
lessee  in  securing  other  premises  is  not  an  element  of  the  dam- 
ages.' If  the  lessee  of  business  premises  is  evicted  and  his 
business  broken  up  he  may  recover  the  prospective  profits 
thereof  for  the  remainder  of  the  term.^  If  the  lessor  of  busi- 
ness property  fails  to  keep  it  in  repair  as  he  agreed  to  do  the 
lessee  may  recoup  for  the  loss  of  custom  and  the  profits  he 
might  have  made  but  for  the  breach;  and  it  will  be  enough 
for  him  to  show  facts  which  enable  the  jury  to  approximate 
his  losses.*  A  lessee  who  violates  covenants  in  the  lease  as  to 
posting  a  notice  "  to  let "  and  allowing  the  premises  to  be 
shown  will  be  liable  for  the  loss  of  rent  resulting.*^ 

§  66.  Profits  of  labor.  Where  a  party  has  contracted  to 
perform  labor  from  which  a  profit  is  to  spring  as  a  direct  re- 
sult of  the  work  done  at  the  contract  price,  and  is  prevented 
from  earning  this  profit  by  the  wrongful  act  of  another  party, 
its  loss  is  a  direct  and  natural  result  which  the  law  will  pre- 
sume to  follow  the  breach  of  the  contract;  and  he  is  en-  [118] 

1  Eastman  v.  Mayor,  152  N.  Y,  468,  Trust  Co.  v.  Eaton,  114  Fed.  Rep.  14, 

46  N.  E.  Rep,  461.  51  C.  C.  A.  640,  applying  the  rule  to 

-  Depew  V.  Ketchum,  75  Hun,  227,  the  termination  of  tlie  lease  of  a 

27  N.  Y.  Supp.  8;  Taylor  v.  Bradley,  railroad    executed    by    a    receiver; 

39  N,  Y.  129;  Shoemaker  v.  Craw-  Owensboro-Harrison   Telephone  Co. 

ford,    82    Mo.    App.    487;    Cilley   v.  v.  Wisdom,  23  Ky.  L.  Rep.  97,  62  S. 

Hawkins,  48  111.  808;  North  Chicago  W.  Rep.  529  (violation  of  lease  for 

Street  R.  Co.  v.  Le  Grand  Co.,  95  111.  use  of  telephone). 

App.  435.  5  Stewart  v.  Lanier  House  Co.,  75 

3  Schultz  V.  Brenner,  24  N.  Y.  Misc.  Ga,  582. 

522,  53  N.  Y.  Supp.  972.  6  United     States     Trust     Co.     v. 

^Snow  V.  Pulitzer.  142  N.  Y.  263,  36  O'Brien,  143  N.  Y.  284,  38  N.  E.  Rep. 

N.  E.  Rep.  1059;  Farmers'  Loan  &  266.    See  ch.  20. 
Vol.  1  —  14 


210  COMPENSATION.  [§  67. 

titled  to  recover  it  without  special  allegations  in  his  declara- 
tion. The  amount  of  damage  may  be  established  by  showing 
how  much  less  than  the  contract  price  it  will  cost  to  do  the 
work  or  perform  the  contract.^  Actual  damages  clearly  in- 
clude the  direct  and  actual  loss  which  a  plaintiff  sustains  j^^ro/;- 
ter  rem  ipsam  non  habitam.  And  in  case  of  such  contracts  the 
loss  of  profits,  among  other  things,  is  the  difference  between 
the  cost  of  doing  the  work  and  the  price  to  be  paid  for  it. 
This  difference  is  the  inducement  and  real  consideration  which 
causes  the  contractor  to  enter  into  the  contract.  For  this  he 
expends  his  time,  exerts  his  skill,  uses  his  capital  and  assumes 
the  risks  which  attend  the  enterprise.  Where  profits  are  ad- 
visedly spoken  of  as  not  a  subject  of  damages  it  will  be  found 
that  something  contingent  upon  future  bargains,  or  specu- 
lations, or  state  of  the  market  is  referred  to,  and  not  the  dif- 
ference between  an  agreed  price  of  something  contracted  for 
and  its  ascertainable  value  or  cost.^ 

§  67.  Profits  from  coniniercial  ventures.  The  success  of  busi- 
ness ventures  is  not  antecedently  certain  in  an  absolute  sense; 
they  are  generally  undertaken  in  reliance  upon  probabilities 

1  Leonard  v.  Beaudry,  68  Mich.  310,  10  Bush,  185:  Wallace  v.  Tumlin,  42 
13  Am.  St.  344,  36  N.  W.  Rep.  88;  Ga.  462;  United  States  v.  Smith,  94 
Mississippi  &  Rum  River  Boom  Co.  U.  S.  214;  Somers  v.  Wright,  115 
V.  Prince,  34  Mich.  71,  24  N.  W.  Rep.  Mass.  292;  Richmond  v.  D.  &  S.  C. 
344;  Oldham  v.  Kerchner,  79  N.  C.  R.  Co.,  40  Iowa,  264;  Fail  v.  McRee, 
106;  Jolly  v.  Single,  16  Wis.  280;  36  Ala.  61;  Goldman  v.  Wolff.  6  Mo. 
Kinney  v.  Crocker,  18  id.  74;  Hinck-  App.  490;  Dennis  v.  Maxfield,  10 
ley  V.  Beckwith,  13  Wis.  31;  McAn-  Allen,  138;  Skagit  R.  &  L.  Co.  v. 
drews  v.  Tippett,  39  N.  J.  L.  105;  Cole,  2  Wash.  57,  25  Pac.  Rep.  1077; 
United  States  v.  Speed,  8  Wall.  77;  Fell  v.  Newberry,  106  Mich.  542,  64 
Doolittle  V.  McCullough.  12  Ohio  St.  N.  W.  Rep.  474:  O'Connor  v.  Smith, 
360;  Middekauff  v.  Smith,  1  Md.  343;  84  Tex.  232,  19  S.  W.  Rep.  168;  Bar- 
Clark  V.  Mayor,  4  N.  Y.  338.  53  Am.  ret  v.  Grand  Rapids  Veneer  Works, 
Dec.  379;  Cook  v.  Commissioners  of  110  Mich.  6,  67  N.  W.  Rep.  976;  Ram- 
Hamilton,  6  McLean,  612;  Frye  v.  sey  v.  Holmes  Electric  Protective 
Maine,  etc.  R.  Co.,  67  Me.  414;  Lentz  Co.,  85  Wis.  174,  55  N.  W.  Rep.  391; 
V.  Choteau,  42  Pa.  435;  James  v.  Equitable  Mortgage  Co.  v.  Wedding- 
Adams,  8  W.  Va.  568;  Cramer  v.  ton,  2  Tex.  Civ.  App.  373,  21  S.  W. 
Metz,  57  N.  Y.  659;  Devlin  v.  Mayor,  Rep.  576.  See  ch.  15. 
63  N.  Y.  8;  Hoy  v.  Gronoble,  34  Pa.  2  Philadelphia,  etc.  R.  Co.  v.  How- 
9,  75  Am.  Dec  628;  Thompson  v.  ard,  13  How.  344;  O'Connor  v.  Smith, 
Jackson,  14  B.  Mon.  114;  Fox  v.  Hard-  84  Tex.  232, 19  S.  W.  Rep.  168;  Hirsch- 
ing,  7  Cusli.  516;  Milburn  v.  Belloni,  horn  v.  Bradley,  —  Iowa,  — ,  90  N. 
39  N.  Y.  53,  100  Am.  Dec.  403;  Eliza-  W.  Rep.  592. 
bethtown,  etc.  R   Co.  v.  Pottiuger, 


^  67.]  EEQUIEED    CERTAINTY    OF    DAMAGES.  211 

based  upon  the  law  of  demand  and  supply.  Though  specula- 
tive in  their  inception,  by  anticipating  future  values,  they  are 
generally  retrospectively  examined  when  they  become  subjects 
of  judicial  investigation,  and  then  such  values  are  capable  of 
proof.  If  the  business,  the  profits  from  which  are  in  ques- 
tion, is  a  trading  business  they  must  depend  on  a  succession  of 
purchases  of  stock  of  some  sort  for  sale,  or  the  emj)loyment  of 
labor  or  material  to  be  purchased  for  its  production,  and  a 
succession  of  sales  to  prospective  customers.  Where  the  [110] 
injury  complained  of  is  an  interruption  or  prevention  of  such 
a  business,  or  causes  a  diminution  of  it,  it  is  scarcely  pocsible 
to  establish  damages  to  a  very  high  degree  of  certaint3^^  In 
many  cases  the  best  conclusion  will  be  merely  a  probable  one. 
The  rule  of  law  is  the  same  in  all  cases  that  the  damages  be 
proved  with  certainty ;  but  a  greater  degree  of  certainty  being 
attainable  in  some  cases  than  is  possible  when  the  result  sought 
depends  on  the  chances  of  future  bargains,  the  law  will  not 
permit  the  proof  which  is  certain  to  be  neglected,  and  resort 
be  made  to  that  which  is  less  satisfactory;  though  the  latter, 
in  other  cases,  is  the  best  the  nature  of  the  case  admits  of,  and 
must  be  received  as  the  only  guide  to  the  proper  amount  of 
compensation,  and  is  then  available.^  The  damages  resulting 
from  the  breach  of  an  agreement  to  furnish  the  plaintiff  facil- 
ities for  carrying  on  his  business  in  a  store  during  a  fixed  term 
were  sufficiently  shown  by  proof  of  the  gross  receipts  made 

1  See  Paola  Gas  Co.  v.  Paola  Glass  Dr.  Harter  Medicine  Co.  v.  Hopkins, 

Co.,  56  Kan.  614.  623,  44  Pac.  Rep.  83  Wis.  309,  53  N.  W.  Rep.  501. 

621,  54  Am.  St.  598.  In   an  action  to  recover  for  mis- 

■"i  Fairchild  v.  Rogers,  33  Minn.  269,  representations  concerning  liis  busi- 

20  N.   W.   Rep.    191;    Alexander    v.  ness  the  plaintiff  alleged   injury  to 

Breeden,  14  B.  Mon.   154;  Houston,  his  credit,  whereby  he  was  unable 

etc.  R.  Co.  V.  Hill,  70  Tex.  51,  7  S.  W.  to  obtain  goods  to  sell,  and  that  lie 

Rep.  659:  Same  v.  MoUoy,  64  Tex.  therefore  lost  profits.     The  damage 

607;  Kelly  v.  Miles,  58  N.  Y.  Super,  claimed  under  the  latter  head  was 

Ct.  495,  12  N.  Y.  Supp.  915:  Oliver  v.  too  remote.     Bradstreet   Co.    v.  Os- 

Perkins,  53  N.  W.  Rep.  609.  92  Mich,  wald,  90  Ga.  396,  23  S.  E.  Rep.  423. 

304;  Treat  v.  Hiles.  81  Wis.  280,  50  One  cannot  recover  the  loss  of  the 

N.  W.  Rep.  896;  World's  Columbian  prospective    profits    of    a    business 

Exposition  Co.  v.  Pasteur-Chamber-  which  is  illegal,  and  which  he  dis- 

land  Filter  Co.,  82111.  App.  94;  Eraser  continued  because  of  threats.  Prude 

V,  Echo  Mining  &  Smelting  Co.,   9  v.  Sebastian,  107  La.  64,  31  So.  Rep. 

Tex.  Civ.  App.  210,  28  S.  W.  Rep.  714;  764» 


212  COMPENSATION.  [§  68. 

during  the  two  years  business  was  done  there,  the  net  profits, 
the  income  obtained  elsewhere  during  the  succeeding  year, 
and  what  plaintiff  was  able  to  earn  after  his  business  in  the 
store  was  broken  up.^ 

§  68.  Profits  on  dissolution  of  partnership.  One  partner 
may  maintain  an  action  at  law  against  another  for  a  breach 
of  the  copartnership  articles  in  dissolving  before  the  time  lim- 
ited therefor,  and  may  do  so  before  the  expiration  of  the  period 
for  which  the  partnership  was  to  continue.  The  damages  are 
the  profits  which  would  have  accrued  to  the  plaintifi:  from  the 
continuation  of  the  partnership  business,  and  which  are  lost  by 
its  unauthorized  dissolution.-  The  only  legitimate  beneficial 
consequence  of  continuing  a  partnership  is  the  making  of  profits. 
The  most  direct  and  legitimate  injurious  consequence  which 
can  follow  upon  an  unauthorized  dissolution  of  a  partnership 
is  the  loss  thereof.  Unless  that  loss  can  be  made  up  to  the  in- 
jured party  it  is  idle  to  say  that  any  obligation  is  imposed  by 
a  contract  to  continue  a  partnership  for  a  fixed  period.^  It  is 
safe  to  say  that  such  profits  cannot  be  proved  except  to  a  rea- 
sonable probability.  The  profits  immediately  before  the  dis- 
solution may  be  shown  as  a  competent  fact  for  the  considera- 

1  Dickinson  v.  Hart,  143  N.  Y.  183,  and  having  the  means  to  buy?  As 
36  N.  E.  Rep.  801.  illustrating  this  question  the  actual 

2  Bagley  v.  Smith,  10  N.  Y.  489,  state  and  condition  of  the  property, 
61  Am.  Dec.  756;  Treat  v.  Hiles,  81  business  and  assets  of  the  firm  at  the 
Wis.  280,  50  N.  W.  Rep.  896.  time,  together  with  proof  of  actual 

'Bagley  v.  Smith,  supra;  McNeill  results  accomplished,  whether  of 
V.  Reid.  9  Bing.  68;  Gale  v.  Leckie,  profit  or  loss  or  both,  in  the  past, 
2  Stark.  107;  Mitchell  v.  Read,  84  would  be  competent  evidence.  Be- 
N.  Y.  556;  Burckhardt  v.  Burck-  yond  this,  at  least  so  far  as  conjec- 
hardt,  4J  Ohio  St.  474,  498,  58  Am.  tural  profits  in  the  future  are  con- 
Rep.  842,  citing  the  text  and  apply-  cerned,  it  would  not  be  .safe  to  go." 
ing  the  principle  to  the  breach  of  a  Where  one  partner  rendered  serv- 
contract  for  the  sale  of  the  good-will  ices  and  the  otlier  furnished  the  cap- 
of  a  business.  ital,  there  being  no  time  fixed  for  the 

In  Reiter  v.  Morton,  96  Pa,  229, 242,  duration  of  the  partnership,  the  dam- 

the    measure    of    damages    for  the  ages  recoverable  by  the  former  for 

wrongful  dissolution  of  a  manufac-  its   wrongful    dissolution   were    tha 

turing  partnership  was  held  to  be  the  value  of  his  services,  skill,  etc.,  in 

actual  money  value  of  the  plaintiffs  conducting  the  partnership  business, 

interest  in  the  firm  at  the  time  of  and  not  his  share  of  profits  for  any 

the  breach.  "What  would  the  inter-  specific    time.     Ball    v.   Britton,  58 

est  sell  for  to  a  person  willing  to  buy  Tex.  57. 


§  GS.]  EEQUIKED    CEETAINTY    OF   DAMAGES.  213 

tion  of  the  jury.  In  Bagley  v.  Smith '  Judge  Johnson  said: 
"It  seems  to  me  quite  obvious  that  outside  of  a  court  of  [120] 
justice  no  man  would  undertake  to  form  an  opinion  as  to  pros- 
pective profits  of  a  business  without  in  the  first  place  inform- 
ing himself  as  to  its  past  profits,  if  that  fact  were  accessible. 
As  it  is  a  fact  in  its  nature  entirely  capable  of  accurate  ascer- 
tainment and  proof,  I  can  see  no  more  reason  why  it  should  be 
excluded  from  the  consideration  of  the  tribunal  called  upon  to 
determine  conjecturally  the  amount  of  prospective  profits  than 
proof  of  the  nature  of  the  business,  or  any  other  circumstances 
connected  with  its  transaction.  It  is  very  true  that  there  is 
great  difficulty  in  making  an  accurate  estimate  of  future  profits, 
even  with  the  aid  of  knowing  the  amount  of  past  profits.  This 
difficulty  is  inherent  in  the  nature  of  the  inquiry.  We  shall 
not  lessen  it  b}^  shutting  our  ej^^es  to  the  light  which  the  pre- 
vious transactions  of  the  partnership  throw  upon  it.  Kor  are 
we  more  inclined  to  refuse  to  make  the  inquiry,  by  reason  of 
its  difficulty,  when  we  remember  that  it  is  the  misconduct  of 
the  defendants  which  has  rendered  it  necessary."  In  a  subse- 
quent case,  where  the  business  in  the  past  had  been  a  losing 
one,  it  was  held  error  to  charge,  as  the  plaintiff  requested,  that 
the  jury  were  not  confined  in  estimating  damages  to  the  rate 
of  profits  at  the  time  of  dissolution,  but  might  consider  and 
give  damages  for  profits  that  would  probably  have  been  made 
by  the  higher  prices;  and  might  consider  the  present  and  prob- 
able future  rate  during  the  balance  of  the  partnership,  though 
the  court  added:  "  It  requires  some  care.  You  are  not  to  guess 
about  this  matter.  If  you  can  rationally  see  through  this  that 
the  profits  would  have  been  greater  in  the  future,  and  are 
greater  at  the  present  time  than  at  the  time  of  the  dissolution, 
and  you  believe  that  the  present  increased  profits,  if  such  there 
would  be,  are  likely  to  continue  and  increase,  and  you  can  sat- 
isfy yourselves  of  this  in  your  own  mind,  then  you  have  the  right 
to  look  through  the  remainder  of  the  time  of  the  partnership, 
making  a  very  careful  estimate  in  regard  to  what  the  profits 
might  probably  be."  The  supreme  court  regarded  the  instruc- 
tion to  give  damages  for  profits  that  would  prohdbly  have  been 
made  by  the  higher  prices,  and  authorizing  the  jury  to  consider 

1 10  N.  Y.  489,  61  Am.  Dec.  756. 


214  COMPENSATION.  [§  60. 

the  present  and  probable  future  rate,  as  going  beyond  any  pre- 
vious case  in  favor  of  speculative  and  contingent  profits;  the 
former  case  was  referred  to  as  adhering  to  the  rule  of  certainty. 
The  court  say,  also,  "  The  case  at  bar  differs  from  that  case, 
[121]  and  the  cases  cited  therein,  inasmuch  as  in  those  cases 
where  the  court  was  submitting  the  question  of  damages  to  the 
jury  they  were  no  longer  prospective;  but  at  the  time  of  the 
trial  in  those  cases  respectively,  the  time  had  expired  up  to 
which  the  profits  in  question  were  to  be  estimated.  In  such 
cases  all  the  data  for  ascertaining  what  profits  might  have  been 
obtained  from  the  business  could  be  furnished  by  witnesses 
and  there  was  no  need  of  resorting  to  conjecture."  ^  This  case 
insists  on  a  more  rigid  rule  than  the  former  one.  It  was,  how- 
ever, a  case  in  which  there  was  very  little  data  for  finding  even 
a  probable  profit.^  If  one  partner  fails  to  pay  in  a  portion  of 
his  share  of  the  capital  and  the  copartner  continues  in  the  firm 
until  it  is  dissolved  by  mutual  consent,  there  cannot  be  a  re- 
covery of  profits  which  might  have  been  made  if  such  share 
had  been  fully  paid;  the  payment  of  interest  will  adjust  the 
parties'  rights.''  Where  a  copartner  to  whom  a  premium  has 
been  paid  wrongfully  brings  an  action  to  dissolve  the  partner- 
ship the  premium  may  be  apportioned  and  an  equitable  part  of 
it  be  adjudged  in  such  action  to  be  returned.^ 

§  69.  Commercial  agencies.  The  contracts  between  com- 
mercial agents  and  their  principals  embody  as  many  elements 
of  uncertainty  as  are  usually  found  in  combination;  among 
others  (at  least  where  the  compensation  is  based  upon  com- 
missions) the  state  of  trade,  quality  and  price  of  the  goods  of- 
fered, the  skill,  energy  and  industry  with  which  the  business 
is  prosecuted,  the  credit  of  the  parties  to  whom  the  sales  are 
made,  and  the  acceptance  of  the  agent's  orders  by  his  princi- 
pal, are  all  considerations  which  tend  to  make  the  damages 

1  Van  Ness  v.  Fisher,  5  Lans.  236.  Iowa,  423;  Satchwell  v.  Williams,  40 

2See  Dobbins  V.  Duquid,  66  111.464;  Conn.  371;  Schile  v.   Brokhahus,  80 

Park  V.  C.  &  S.  W.  R  Co.,  43  Iowa,  N.  Y.  614;  Treat  v.  Hiles,  81  Wis.  280, 

636;  Smith  v,  Wunderlich,70Ill.  426;  50  N.  W.  Rep.  896. 

Sewall's  Falls  Bridge  v.  Fisk.  28  N.  H.  ^Delp  v.  Edlis,  190  Pa.  25,  43  Atl. 

171;  Shafer  v.  Wilson,  44  Md.   268;  Rep.  463. 

Lacour   v.  Mayor,  3  Duer,  406;    St.  *  Corcoran  v.  Sumption,  79  Minn. 

John    V.  Mayor,  13    How.  Pr.    527;  108,  81  N.  W.  Rep.  761. 

Richmond  v.  Dubuque,  etc.  R.  Co.,  33 


§  C9.J  REQUIRED    CERTAINTY    OF   DAMAGES.  215 

sustained  by  an  agent  by  reason  of  the  wrongful  revocation  of 
his  agency  so  uncertain  as  to  be  diificult,  if  not  impossible,  of 
ascertainment.^  Past  sales  do  not  afford  a  safe  basis  for  esti- 
mating future  profits  because  the  conditions  may  not  remain 
as  they  were,-  and  also  because  the  time  and  service  of  the 
salesman,  which  have  been  given  to  the  making  of  them,  will 
be  his,  on  the  termination  of  the  employment,  to  use  other- 
wise.^ The  damages  in  cases  of  this  class  are  not  speculative 
or  remote,  and  the  difficulty  in  ascertaining  them  does  not 
deter  courts  from  awarding  such  compensation  for  their 
breach  as  the  evidence  shows  with  reasonable  certainty  the 
wronged  party  is  entitled  to.  It  would  be  a  reproach  to  the 
law  if  he  could  not  recover  all  the  damages  sustained.*  Where 
an  agent  selling  on  commission  was  discharged  three  months 
before  the  expiration  of  his  contract  the  court  said  it  could 
see  no  great  difficulty  in  proving  facts  that  would  enable  a 
jury  to  determine  approximately  the  amount  of  goods  the 
plaintiff  would  have  sold  during  that  time.  He  had  been  a 
traveling  salesman  for  the  defendant  during  the  two  preced- 
ing years,  and  his  sales  during  the  corresponding  months  of 
those  3^ears  could  have  been  shown,  as  might  the  state  of  the 
markets,  the  number  of  his  regular  customers,  etc.^  If  the  agent, 
at  the  time  of  the  revocation  of  his  authority,  had  agreements 
for  sales  which  he  could  have  consummated  but  for  the  wrong:- 
ful  act  of  his  principal  he  is  entitled  to  his  commissions  on 
them,  if  it  is  clear  that  they  would  have  been  made.  Mere 
expectations,  doubtful  offers  or  other  vague  or  indefinite  as- 
surances of  intention  to  purchase  are  speculative.^  The  loss 
of  employment  is  an  element  of  damage,  but  no  standard  can 
be  fixed  for  ascertaining  the  extent  of  it.^     If  the  principal 

1  Union  Refining  Co.  v.  Barton,  77  ^  Baldwin  v.  Marqueze,  91  Ga.  404, 

Ala.  148;  Brigliam  v.  Carlisle,  78  id.  18  S.  E.  Rep.  309. 

243,  56  Am.  Rep.  28;  Stern  v.  Rosen-  ^Cranmer  v.  Kohn,  7  S.  D.  247,  64 

heim,  67  Md.  503,  10  Atl.  Rep.  221,  N.  W.  Rep.  125. 

307.     See  Noble  v.  Hand,  163  Mass.  ^See  Dowagiac  Manuf.  Co.  v.  Cor- 

289,  39  N.  E.  Rep.  1020.  bit,    127  Mich.   473,   86  N.   W.   Rep. 

2 Id.;    Washburn    v.    Hubbard,    6  954,  87  id.  886. 

Lans.  11;  Hair  v.  Barnes,  26  111.  App.  '  Beck  v.  West,  87  Ala.  213,  6  So. 

580.  Rep.  70. 

3  Ray  V.  Lewis,  67  Minn.  365,  69  N. 
W.  Rep.  1100. 


216  COMPENSATION.  [§  69. 

has  accepted  orders  from  his  agent  and  refused  to  fill  them 
the  commission  thereon  may  be  recovered ;  ^  but  not  damages 
which  resulted  to  the  business  of  the  agent  otherwise.'^  A 
more  liberal  rule  has  been  held  in  a  case  which  has  been  often 
cited.^  The  contract  sued  upon  provided  that  if  the  plaintiff 
should  sell  fifty  of  defendant's  machines  to  one  firm  in  Mexico 
for  every  such  sale  he  should  have  the  exclusive  agency  of  the 
machines  in  that  locality,  they  to  be  furnished  by  the  defendant 
at  the  lowest  price,  and  the  plaintifl"  to  receive  a  commission. 
Two  such  sales  were  made,  the  order  for  one  of  which  was 
filled;  the  other  order  was  not  filled;  the  contract  was  repu- 
diated. Agencies  were  established  by  the  plaintiff  at  the 
places  where  these  sales  were  made.  The  court  observed 
that  these  agencies  were  to  be  exclusive,  and  to  have  some 
permanency.  They  were  valuable  to  the  plaintiff,  and  though 
there  was  diSiculty  in  ascertaining  the  damages  he  sustained, 
it  was  not  greater  than  existed  in  other  cases  where  profits 
had  been  recovered.  There  were  some  facts  upon  which  a  jury 
could  base  a  judgment,  not  certain  nor  strictly  accurate,  but 
sufficiently  so  for  the  administration  of  justice;  such  as  the 
fact  that  sales  had  been  made  before  the  breach  and  after- 
wards; the  qualifications  of  the  agent  and  those  who  operated 
under  him  to  make  sales;  the  facilities  for  carrying  on  busi- 
ness, and  like  facts  would  have  warranted  a  verdict  which 
would  have  approached  as  near  the  proper  measure  of  justice 
as  the  nature  of  the  case  and  the  infirmity  which  attaches  to 
the  administration  of  the  law  will  allow.''     In  another  case 

1  Taylor  Manuf.  Co.  v.  Hatcher  476,  95  Fed.  Eep.  222,  53  L.  R.  A. 
Manuf.  Co.,  39  Fed.  Rep.  440,  3  L.  R  33,  approving  the  Wakeman  case, 
A.  587.  supra;  Hitchcock  v.  Supreme  Tent 

2  Id.  Knights  of  Maccabees,  100  Mich.  40, 

3  Wakeman    v.    Wheeler    &    W.  58  N.  W.  Rep.  640,    43  Am.  St.  423; 

Manuf.  Co.,  101  N.  Y.  205,  54  Am.     Hirschhorn  v.  Bradley, Iowa, 

Rep.  671,  4  N.  E.  Rep.  264;  Bannatyne  90  N.  W.  Rep.  592.   See  Meylert  v.  Gas 

V.  Florence  Milling  &  Mining  Co..  77  Consumers'  Benefit  Co..  26  Abb.  N. 

Hun,  289,  28  N.  Y.  Supp.   334,  apply-  C.  262, 14  N.  Y.  Supp.  148;  ^  62,  and 

ing  the  rule  in  the  Wakeman  case,  Mechanics'  &  Traders'  Ins.  Co.  v.  Mc- 

supra;    Crittenden    v.    Johnston,   7  Lain,  48  La.  Ann.  109,  20  So.  Rep.  278. 

App.  Div.   258,  40  N.   Y.   Supp.   87;  <  In  Howe  Machine  Co.  v.  Bryson, 

More    V.    Knox,   52    App.    Div.    145,  44  Iowa,  159,  24  Am.  Rep.  735,  a  ma- 

64    N.    Y.     Supp.     1101;    Wells    v.  jority   of  the  court   held    that    an 

National     L.    Ass'n,     39     C.    C.  A.  agent  could  not  recover  as  damages 


§  G9.]  KEQUIKED    CERTAINTY    OF    DAMAGES.  217 

there  was  an  unauthorized  revocation  of  the  sole  agency  for 
the  sale  of  an  article.  The  agent's  recovery  was  measured  by 
the  profits  he  might  have  realized  if  there  had  been  no  breach 
of  the  principal's  contract.  In  order  to  determine  what  they 
would  have  been,  proof  of  the  actual  sales  of  the  article  made 
by  the  agent's  successor  during  the  term  the  former  was  enti- 
tled to  the  agency  was  admissible.^  On  the  revocation  of  the 
sole  agency  for  the  sale  of  an  article  in  prescribed  territory 
evidence  of  the  sales  made  by  the  agent  after  the  breach  and 
up  to  the  time  of  the  trial  is  competent  to  establish  his  claim 
for  the  loss  of  profits.- 

The  breach  of  a  contract  giving  the  plaintiff  a  general 
■agency  for  a  term  of  years,  within  a  specified  territory,  of  a 
life  insurance  company,  he  to  have  sole  charge  of  such  terri- 
tory, establish  sub-agencies  and  receive  as  compensation  com- 
missions on  the  first  and  subsequent  premiums  paid,  gives  a 
cause  of  action  for  loss  of  commissions  on  premiums  to  be- 
come due  afterward.  It  was  said :  "  It  is  evident  that  all  the 
schemes  of  insurance  referred  to  in  the  contract  to  be  offered 
to  the  public  contemplated  the  keeping  of  the  policies  alive 
by  payments  made  from  time  to  time  subsequent  to  the  first 
year's  premium.  Between  the  parties  to  the  contract,  the 
presumption  is  that  the  policies  would  be  kept  alive,  and  these 
subsequent  payments  —  renewal  premiums  as  they  are  called  — 
would  be  received  by  the  defendant  companj'-.  The  conduct 
of  that  company  in  breaking  the  contract  entitles  the  plaintiff 
to  this  presumption  and  puts  upon  the  defendant  the  burden 

for  the  breach  of  a  contract  to  fur-  view,  see  Wells  v.  National  L.  Ass'n, 

nish  him  machines  to  sell  on  com-  39  C.  C.  A.  476,  95  Fed.  Rep.  222,  53 

mission  the  proiits  which  might  have  L.  R.  A.  33. 

been  realized   if  the  contract   had  i  Mueller    v.     Bethesda      Mineral 

been    performed.      The    New  York  Spring  Co..  88  Mich.  390,   50  N.  W. 

court  in  the  case  considered  in  the  Rep.  319,  approved   in  Cranmer  v. 

text   concurs    with    the  two  Iowa  Kohn,  7  S.  D.  347.  64  N.  W.  Rep.  125; 

judges  who  dissented.     It  is  said  in  Hirschhorn  v.  Bradley,  —  Iowa, — , 

Hirschhornv.  Bradley,  SMpra;  If  the  90  N.  W.  Rep.    592.     Schumaker  v. 

question  considered  in  Machine  Co.  Heinemann,  99   Wis.   251,  74  N.  W. 

v.    Bryson,  supra,  were   now  before  Rep.   785,  is   in   harmonj-  with  the 

us  for  the  first  time,  we  might,  in  cases  sustaining  the  right  to  recover 

view  of  the  later  authorities,  incline  profits. 

to  the  view  expressed  in  the  dissent-  -  Hirschhorn  v.  Bradlej',  supi^a. 
ing  opinion.      As  supporting    that 


218  COMPENSATION.  [§  69.. 

of  showing  the  contrary,  if  it  exists,  and  the  extent  to  which 
it  does  exist.  So  all  uncertainty  is  eliminated  from  this  branch 
of  the  plaintiff's  claim  for  loss  of  profits.  As  to  the  other 
branch,  assuming,  as  we  must  for  the  present  do,  that  the  de- 
fendant breached  the  contract  as  alleged  in  the  petition,  en- 
tered the  territory  allotted  to  the  plaintiff,  and  has  through 
other  agents  and  agencies,  since  the  date  of  the  breach,  writ- 
ten a  large  amount  of  other  insurance,  such  as  the  contract 
between  the  parties  contemplated  would  be  obtained  by  and 
through  the  action  of  the  plaintiff  and  his  sub-agents,  the 
amount  of  such  insurance  so  taken  and  carried  by  the  defend- 
ant up  to  the  time  of  the  trial  may  be  exactly  shown  by  the 
testimony  of  the  managing  agents  of  the  defendant,  or  by  its 
books,  or  by  both.  .  .  .  There  can  be,  therefore,  no  substan- 
tial difficulty  in  arriving  at  this  amount,  at  least  with  substan- 
tial accuracy.  .  .  .  Whether  he  could,  and  with  reason- 
able probability  would,  have  done  all  or  a  definite  portion  of 
this  work,  had  the  defendant  not  breached  the  contract,  is  a 
proper  subject  for  the  finding  of  a  jury  on  the  proof  that  may 
be  offered  as  to  the  means  which  the  plaintiff  had  organized 
and  was  using  for  the  efficient  prosecution  of  this  work, 
compared  with  the  means  and  effort  which  the  defendant  has 
used  in  its  accomplishment  of  the  work  so  done  by  it  in  the 
territory  allotted  to  the  plaintiff.  He  is  not  necessarily  or 
even  probably  entitled  to  receive  the  full  specified  rate  of  per 
cent,  on  the  first  year's  and  subsequent  premiums  paid  and  to 
be  paid  on  policies  so  issued  by  defendant  through  its  other 
agents  and  agencies,  for  some  deduction  must  necessarily  be 
made  on  account  of  the  fact  that  he  could  incur  no  current 
expenses,  nor  render  any  personal  services  in  the  procurement 
of  this  insurance  thus  obtained  by  the  defendant  through  its 
other  agents  and  a2:encies.  The  condition  of  the  business  "  in 
the  territory  assigned  to  the  plaintiff  "  at  the  time  of  the  breach ; 
the  means  that  had  been  used  and  were  being  used  by  the 
plaintiff  to  work  the  territory  allotted  to  him;  the  machinery 
which  he  had  organized  for  the  purpose  of  that  work;  the 
reasonable  cost  of  its  continued  operation;  the  extent  of  the 
territory  allotted  to  him ;  the  number  of  persons  therein  who 
were  fit  subjects  for  such  insurance  as  the  defendant  proposed 
to  write;  the  reasonable  relative  proportion  of  cost  for  th& 


§  70.]  KEQUIRED    CERTAINTY    OF    DAMAGES.  219 

first  year  of  organizing  the  business  and  putting  it  in  opera- 
tion to  the  cost  of  continuing  its  conduct  during  the  subse- 
quent years;  the  machinery  actually  used  by  the  defendant 
after  it  entered  the  territory  allotted  to  the  plaintiff,  and  its 
success,  through  the  use  of  this  machinery,  and  the  agencies 
it  established,  in  obtaining  applicants  for  insurance  and  hold- 
ers for  its  policies,  should  all  be  given  to  the  jury." '  A  manu- 
facturer of  a  particular  style  of  hats  who  gives  a  local  dealer 
the  exclusive  agency  for  their  sale  cannot,  upon  withdrawing 
the  agency,  refuse  to  fill  orders  sent  by  the  agent  and  accepted 
prior  to  the  termination  of  the  agency;  and  where  such  agency 
is  transferred  to  another  dealer  in  the  same  city,  so  that  it 
was  impossible  for  the  deposed  agent  to  buy  the  hats  at  whole- 
sale, he  may  prove  the  retail  price  charged  by  the  new  agent 
as  tending  to  show  the  market  value  of  the  hats  called  for  by 
such  orders,  and  as  establishing  the  measure  of  recovery  for 
the  profits  lost.  The  plaintiff's  right  to  such  profits  was  not 
affected  because  he  sold  other  hats  as  valuable  as  those  made 
by  the  defendant,  nor  though  he  sold  as  many  of  such  as  he 
would  formerly  have  sold  of  those  furnished  by  the  defend- 
ant.^ In  ascertaining  the  value  of  such  an  agency  no  account 
is  to  be  taken  of  the  stock  in  the  hands  of  the  agent  which  he 
has  paid  for,  the  principal  not  having  bound  himself  to  take 
it  from  the  agent.* 

§  70.  Tortious  interference  with  business.  In  actions  for 
torts  injurious  to  business  the  extent  of  the  loss  is  provable  by 
the  same  testimony  as  in  actions  to  recover  for  the  loss  of  profits 
caused  by  the  breach  of  contracts,  and  recovery  may  be  had  for 

1  Wells  V.  National  L.  Ass'n,  39  C.  the  goods  so  bought  within  a  certain 
C.  A.  476,  489,  99  Fed.  Rep.  222,  58  L.  territory,  in  which  the  vendor  has  a 
R  A.  33;  Hitchcock  v.  Supreme  Tent  monopoly,  and  he,  violating  his  con- 
Knights  of  Maccabees,  100  Mich.  40,  tract,  sells  goods  to  other  persons 
58  N.  W.  Rep.  640,  43  Am.  St.  423.  within  such  territory,  he  is  liable  to 
See  Lewis  v.  Atlas  Mut.  L.  Ins.  Co.,  the  first  person  for  the  profits  he 
61  Mo.  534;  Pellett  v.  Manufacturers'  may  show,  with  reasonable  certainty, 
&  Merchants'  Ins.  Co.,  43  C.  C.  A.  would  have  been  his  if  there  had 
669,  104  Fed.  Rep.  502.  not  been  a  breach  of  the  contract. 

2  More  V.  Knox,  52  App.  Div.  145,  Russell  v.  Horn,  etc.  Manuf.  Co.,  41 
64  N.  Y.  Supp.  1101.  Neb.  567,  59  N.  W.  Rep.  901. 

Where  a  person  has  the  exclusive  3  Vosburg  v.  Mallory,  70  App.  Div. 
right  to  buy  from  another  and  resell    247,  75  N.  Y.  Supp.  480. 


220  COMPENSATION.  [§  70. 

such  as  is  proved  with  reasonable  certainty;  it  is  enough  to  show 
what  the  profits  would  probabl}^  have  been.^  Certainty  is  very 
desirable  in  estimating  damages  in  all  cases;  and  where  from 
the  nature  and  circumstances  of  the  case  a  rule  can  be  discov- 
ered by  which  adequate  compensation  can  be  accurately  meas- 
ured, it  should  be  applied  to  actions  of  tort  as  well  as  to  those 
upon  contract.  The  law,  however,  does  not  require  impossi- 
bilities; and  cannot,  therefore,  demand  a  higher  degree  of  cer- 
tainty than  the  nature  of  the  case  admits.  If  a  regular  and 
established  business  is  wrongfully  interrupted  the  damage 
thereto  can  be  shown  by  proving  the  usual  profits  for  a  reason- 
able time  anterior  to  the  wrong  complained  of.^  But  it  is  other- 
wise where  the  business  is  subject  to  the  contingencies  of 
weather,  breakages,  delays,  etc."  There  is  no  good  reason  for 
requiring  any  higher  degree  of  certaintj^  in  respect  to  the 
amount  of  damages  than  in  respect  to  any  other  branch  of  a 
cause.  Juries  are  allowed  to  act  upon  probable  and  inferential 
as  well  as  direct  and  positive  proof.  And  when  from  the  nat- 
ure of  the  case  the  amount  of  the  damages  cannot  be  estimated 
with  certainty,  or  only  a  part  of  them  can  be  so  estimated,  no 

1  Allison  V.  Chandler,  11  Midi-  543;  661,  26  N.  W.  Rep.  524:  Schriver  v. 
Dennery  v.  Bisa.  6  La.  Ann.  365;  Johnstown.  71  Hun,  232,  24  N.  Y. 
Shepard  v.  Milwaukee  G.  L.  Co.,  15  Supp.  1083,  affirmed  without  opin- 
Wis.  318,  82  Am.  Dec.  679:  SewalPs  ion,  148  N.  Y.  758;  Langan  v.  Potter, 
Falls  Bridge  v.  Fisk,  23  N.  H.  171;  8  N.  Y.  Misc.  541,  28  N.  Y.  Supp.  752; 
Schile  V.  Brokhahus,  80  N.  Y.  614;  Williams  v.  Island  City  Milling  Co., 
Oliver  v.  Perkins,  92  Mich.  304,  52  N.  25  Ore.  573,  589,  37  Pac.  Rep.  49,  cit- 
W.  Rep.  609:  Jackson  v.  Stanfield,  ing  the  text;  Paul  v.  Cragnaz,  25 
137  Ind.  592,  36  N.  E.  Rep.  345;  White  Nev.  293,  320,  47  L.  R.  A.  540,  59  Pac. 
V.  Moseley,  8  Pick.  356;  French  v.  Rep.  57.  60  id.  982;  Exchange  Tel. 
Connecticut  River  Lumber  Co.,  145  Co.  v.  Gregory,  [1896]  1  Q.  B.  147; 
Mass.  261,  14  N.  E.  Rep.  113;  Terre  Hartman  v.  Pittsburgh  Incline  Co., 
Haute  V.  Hudnut,  112  Ind.  542,  13  N.  159  Pa.  442.  28  Atl.  Rep.  145;  Leach 
E.  Rep.  686;  National  Fibre  Board  v.  New  York,  etc.  R  Co.,  89  Hun.  377, 
Co.  V.  Lewiston  &  A.  Electric  Light  35  N.  Y.  Supp.  305;  Butler  v.  Man- 
Co.,  95  Me.  318,  49  Atl.  Rep.  1095;  hattan  R.  Co.,  143  N.  Y.  417,  38  N.  E. 
Paul  E.  Wolff  Shirt  Co.  v.  Franken-  Rep.  454,  42  Am.  St.  738.  26  L.  R  A. 
thai,  70  S.  W.  Rep.  378,  —  Mo.  App.  46;  Goebel  v.  Hough,  26  Minn.  252, 

;  Pacific  Steam  Whaling  Co.   v.  2  N.  W.  Rep.   847:  Terre  Haute  v. 

Alaska  Packers'  Assn,  —  Cal.  — ,  Hudnut,  112  Ind.  542,  13  N.  E.  Rep. 

72  Pac.  Rep.  161.  686;    National   Fibre   Board  Co.    v. 

li  Willis  v.  Perry,  92  Iowa,  297,  306,  Lewiston  &  A.  Electric  Light  Co., 

60  N.  W.  Rep.  727,  26  L.  R.  A.  124;  95  Me.  318,  49  AtL  Rep.  1095. 
Kyd  V.  Cook,  56  Neb.  71,  71  Am.  St.         •■*  Cushing  v.  Seymour,  30  Minn.  301, 


§T0.] 


EEQUIRED    CERTAINTY    OF   DAMAGES. 


221 


objection  is  perceived  to  placing  before  the  jury  all  the  facts 
and  circumstances  of  the  case  having  any  tendency  to  [122] 
show  damages  or  their  probable  amount,  so  as  to  enable  them 
to  make  the  most  intelligible  and  accurate  estimate  which  the 
nature  of  the  case  will  permit.  This  should,  of  course,  be  done 
with  such  instructions  and  advice  from  the  court  as  the  circum- 
stances may  require,  and  as  may  tend  to  prevent  the  allowance 
of  such  damages  as  may  be  merely  possible,  or  too  remote  or 
fanciful  in  their  character  to  be  safely  considered  as  the  result 
of  the  injury.^     If  the  business  interfered  with  was  conducted 


15  N.  W.  Rep.  209.  In  this  case 
plaintiff  had  entered  into  contracts 
for  threshing  grain  before  the  con- 
version of  the  machine  which  he 
was  to  use  in  executing  them. 

In  Jones  v.  Call,  96  N.  C.  337,  60 
Am.  Rep.  416,  2  S.  E.  Rep  647,  a 
manufacturer  of  machines,  unlaw- 
fully prevented  from  carrjdng  on  his 
business,  recovered  damages  to  the 
extent  that  the  machines  then  con- 
tracted for  would  have  yielded  him 
a  profit.  The  estimated  profits  be- 
yond that  point  were  considered  too 
speculative  and  remote.  See  Clem- 
ents V.  State,  77  N.  C.  143,  doubted  in 
the  preceding  case. 

1  Allison  V.  Chandler,  supra.  In 
this  case  Christiancy,  J., said:  "  Since, 
from  the  nature  of  the  case  (one  of 
injury  to  business),  the  damages  can- 
not be  estimated  with  certainty,  and 
there  is  risk  of  giving  by  one  course 
of  trial  less,  and  by  the  other  more, 
than  a  fair  compensation  —  to  say 
nothing  of  justice  —  does  not  sound 
policy  require  that  the  risk  should 
be  thrown  upon  the  wrong-doer  in- 
stead of  the  injured  party?  However 
tliis  question  may  be  answered,  we 
cannot  resist  the  conclusion  that  it 
is  better  to  run  a  slight  risk  of  giving 
somewhat  more  than  actual  compen- 
sation than  to  adopt  a  rule  which, 
under  the  circumstances  of  the  case, 
will,  in  all  reasonable  probability,  pre- 
clude the  injured  party  from  the  re- 


covery of  a  large  proportion  of  the 
damages  he  has  actually  sustained 
from  the  injury,  though  the  amount 
thus  excluded  cannot  be  estimated 
with  accuracy  by  a  fixed  and  certain 
rule."  Gilbert  v.Kennedy,22Mich.l29. 
See  Jenkins  v.  Pennsylvania  R.  Co., 
67  N.  J.  L.  331,  51  AtL  Rep  704;  Cos- 
griff  V.  Miller,  —  Wyo.  — ,  68  Pac. 
Rep.  206,  215. 

In  Hoi  den  v.  Lake  Co.,  53  N.  H. 
552,  the  action  was  case  for  so  inter- 
fering with  the  natural  flow  of  the 
river,  on  which  the  plaintiffs  had  a 
mill  for  the  manufacture  of  woolen 
goods,  as  to  diminish  its  production. 
Upon  the  question  of  damages  one 
of  the  plaintiffs  was  permitted  to 
state  that  the  cost  of  the  raw  ma- 
terial manufactured  at  their  mill  in 
producing  a  yard  of  cloth  was  about 
one-half  the  value  of  a  yard  of  cloth 
when  finished.  There  was  no  evi- 
dence as  to  the  cost  of  manufactur- 
ing a  yard  of  cloth,  nor  the  number 
of  yards  manufactured,  either 
monthly  or  otherwise,  but  only  the 
aggregate  amount  of  business  in  dol- 
lars annuall}';  and  the  falling  off  in 
the  aggregate  business  during  the 
dry  months  of  summer,  when  the 
plaintiffs  claim  they  were  injured, 
as  compared  with  the  average  of  the 
other  months  of  the  year.  The  court 
say:  "  It  is  difficult  to  see  what  other 
rule  could  have  been  applied  to  show 
what  the  effect  of    the  alteration 


222 


COMPENSATION. 


[i'To. 


under  a  license  granted  by  public  officers  and  the  issue  of  a  new 
license  depends  upon  their  discretion,  profits  which  might  have 
been  realized  for  a  time  beyond  the  existence  of  the  license  in 


was,  than  by  showing  the  facts  before 
and  after  the  change,  and  how  the 
change  affected  the  stream  and  the 
plaintiffs'  rights.  .  .  .  The  cost  of 
the  cloth  would  be  made  up  of  tlie 
cost  of  raw  materials  and  of  the  labor 
expended  in  the  manufacture.  The 
profits,  if  anything,  would  be  ascer- 
tained by  deducting  from  the  market 
value,  first,  the  cost  of  material,  and 
then  the  expense  of  manufacture. 
But  it  seems  that  the  expense  was 
not  ascertamed  in  that  way,  nor  the 
profits.  When  the  mill-owner  keeps 
his  whole  force  through  the  year  on 
full  pay,  then  the  amount  he  manu- 
factures less  than  the  full  amount 
for  the  year  would  be  so  much  dead 
loss,  without  regard  to  the  profits  on 
a  single  yard;  and  the  value  of  the 
■work  lost  by  lack  of  water  would  be 
found  by  deducting  the  cost  of  raw 
material  from  the  value  of  the  cloth 
that  would  have  been  made  with  a 
full  supply  of  water." 

In  Richmond  v.  Dubuque,  etc.  R. 
Co.,  33  Iowa,  422,  the  railroad  com- 
pany and  an  elevator  company  at 
Dubuque  entered  into  an  agreement 
containing  these  stipulations:  tiiat 
the  latter  would  erect  a  building  suit- 
able "  for  receiving,  storing,  deliver- 
ing and  handling  all  grain  that  shall 
be  i-eceived  by  the  cars  of  said  rail- 
road company  not  otherwise  con- 
signed." In  a  supplement  to  this 
contract  it  was  further  provided  that 
the  elevator  company  "should  re- 
ceive and  discharge  for  the  said  rail- 
road company  all  through  grain  at 
one  cent  a  bushel,"  etc.,  and  that  the 
elevator  should  have  the  handling 
of  all  through  grain  at  that  price 
per  bushel.  It  was  also  provided 
that  in  case  the  grain  was  held  in 
store  for  the  railroad  company  more 


than  ten  days,  then  the  elevator 
company  should  have  a  certain  per 
cent,  per  bushel.  The  contract,  by 
its  terms,  extended  for  a  period  of 
fifteen  years,  and  at  the  option  of 
the  railroad  company  it  was  to  be 
extended  fifteen  years  more,  but  no 
times  of  payment  were  provided  for 
therein.  In  an  action  against  the 
railroad  company  for  refusing  to 
give  the  elevator  company  the  hand- 
ling of  grain  according  to  the  con- 
tract, the  court  held  that  in  the 
estimate  of  damages  the  plaintiffs 
were  entitled  to  recover  not  only 
loss  of  profits  which  would  have  re- 
sulted to  them  had  the  "  through 
grain "  been  delivered  as  per  con- 
tract, but  also  the  loss  of  profits  re- 
sulting from  the  plaintiffs  being 
deprived  of  the  storage  of  the  grain 
as  stipulated.  There  was  allowed 
$57,750  for  the  prospective  profits  of 
handling  through  grain  at  one  cent 
per  bushel  during  the  period  of  the 
contract,  and  .$11,250  for  prospective 
profits  on  storage  of  grain.  The 
court  say,  in  reference  to  the  last 
item:  "  There  is  not  entire  certainty 
as  to  the  amount  that  ought  to  be 
allowed,  but  this  is  no  reason  why 
none  should  be  given.  The  law  is 
satisfied  with  a  just  and  true  approx- 
imation to  the  true  amount."  See 
Howe  Machine  Co.  v.  Bryson,  44 
Iowa,  159,  24  Am.  Rep.  735;  Fultz  v. 
Wycoff,  25  Ind.  321;  Flick  v.  Weth- 
erbee,  20  Wis.  392:  Heard  v.  Holman, 
19  C.  B.  (N.  S.)  1;  Simmons  v.  Brown, 
5  R.  I.  299,  73  Am.  Dec.  66;  Mc- 
Knight  v.  Ratcliff,  44  Pa.  156:  The 
Narragansett,  Olcott,  388;  Douty  v. 
Bird,  60  Pa.  48;  Hanover  R.  Co.  v. 
Coyle,  55  Pa.  396;  Chapman  v.  Kirby, 
49  111.  211;  Ludlow  v.  Yonkers,  43 
Barb.  493;  Todd  v.  Minneapolis,  etc. 


.^  71.]  EEQUIKED    CERTAINXr   OF   DAMAGES.  22S 

force  when  the  wrong  was  done  cannot  be  recovered.^  A  per- 
son who  has  been  forcibly  prevented  from  fishing  in  public 
waters  may  show  the  quantity  of  fish  he  might  have  caught, 
the  value  of  the  same,  and  the  probable  profits  he  would  have 
made.  As  an  aid  in  determining  these  questions,  he  may  prove 
the  quantity  of  fish  caught  in  the  waters  from  which  he  was 
excluded  by  the  defendant.^ 

§  71,  Chances  for  prizes  and  promotions.  In  an  [123] 
action  against  a  carrier  for  negligently  delaying  the  transpor- 
tation of  models  made  to  compete  for  a  prize  until  the  award 
was  made,  the  judges  differed  as  to  the  measure  of  damages, 
and  it  was  left  undecided  whether  they  should  be  given  for 
the  labor  and  materials  used  in  making  the  models,  or  whether 
the  chance  for  the  prize  might  be  taken  into  consideration. 
Patteson,  J.,  favored  the  latter:  "The  goods  were  made  for  a 
specific  purpose,  which  had  been  defeated  by  the  negligence 
of  the  defendant,  and  they  have  become  useless."  Erie,  J., 
said:  "I  have  great  doubts  whether  that  chance  was  [124] 
not  too  remote  and  contingent  to  be  the  subject  of  damages."* 
In  a  similar  case  the  plaintiff  had  delivered  to  the  defend- 
ants, who  were  carriers,  a  box  containing  plans  and  specifica- 
tions to  be  forwarded  to  a  committee  at  a  distant  place, 
who  had  offered  a  premium  of  8500  to  the  successful  com- 
petitor for  the  best  plans  for  a  public  building.  In  conse- 
quence of  the  defendants'  negligence  they  were  not  delivered 
at  their  destination  until  after  the  premium  had  been  awarded. 
There  was  no  evidence  on  the  part  of  the  plaintiff  to  show 
that  there  was  any  probability  that  his  plans  would  have  been 
adopted,  and  there  was  some  evidence  to  the  contrary.  On 
this  ground  it  was  held  that  the  plaintiff  was  entitled  to  only 
nominal  damages.  But  it  Avas  held  that  such  proof  was  ad- 
missible to  show  the  value  of  his  opportunity  to  compete,  and 

R  Co.,  39  Minn.  186,  39  N.  W.   Rep.  i  Porter  v.  Johnson,  96  Ga,  154,  23 

318;  Swain  v.   Schiefielin,  134  N.  Y.  S.  E.  Rep.  123. 

471,  31   N.  E.  Rep.   1025,  18  L.  R.  A.  2  Pacific    Steam    Whaling  Co.    v. 

385;  Dickinson   v.    Hart,   142  N.  Y.  Alaska  Packers*  Ass'u,  —  Cal. — ,72 

183,   36  N.   E.   Rep.  801;   Malone  v.  Pac.  Rep.  161. 

Weill,  67  App.   Div.   169,   73  N.   Y.  » Watson  v.  Ambergate  R.  Ca,  15 

Supp.  700;  Ingram  v.  Lawson,  6  Bing.  Jur.  448. 

N.   C.   212;  Savery  v.    Ingersoll,    46 

Hun,  176. 


22-i  COMPENSATION.  [§  71. 

that  the  loss  of  this  was  the  direct  and  immediate  effect  of  the 
neo-lio-ence  complained  of.^  "It  is  doubtless  true  that  in  all 
actions  for  breach  of  contract  the  loss  or  injury  must  be  a 
proximate  consequence  of  the  breach.  A  remote  or  possible 
loss  is  not  sufficient  for  compensation.  There  is  no  measure 
for  those  losses  which  have  no  direct  and  necessary  connection 
with  the  stipulations  of  the  contract,  or  which  are  dependent 
upon  contingencies  other  than  the  performance  of  the  con- 
tract, and  which  are,  therefore,  incapable  of  being  estimated. 
"With  no  certainty  can  it  be  said  that  such  losses  are  attribu- 
table to  the  wrongful  act  or  omission  of  him  who  has  violated 
his  engagement.  But,  on  the  other  hand,  the  loss  of  profits 
or  advantages  which  must  have  resulted  from  a  fulfillment  of 
the  contract  may  be  compensated  in  damages  when  they  are 
the  direct  and  immediate  fruits  of  the  contract,  and.  must^ 
therefore,  have  been  in  the  contemplation  of  the  parties  when 
it  was  made.  Applying  this  rule  to  the  present  case,  why  was. 
not  the  loss  of  the  opportunity  to  compete  for  the  premium 
(whatever  may  have  been  its  value)  an  immediate  consequence 
of  the  breach  of  the  contract  ?  The  company  undertook  to 
transport  the  box  to  the  committee  appointed  to  award  the 
[125]  premium.  The  purpose  of  the  contract  was  to  secure  tO' 
the  plaintiff  the  privilege  of  competition.  Certainly,  he  must 
have  had  that  in  contemplation,  and,  if  the  company  was  in- 
formed of  the  object  of  the  transmission,  the  loss  of  this  privi- 
lege was  in  view  of  both  parties  at  the  time  they  entered  into 
the  contract.  But  whether  known  or  not  by  the  compan}^ 
the  loss  was  an  immediate  consequence  of  the  negligent  breach. 
We  do  not  now  stop  to  inquire  whether  the  defendants  can  be 
held  liable  for  every  consequence,  even  though  immediate, 
which  cannot  reasonably  be  supposed  to  have  been  in  the  con- 
templation of  both  parties  at  the  time  they  made  the  contract 
as  the  probable  result  of  the  breach  of  it.  Perhaps  if  the 
special  circumstances  under  which  the  contract  was  made,  and 
which  occasioned  special  and  unusual  injury  to  attend  its 
breach,  were  unknown  to  the  party  which  broke  it,  they  could 
not  be  held  to  make  compensation  for  more  than  the  amount 
of  injury  which  generally  results  from  the  breach  of  such  con- 

1  Adams  Exp.  Co.  v.  Egbert.  36  Pa,  360,  72  Am.  Dec.  882. 


§  Tl.]  EEQUIKED    CERTAINTY    OF   DAMAGES.  225 

tracts  in  cases  unattended  by  any  special  circumstances.  .  .  . 
Suppose  the  engagement  of  the  company  had  been  directly  to 
afford  to  the  plaintiff  an  opportunity  to  compete  for  the  pre- 
mium offered,  could  he,  for  the  breach  of  such  an  agreement, 
recover  more  than  nominal  damages  without  any  proof  that 
any  actual  injury  had  resulted  from  the  breach  ?  We  think 
not.  To  entitle  a  plaintiff  in  an  action  founded  on  a  contract 
to  recover  more  than  nominal  damages  for  its  breach,  there 
must  always  be  evidence  that  an  actual,  substantial  loss  or  in- 
jury has  been  sustained,  unless  the  contract  itself  furnishes  a 
guide  to  the  measurement  of  the  damages;  and  even  when 
there  is  some  such  proof  and  the  amount  is  uncertain,  courts 
have  sometimes  directed  the  jury  to  allow  the  smallest  sum 
which  would  satisfy  the  proof.^  A  plaintiff  claims  compensa- 
tion. The  amount  of  that  compensation  is  a  part  of  his  case. 
Whether,  in  the  present  case,  the  plaintiff  sustained  any  actual 
injury  depended  upon  the  degree  of  probability  there  was  that 
he  would  be  a  successful  competitor  if  the  contract  had  not 
been  broken.  If  his  plans  were  entirely  defeated  ...  it 
cannot  be  claimed  that  he  was  damaged.  He  introduced,  how- 
ever, no  evidence  to  show  there  was  the  least  probability  that 
the  premium  would  have  been  awarded  to  him  had  his  plans 
been  submitted  to  the  committee  in  time."  [126] 

Damages  cannot  be  recovered  against  a  telegraph  company 
because  the  inaccurate  transmission  of  a  message  prevented  a 
horse  from  being  entered  in  competition  for  a  purse.^  The 
fact  that  an  injured  person  was  in  the  line  of  promotion  from 
the  position  of  fireman  to  engineer  cannot  be  considered  in 
awarding  him  damages.^  A  person  who,  in  connection  with 
others,  has  arranged  for  the  capture  of  one  accused  of  crime 
and  for  whose  arrest  a  reward  has  been  offered,  may  recover 
the  amount  of  the  reward  from  a  telegraph  company  which 
has  negligently  failed  to  deliver  a  message  relating  to  the  cap- 

^  Lawton  v.  Sweeney,  8  Jur.  964;  Eep.  334    Contra,  Gulf,  etc.  R.  Co.  v. 

Clunnes  v.  Pezzey,  1  Camp.  8.  John,  9  Tex,   Civ.  App.  343,  29  S.  W. 

2  Western  U.  Tel.  Co.  v.  Crall,  39  Rep.  558. 

Kan.  580,  18  Pac.  Rep.  719;  Hessee  v.  3  Brown  v.  Chicago,  etc.  R  Co.,  64 

Columbus,  etc.  R.  Co.,  58  Ohio  St.  167,  Iowa,  652,  21  N.  W.  Rep.  193.    But 

50  N.  E.  Rep.  354;  Bonnet  v.  Galvea-  see  ch.  36. 
ton,  etc.  R.  Co.,  89  Tex.  72,  33  S.  W. 
Vol.  1—15 


220  COMPENSATION.  [§§  72-7^. 

ture  if  the  jury  find  that  the  arrest  would  have  been  made  but 
for  the  negligence.^  The  defendant  failed  to  deliver  to  plaintiff 
a  message  sent  him  by  the  comptroller  of  the  currency :  "  Would 
you  accept  receivership  of  a  bank  named?  Bond  |35,000; 
compensation  $200  per  month,  subject  to  future  modification." 
Because  there  would  have  been  no  binding  obligation,  if  the 
message  had  been  received  and  an  affirmative  answer  sent,  to 
make  the  appointment  there  could  not  be  a  recovery.-  The 
defeat  of  a  candidate  for  office  because  of  a  slander  is  a  dam- 
age too  remote,  uncertain  and  speculative  to  justify  a  re- 
covery.' 

§  72.  Contingent  advantage.  The  fact  that  the  value  of  a 
contract  or  the  advantage  to  be  derived  from  it  is  contingent  — 
that  is,  that  the  expected  advantage  depends  on  the  concur- 
rence of  circumstances  subsequently  to  transpire,  and  which 
may  by  possibility  not  happen  —  is  not  an  insuperable  objec- 
tion to  recovering  damages  for  its  loss.  The  chance,  so  to 
speak,  of  obtaining  that  advantage  by  performance  of  the  con- 
tract and  the  conjunction  of  the  necessary  subsequent  facts 
may  be  valuable.  The  nature  of  the  contingency  must  be 
considered.  If  it  is  purely  conjectural  and  cannot  be  reason- 
ably anticipated  to  happen  in  the  usual  course  of  things  it  is 
too  uncertain.  There  must  be  proof  legally  tending  to  show 
and  sufiicient  to  satisfy  the  jury  that  it  would  happen.  The 
chance  that  a  father  would  pay  a  son's  debt  to  procure  his  re- 
lease from  custody  has  been  held  capable  of  estimation.'' 

§  73.  Uncertain  mitigation  of  breach  of  marriage  prom- 
ise. In  assessing  damages  for  the  breach  of  a  promise  of  mar- 
riage it  would  not  be  a  legitimate  subject  for  the  jury  to  con- 
sider the  consequences  to  the  plaintiff,  in  mitigation  of  dam- 
ages, of  marrying  the  defendant  and  thereby  forming  an 
unhappy  alliance,  by  reason  of  a  want  of  that  love  and  affection 
that  a  husband  should  bear  his  wife.^ 

§  74.  Failure  to  provide  sinking  fund.  The  damages  to  a 
creditor  for  the  failure  of  a  municipal  corporation  to  fulfill  its 

iMcPeek  v.  Western  U.  Tel.  Co.,  s  Field  v.  Colson.  93  Ky.  347,  20  S. 

107  Iowa,  356,  78  N.  W.  Rep.  63,  70  W.  Rep.  264. 

Am.  St.  205,  43  L.  R.  A.  214.  *  Macrae  v.  Clarke,   L.  R  1  C.  P. 

2Walser  v.  Western  U.   TeL    Co.,  403.     See  §  71. 

114  N.  C.  440, 19  S.  R  Rep.  366.  s  Piper  v.  Kingsbury,  48  Vt  480. 


§  75.]  ELEMENTS    OF   DAMAGE.  227 

contract  to  provide  a  sinking  fund  as  security  for  the  debt 
have  been  held  not  capable  in  their  nature  of  legal  computa- 
tion; there  is  no  legal  standard  by  which  they  can  be  fixed; 
they  are  shadowy,  uncertain  and  speculative.' 

Section  6. 

THE    constituents    OF    COMPENSATION,    OR    ELEMENTS    OF    DAMAGE. 

§75.  Elementary  limitation  of  damages.  The  ele-  [127] 
mentary  limitation  of  recovery  to  a  just  indemnity  for  actual 
iujury,  estimated  upon  the  natural  and  proximate  consequences 
of  the  injurious  act,  fixes  a  logical  boundary  of  redress  in  the 
form  of  compensation  and  furnishes  a  general  test  by  which 
any  particulars  may  be  included  or  rejected.  Kecovery  beyond 
nominal  damages  requires  that  actual  injury  be  shown  except 
in  those  cases  where  there  are  no  pecuniary  elements  or  meas- 
ure, and  the  amount  of  the  recovery  is  necessarily  left  to  the 
discretion  of  the  jury,  as  in  cases  of  personal  injury  or  defama- 
tion of  character.-  What  are  the  elements  of  injury  which  may 
be  compensated  ?  This  inquiry  is  a  legal  one  and  must  be  de- 
termined by  the  court;  where  the  details  are  capable  of  pe- 
cuniary valuation  the  law  affords  some  standard  for  measuring 
compensation  for  them.  The  elements  of  damage  are  always 
correlative  to  the  right  violated  by  the  act  complained  of;  and 
the  amount  of  compensation,  whether  measured  by  legal  rules 
or  referred  to  the  discretion  of  the  jury,  must  depend  on  the 
nature  of  the  right  and  the  mode,  incidents  and  consequences 
of  the  violative  act.'    Each  party  to  a  contract  has  a  legal  right 

1  Memphis  v.  Brown,  20  Wall.  289.  prentice  had  suffered  by  the  master's 

2  In  Scott  V.  Williams,  1  Dev.  376,  improper  treatment;  but  it  did  not 
an  action  for  assault  and  battery  and  appear  to  what  extent  it  had  been 
false  imprisonment,  its  object  being  injured.  It  was  ruled  not  to  be 
to  determine  whether  the  plaintiff  error  to  instruct  the  jury  that  they 
who  was  held  as  a  slave  was  not  a  might  determine  if  there  was  dam- 
freeman,  more  than  nominal  dam-  age  from  that  cause  and  fix  the 
ages  were  given,  though  there  seems  amount. 

to  have  been  no  proof  of  the  actual  ^  if  land  is  injured  by  a  wrongful 

damages.  act  or  taken  under  the  power  of  emi- 

In  Creech  v.  Creech,  98  N.  C.  155,  nent  domain   the  owner  may  have 

3  S.  E.  Rep.  814,  an  action  upon  an  his  damages  fixed  with  regard  to  its 

apprentice  bond,  evidence  was  given  adaptabilitj' to  any  use  to  which  it 

to  show  that  the  health  of  the  ap-  may  be  applied;  he  is  not  restricted 


228  COMPENSATION.  [§  76. 

to  performance  by  the  other  according  to  its  legal  import  and 
effect.  Any  default  is  a  violation  of  that  right.  The  injured 
[l;2SJ  party  is  entitled  to  a  measure  of  compensation  which  will 
place  him  in  as  good  condition  as  if  the  contract  had  been  ful- 
filled. In  other  words,  all  the  natural  and  proximate  results 
of  the  act  complained  of  will  be  considered  with  a  view  to  giv- 
ing him  compensation  for  all  gains  prevented  and  all  losses 
sustained.  The  particular  stipulations  of  the  contract  and  the 
alleged  breach  will  circumscribe  the  inquiry,  and  the  facts 
establishing  the  breach  and  its  consequences  will  constitute  its 
subjects. 

§  76.  Damages  for  non-payment  of  money.  On  a  contract 
for  the  mere  payment  of  money  the  unpaid  principal,  together 
with  the  stipulated,  or  after  maturity  the  lawful,  rate  of  inter- 
est is  the  measure  of  damages.  It  is  the  invariable  measure 
of  recovery  in  a  creditor's  action  against  his  debtor.^  The 
failure  to  pay  a  debt  when  due  may  disappoint  the  creditor 
and  embarrass  him  in  his  affairs  and  collateral  undertakings; 
he  may  consequentially  suffer  losses  for  which  interest  is  a 
very  inadequate  compensation;  but  they  are  remote  and  do 
not  result  alone  from  the  default  of  his  debtor.  Money,  like 
the  staples  of  commerce,  is,  in  legal  contemplation,  always  in 
market  and  procurable  at  the  lawful  rate  of  interest;  and  the 
same  principle  which  limits  a  disappointed  vendee's  recovery 
against  his  defaulting  vendor  to  the  market  value  of  the  com- 

to  such  damages  as  it  sustained  for  der  v.  Fromberger,  4  Dall.  436;  Lou- 

the  purpose  it  was  used  when  the  don  v.  Taxing  District,  104  U.  S.  771 ; 

injury   was  done  or  it  was  taken.  Hoblit  v.  Bloomington,  71  111.  App. 

Boom  Co.  V.  Patterson,  98  U.  S.  403;  204:  Greene  v.  Goddard,  9  Met.  212, 

Fort  Worth,  etc.  R.  Co.  v.  Wallace,  232;  Ladies'  Building  Ass'n  v.  Rob- 

74  Tex.  581.  12  S.  W.  Rep.  227;  Same  bins,  1  Mart.  Ch.  134,  152;  Western 

V.  Hogsett,  67  Tex.  685,  4  S.  W.  Rep.  Wagon    &    Property    Co.    v.    West, 

365.   See  ch.  26.  [1892]  1  Ch.  271,  277;  South  African 

The  damages  for  the  loss  of  a  grove  Territories    v.     Wallington,     [1898] 

wholly  situated   upon   a  part  of  a  App.  Cas.  309;  Henderson  v.  Bank  of 

farm    which  is  separated  from  the  Hamilton,  25    Ont.   641;    Bethel    v. 

larger  tract  included  in  it  by  a  rail-  Salem  Imp.  Co..  93  Va.  354,  25  S.  E. 

road  are  to  be  awarded  with  regard  Rep.  304,  33  L.  R.  A.  602;  Arnott  v. 

to  its  usefulness  to  the  whole  farm.  Spokane,  6  Wash.   442,  33  Pac.  Rep. 

Brooks    V.    Chicago,  etc.  R  Co.,  73  1033;  Blue  v.  Capital  Nat.  Bank,  145 

Iowa,  179,  34  N.  W.  Rep.  805.  Ind.  518,  45  N.  E.  Rep.  655;  Morrill  v. 

1  Fletcher  v.  Tayleur,  17  C.  B.  21;  Weeks.    70  N.   H.    178,  180,  46  AtL 

Short  V.  Skipwith,  1  Brock.  103;  Ben-  Rep.  32. 


§  77.]  ELEMENTS    OF    DAMAGE.  229 

raodity  which  is  the  subject  of  his  contract  restricts  the  cred- 
itor to  the  principal  and  interest.  The  practical  difficulty  to 
a  creditor  of  borrowing  the  money,  where  the  .debtor  is  with- 
holding the  sum  he  owes  and  which  is  wanted,  and  that  of  a 
vendee  in  making  a  new  purchase,  after  he  has  paid  the  de- 
faulting vendor  for  the  goods  needed,  is  the  same.  No  party's 
condition,  in  respect  to  the  measure  of  damages,  should  be 
worse  for  having  failed  in  his  engagement  to  a  person  whose 
affairs  are  embarrassed  than  if  the  same  result  had  occurred 
with  one  in  prosperous  or  affluent  circumstances.^ 

§  77.  Greater  damages  than  interest  for  failure  to  pay 
money.  Where  the  obligation  to  pay  money  is  special  and 
has  reference  to  other  objects  than  the  mere  discharge  of  a 
debt,  as  w^here  it  is  agreed  to  be  done  to  facilitate  trade,  and 
to  maintain  the  credit  of  the  promisee  in  a  foreign  coun-  [129] 
try,  to  take  up  commercial  paper,  pay  taxes,  discharge  liens, 
relieve  sureties,  or  for  any  other  supposable  ulterior  object, 
damages  beyond  interest  for  delay  of  payment,  according  to 
the  actual  injury,  may  be  recovered.  The  contract  implied 
between  a  bank  and  its  depositors  is  that  the  former  will  hold 
the  funds  and  pay  them  out  on  the  order  of  the  latter;  for 
failing  so  to  do  the  bank  is  liable  either  in  tort  or  upon  con- 
tract.^ If  the  action  be  brought  on  the  contract  and  the  fail- 
ure to  pay  was  not  wilful,  and  no  special  damages  are  proved, 
and  the  check  has  been  paid,  only  nominal  damages  can  be  re- 
covered.' If  the  depositor  is  not  a  trader  and  has  made  his 
deposit  subject  to  special  terms,  on  the  wrongful  refusal  to  pay 
him  in  person  he  can  recover  only  interest  on  the  amount.* 
He  cannot  recover  for  injury  to  his  credit  because  no  public- 
ity is  given  to  the  refusal  to  pay.*    In  the  absence  of  proof  of 

1  Domat,  B.  3,  tit.  5,  §  3,  art.  4;  Mas-  2  Citizens'  Nat.  Bank  v.  Importers' 

terton  v.  Mayor,  7  Hill,  61;  Lowe  v.  &  Traders'  Bank,  119  N.  Y.  195,  23  N. 

Turpie,  147  Ind.  653, 677,  44  N.  E.  Rep.  E.  Rep.   540;  Burroughs   v.   Trades- 

25,  37  L.  R.  A.  333,  quoting  the  text;  men's  Nat.  Bank,  87  Hun,  6,  33  N.  Y. 

Smith  V.  Parker,  148  Ind.   127,  45  N.  Supp.  864,  affirmed  without  opinion, 

R   Rep.  770;  Fox  v.  Poor  Ridge  &  156  N.  Y.  663. 

Sugar  Creek  Turnpike  Road  Co.,  8  ^  Burroughs   v.  Tradesmen's  Nat. 

Ky.  L.  Rep.  437  (Ky.  Super.  Ct.);  Hob-  Bank,  supra. 

lit  V.  Bloomington,  71  111.  App.  204;  *  Henderson  v.  Bank  of  Hamilton, 

McGee  v.  Wineholt,  23  Wash.  748,  63  25  Ont.  641. 

Pac  Rep.  571.  ^  Hanna  v.  Drovers'  Nat  Bank,  92 

111.  App.  611. 


230 


COMPENSATION. 


[§77. 


special  damage  a  farmer  whose  check  is  not  honored  can  re- 
cover only  a  nominal  sura.^  But  a  depositor  who  proves  special 
damage  to  himself  as  a  stock  and  share-broker  and  stock-iob- 
bar  may  recover  Yery  substantial  damages,  though  he  is  not 
a  trader.^  One  who  breaks  his  contract  to  lend  money  at  a 
less  rate  than  is  fixed  by  law  is  liable  to  the  other  party  if  he 
borrows  elsewhere  and  pays  a  rate  in  excess  of  that  fixed  by 
such  contract  for  the  difference  between  such  rates  inside  the 
legal  rate.'  Under  various  circumstances  an  enlarged  liability 
results  from  the  failure  to  pay  checks  of  customers  who  have 
provided  funds  to  meet  them;  in  such  cases  the  business  stand- 
ing and  especially  the  credit  of  the  drawers  may  be  impaired.'* 
In  one  such  case  for  refusal  to  pay  a  check  of  48Z.  the  jury 
gave  a  verdict  of  500^.  damages,  and  there  was  no  evidence 
that  special  damage  had  been  sustained.  This  was  deemed 
excessive  and  was  reduced  by  consent  to  2001.^    The  rule  of 


\ 


1  Bank  of  New  South  Wales  v.  Mil- 
Tain,  10  Vict.  L.  R  (law)  3. 

2  Dean  v.  Melbourne  Stock  Ex- 
change Agency  &  Banking  Corpora- 
tion, 16  Vict.  L.  R.  403.  In  this  case 
the  plaintiff  was  rendered  unable  to 
meet  his  business  engagements  and 
was  suspended  by  a  stock  exchange 
of  which  he  was  a  member,  and  suf- 
fered damage  to  his  reputation.  A 
judgment  for  2,900/,  was  sustained. 

3  Gooden  v.  Moses,  99  Ala.  230,  13 
So.  Rep.  765;  Thorp  v.  Bradley,  75 
Iowa,  50,  39  N.  W.  Rep.  177;  Luce  v. 
Hoisington,  56  Vt.  ^436. 

A  bank  agreed  to  advance  money 
to  a  customer  with  knowledge  of  the 
use  he  designed  to  make  of  it,  and 
subsequently  refused  to  do  so.  He 
was  unable  to  procure  the  money 
elsewhere  and  was  obliged  to  aban- 
don his  enterprise.  There  was  a  re- 
covery of  the  actual  damages  sus- 
tained. Manchester  &  O.  Bank  v. 
Cook,  49  L.  T.  Rep.  674  (1883). 

^Svendsen  v.  State  Bank,  64  Minn. 
40,  58  Am.  St.  532,  31  L.  R.  A.  552,  65 
N.  W.  Rep.  1086,  citing  the  text:  Bank 
of  Commerce  v.  Goos,  39  Neb.  437,  58 
N.  W.  Rep.  84,  23  L.  R  A.  90;  Patter- 


son V.  Marine  Nat.  Bank,  130  Pa.  419, 
18  Atl.  Rep.  632, 17  Am.  St.  779;  First 
Nat.  Bank  v.  Railsback,  58  Neb.  248, 
78  N.  W.  Rep.  512;  Marzetti  v.  Will- 
iams, 1  B.  &  Ad.  415;  Birchall  v. 
Third  Nat.  Bank,  17  Phila,  139;  J.  M. 
James  Co.  v.  Continental  Nat.  Bank,. 
105  Tenn.  1,  58  S.  W.  Rep.  261,  51  L. 
R.  A.  255;  Fleming  v.  Bank  of  New 
Zealand,  [1900]  App.  Cas.  577. 

SRolin  V.  Steward,  14  C.  B.  595; 
Boyd  V.  Fitt,  14  Ir.  C.  L.  (N.  S.)  43; 
Larios  v.  Gurety,  L.  R.  5  P.  C.  346; 
Prehn  v.  Royal  Bank,  L.  R  5  Ex.  92: 
Patterson  v.  Marine  Nat.  Bank,  130 
Pa.  419, 17  Am.  St.  779,  18  Atl.  Rep. 
632. 

In  Schaflfner  v.  Ehrman,  139  111.  109, 
28  N.  E.  Rep.  917,  a  verdict  for  $400 
was  sustained  for  a  mistaken  refusal 
to  cash  checks  amounting  to  $900. 

In  the  absence  of  proof  of  special 
damage  a  bank  which  failed  to  pay 
a  check  sent  it  by  mail,  solely  through 
the  negligent  mistake  of  an  em- 
ployee, was  liable  for  "temperate 
damages;"  judgment  for  $200  was 
affirmed.  Atlanta  Nat.  Bank  v, 
Davis,  96  Ga.  334,  23  S.  E.  Rep.  190, 
51  Am.  St.  139. 


§  77.]  ELEMENTS   OF   DAMAGE.  231 

Hadley  v.  Baxendale  is  applied  to  such  cases.^  Bankers  at 
Liverpool  by  letter  of  credit  delivered  to  a  customer  undertook 
to  accept  drafts  drawn  abroad  to  be  paid  with  his  money  de- 
posited for  that  purpose.  Before  maturity  they  gave  notice 
that  they  would  be  unable  to  pay  the  drafts  at  maturity  and 
the  customer  was  put  to  the  expense  of  a  commission  to  an- 
other party  to  take  up  the  bills,  of  protesting  them  and  of  tel- 
egrams. These  were  held  proper  elements  of  damage.^  In 
another  case  the  defendant's  failure  to  meet  the  plaintiff's 
drafts  caused  a  suspension  of  the  latter's  business  at  one  place, 
injured  it  at  another,  and  caused  the  loss  of  a  valuable  agency; 
all  resulting  losses  were  recoverable.^  The  elements  of  dam- 
age for  the  non-payment  of  a  check  include  time  lost,  expense 
incurred,  and  loss  of  business  sustained ;  but  punitive  damages 
should  not  be  allowed  in  the  absence  of  proof  showing  actual 
malice,  oppression  or  bad  motive.  The  fact  that  the  drawer 
of  an  unpaid  check  had  a  nervous  chill  in  consequence  of  its 
non-payment  is  too  remote  to  be  considered.*  The  arrest  and 
imprisonment  of  the  drawer  of  a  check  is  not  a  result  which 
may  be  considered  in  awarding  him  compensation  for  the  non- 
payment of  his  check.^    If  the  plaintiff  pleads  and  proves  that 

On  the  dishonor  of  a  note  because  a  bank  to  pay  a  note  for  $517  which 

of  the  breach  of  an  agreement  to  re-  was  payable  there  out  of  a  deposit  of 

new  it,  although  pecuniary  loss  was  $611   should  result  in  the  entry  of 

notshown,  a  judgment  for  the  plaint-  judgment  for  over  $8,000,  and  the 

iflf's  expenses  and  150Z.    for  general  seizure  of  the  business  of  the  maker 

damages  was  sustained;   but  a  re-  of  the  note.     Brooke  v.  Tradesmen's 

covery  of  lOl.  for  attorney's  expenses  Nat.  Bank,  69  Hun,  202, 23  N.  Y.  Supp. 

was  disallowed.     Dowling  v.  Jones,  802. 

2  N.  S.  W.  359.  Where  a  check  has  been  dishon- 

1  Parker  v.  Cunningham,  5  Vict.  L.  ored  the  plaintiff  may  show,  as  evi- 

R.  (law)  202,  and  cases  cited  supra,  dence  of  damage  to  his  business  repu- 

except  Boyd  v.  Fitt,  14  Ir.  C.  L.  (N.  tation,  the  loss  of  a  partnership;  but 

S.)  43,  in  which  it  is  suggested  that  such  loss  is  too  remote  to  be  regarded 

it  is  for  the  jury  to  find  whether  the  as  special  damage.     Dyson  v.  Union 

damages  are  the  natural  and  proxi-  Bank  of  Australia,  8  Vict.  L.  R.  (law) 

mate  consequence  of  the  breach  of  106. 

contract.  *  American   Nat   Bank   v.   Morey, 

2Prehn  v.  Royal  Bank,  supra;  Ur-  24  Ky.  L.  Rep.  658,  69  S.  W.  Rep.  759, 

quhart  v.  Mclver.  4  Johns.  103;  Riggs  58  L.  R.  A.  956. 

V.  Lindsay,  7  Cranch,  500.  5  Bank  of  Commerce  v.   Goos,  39 

»  Boyd  V.  Fitt,  supra.  Neb.  437,  58  N.  W.  Rep.  84,  23  L.  R,  A. 

It  is  not  according  to  the  usual  90. 
course  of  events  that  the  refusal  of 


232  COMPENSATION.  [§  77. 

he  is  a  trader  he  may  show  a  general  impairment  of  his  credit 
as  the  result  of  dishonoring  his  checks  without  alleging  special 
damage;^  but  if  loss  of  custom  and  credit  from  particular 
persons  is  relied  upon  it  must  be  specially  pleaded.^ 

"Where  a  depositor's  checks  had  been  refused  payment  four 
times  in  close  succession,  with  knowledge  that  his  deposit  was 
sufficient  to  pay  them,  the  plaintiff  recovered  damages  for  his 
actual  money  loss  because  of  the  notice  of  protest  and  expend- 
itures made  in  arranging  matters  after  he  knew  of  the  dis- 
honor of  his  checks,  substantial  damages  for  the  impairment 
of  his  credit,  notwithstanding  he  was  not  a  trader.  On  this 
feature  of  the  recovery  it  was  said  that  plaintiff  was  engaged 
in  actual  business,  and  that  it  was  in  the  course  of  that  business 
that  the  checks  had  been  drawn.  Ordinarily,  an  honest  man 
draws  checks  only  on  a  bank  where  he  has  an  account,  and 
though  sometimes  by  mistake  he  may  draw  checks  when  he 
has  overdrawn  his  account,  yet,  if  he  does  that  repeatedly, 
any  one  knowing  it  would  be  sure  to  conceive  an  unfavorable 
opinion,  not  only  as  to  his  honesty,  but  also  as  to  his  credit;  so 
that  the  act  of  a  bank  in  refusing  to  pay  its  customer's  checks 
is  something  more  than  a  mere  nominal  breach  of  the  contract 
to  be  paid  for  by  requiring  the  bank  to  make  good  the  money 
which  its  act  has  cost  him.  From  these  repeated  refusals  the  jury 
might  infer  that  the  credit  of  the  plaintiff  was  impaired  thereby. 
A  further  recovery  was  sustained  for  injured  feelings  and 
mental  anxiety  over  the  matter;  so  far  as  these  resulted  di- 
rectly and  proximately  from  the  defendant's  acts  if  these  were 
committed  maliciously  through  wrongful  and  improper  mo- 
tives. As  to  this  head  the  court  said:  As  we  have  seen,  when 
the  animus  is  a  question  for  the  jury,  they  are  at  liberty,  when 
they  find  that  damages  are  suffered  because  of  the  tort,  not 
only  to  award  the  actual  money  damages  sustained,  but  dam- 
ages for  the  mental  suffering  and  anxiety  which  accompany 
the  material  damages  resulting  from  the  wrongful  act.  .  .  . 
If  it  can  be  fairly  inferred  that,  as  the  result  of  the  act,  the 
plaintiff,  who  was  a  prosperous  business  man  in  good  standing, 

ij.  M.  James  Co.   v.  Continental        2  Fleming  v.  Bank  of  New  Zealand, 
Nat.  Bank,  105  Tenn.  1, 58  S.  W.  Rep.     [1900]  App.  Cas.  577. 
261,  51  L.  R.  A.  255. 


^  77.]  ELEMENTS    OF    DAMAGE.  233 

has  suffered  damage  to  his  credit,  so  that  his  status  in  that  re- 
gard has  been  changed,  and  that  has  taken  place  because  of 
the  wrongful  and  intentional  act  of  the  defendant,  it  is  not  too 
much  to  infer  that,  as  a  result  of  that  act,  and  the  damages 
caused  by  it,  the  plaintiff  has  suffered  anxiety  and  the  feeling 
of  humiliation  which  would  necessarily  follow  the  consciousness 
of  a  loss  of  one's  business  reputation.  The  case  is  quite  analo- 
gous to  an  action  of  slander.  It  is  quite  true  that  in  such  a 
case  as  this  the  bank  says  nothing  which  can  be  laid  hold  of 
as  the  basis  of  the  action,  but  hy  its  act  it  affirms  that  the  per- 
son who  has  drawn  checks  upon  it  has  made  an  effort  to  obtain 
money  from  the  bank  and  to  impose  his  checks  upon  his  neigh- 
bors with  w^hom  he  deals,  knowing  that  they  would  not  be 
honored  when  presented;  and  that  is  substantially  saying  that 
in  respect  to  that  matter  his  dealing  is  dishonest,  and  neces- 
sarily impairs  his  credit  as  an  honest  man.  The  jury  were, 
therefore,  justified  in  considering  that  an  act  of  the  bank  which 
raised  an  inference  that  the  plaintiff  was  not  an  honest  man, 
necessarily  inflicted  upon  him  that  humiliation  and  mental 
iinxiety  which  follows  upon  the  knowledge  by  a  man  that  he 
has  been  accused  of  the  dishonest  act,  which  the  action  of  the 
bank  has  given  rise  to.^  The  rule  which  supports  a  recovery 
i-ov  the  loss  of  credit  where  a  bank  refuses  to  pay  a  depositor's 
check  has  no  application  in  the  case  of  unintentional  delay  in 
the  delivery  of  money  by  a  telegraph  company  whereby  the 
plaintiff's  note  was  protested,  unless  he  shows  a  pecuniary  loss 
because  of  the  protest,^  Where  the  plaintiff  gave  up  certain 
claims  against  the  defendant  as  a  consideration  for  the  supply 
of  funds  by  the  latter  for  specified  purposes  and  for  a  fixed 
time,  and  at  the  expiration  of  three-fourths  of  that  time  the 
defendant  broke  his  contract,  the  plaintiff  was  not  entitled  to 
recover  the  value  of  such  claims,  the  failure  of  consideration 
not  being  total;  he  did  recover  the  expenses  directly  entailed 
upon  him  by  the  breach,  a  liberal  sum  in  respect  to  loss  and 
embarrassment,  to  avoid  which  he  surrendered  those  claims, 
which  loss  and  embarrassment  were  in  the  contemplation  of 
the  parties  when  they  contracted.    The  first  head  of  damage 

1  Davis  V.  Standard  Nat.  Bank,  50  .     2  Smith  v.  Western  U.  Tel.  Co.,  150 
App.  Div.  210,  63  N.  Y.  Supp.  764.  Pa.  561,  24  AtL  Rep.  1049. 


234  coMrE.\sATio::T,  [§  7T.. 

consisted  of  the  expense  of  transferring  the  loan,  and  it  was 
allowed  notwithstanding  the  transfer  would  necessarily  have 
been  made  three  months  later.' 

In  order  that  the  liability  for  the  breach  of  a  contract  to 
loan  money  to  pay  an  incumbrance  shall  exceed  a  nominal  sum 
it  must  appear  that  the  contract  was  made  with  knowledge  of 
the  purpose  for  which  the  money  was  to  be  used,  the  necessity 
for  its  use,  and  also  that  the  land  was  lost  to  the  owner  because 
of  the  incumbrance,  and  without  his  knowledge  and  solely 
through  the  fault  of  him  who  was  to  make  the  loan ;  or,  if  the 
other  person  had  notice  of  the  neglect  or  refusal  to  make  the 
loan,  it  came  at  a  time  when  he  was  deprived  of  the  opportu- 
nity to  procure  the  money  elsewhere  and  pay  the  incumbrance 
or  redeem  the  land  if  it  had  been  sold.-  The  breach  of  a  con- 
tract to  advance  money  and  supplies  to  carry  on  a  logging 
business,  the  contract  having  been  made  with  knowledge  that 
the  obligee  could  not  procure  these  elsewhere,  renders  the  party 
guilty  thereof  liable  for  the  profits  which  could  have  been  made 
by  putting  logs  in  the  market.^  The  general  rule  that  a  person. 
can  recover  only  nominal  damages  because  of  the  refusal  of 
another  to  advance  money  of  w^hich  he  may  immediately  de- 
mand the  repayment,^  does  not  apply  where  the  circumstances 
indicate  that  the  parties  did  not  intend  the  transaction  to 
be  a  demand  loan  though  it  was  such  in  terms;  in  such  a  case 
the  plaintiff  may  prove  the  damages  he  has  sustained  because 
of  the  breach  of  contract.^ 

Where  one  person  furnishes  money  to  another  to  discharge 
an  incumbrance  upon  the  land  of  the  person  furnishing  the 
money,  and  the  person  undertaking  to  discharge  it  neglects  to 

1  Parker  v.  Cunningham,  5  Vict.  L.  ^  Lowe  v.  Turpie,  147  Ind.  652,  675, 

R.  (law)  203.  44  N.  E.  Rep.  25,  37  L.  R.  A.  233. 

On  the  breach  of  a  contract  to  ex-  "  Graham  v.  McCoy,  17  Wash.  63, 

tend  a  loan  the  only  damages  recov-  48  Pac.  Rep.  780,  49  id.  235. 

erable  are  those  represented  by  the  *  Bradford,  etc.  R.  Co.  v.  New  York, 

difference  in  the  rate  of  interest  to  etc.  R.  Co.,  123  N.  Y.  316,  25  N.  E.  Rep. 

be  paid,  unless  the  plaintiff  shows  499,  11  L.  R.  A.  116. 

his  inability  to  obtain  the  money  5  Goldsmith  v.  Holland  Trust  Co., 

from  other  sources  to  discharge  the  5  App.  Div.  104,  38  N.  Y.  Supp.  1032. 

debt  which,  by  his  default  in  the  pay-  See  Bank  of  Commerce  v.  Bright,  23- 

ment  of  interesr,  has  matured.  West-  C.  C.  A.  586,  77  Fed.  Rep.  949. 
em  U.   Tel.   Co.   v.  Hearne,  7  Texi 
Civ.  App.  67,  73,  26  S.  W.  Rep.  478. 


§  78.]  ELEMENTS    OF   DAMAGE.  235 

do  SO,  and  the  land  is  lost  to  the  owner  by  reason  of  the  neg 
lect,  the  measure  of  damages  may  be  the  money  furnished 
with  interest,  or  the  value  of  the  land  lost,  according  to  cir- 
cumstances.^ If  the  land-owner  has  knowledge  of  the  agent's 
failure  in  time  to  redeem  the  land  himself  his  damages  [130] 
will  be  the  money  furnished  with  interest.  But  if  the  land- 
owner justly  relies  upon  his  agent  to  whom  he  has  furnished 
money  to  discharge  the  incumbrance,  and  the  land  is  lost  with- 
out his  knowledge,  and  solely  through  the  fault  of  the  agent, 
the  latter  will  be  liable  for  the  value  of  the  land  at  the  time  it 
is  lost.^ 

§  78.  Liability  for  gains  and  losses.  For  the  breach  of 
other  contracts  than  to  pay  money  the  injured  party  is  entitled 
to  compensation  for  gains  prevented  ^  and  losses  sustained.  The 
gains  prevented  are  those  which  would  accrue  to  the  contract- 
ing parties  from  the  mutual  performance  of  the  contract.  The 
damages  for  the  total  breach  of  a  contract  should  include  the 
value  of  it  to  the  injured  party.  This  is  generally  the  meas- 
ure. There  are  some  exceptions,  as  in  case  of  contracts  for 
the  sale  of  land  where  title  unexpectedly  cannot  be  made,  and 
generally  on  covenants  for  title  in  conveyances  of  real  estate.* 

1  In  actions  upon  covenants  against  himself  the  amount  thus  advanced, 
incumbrances  or  covenants  to  pay  and  where,  after  receiving  the  deed, 
off  specific  incumbrances,  the  dam-  he  refuses  to  make  the  advance- 
ages  are  the  diminution  in  value  of  ments.  The  liability  of  such  person 
the  estate  by  reason  of  the  incum-  is  not  for  the  value  of  the  land  nor 
brances,  and  where  the  contract  the  sum  which  was  to  be  advanced, 
broken  was  to  pay  off  a  specific  lien  but  for  the  actual  damages  sustained 
the  owner  may  recover  the  whole  by  the  other  party.  Turpie  v.  Lowe, 
amount  of  it,  although  no  damage  114  Ind.  37,  54,  15  N.  E.  Rep.  834; 
has  been  proved-  Lethbridge  v.  Myt-  Stanley  v.  Nye,  51  Mich.  232,  16  N. 
ton,  2  B.  &  Ad.  772;  Carr  v.  Roberts,  W.  Rep.  387. 

5   id.   78;   Loosemore  v.  Radford,  9  ^  See  ^%  59  et  seq. 

M.  &  W.  657;    Hodgson  v.  Wood,  2  *  Flureau   v.   Thornhill,   2   W.  BL 

H.  &  C.  649.     See  Paro  v.  St.  Mar-  1078;  Worthington   v.    Warrington, 

tin,  180  Mass.  29.  61  N.  E.  Rep.  268.  8  C.  B.  134;  Buckley  v.  Dawson,  4  Ir. 

2  Blood  V.  Wilkins,  43  Iowa,  565;  C.  L.  (N.  S.)  211;  Sikes  v.  Wild,  1  B. 
Gallup  V.  Miller,  25  Hun,  298.  &  S.  594;  Bain   v.  Fothergill,  L.  R,  6 

The  rule  stated  in  the  text  does  not  Ex.  59,  L.  R  7  Eng.  &  Irish  App.  158; 

apply  where  an  individual  accepts  a  Baldwin   v.  Munn,  2  Wend.  399,  20 

deed  for  the  land  of  another,  and  Am.  Dec.  627;  Conger  v.  Weaver,  20 

agrees  with  him  to  advance  money  N.  Y.  140;  Pumpelly  v.  Phelps,  40  id. 

to  pay  his  debts,  and  to  sell  the  land  60;   Sweem  v.  Steele,   5   Iowa,   352; 

to  raise  money  with  which  to  repay  Drake  v.  Baker,  34  N.  J.  L.  358;  Vio- 


236 


COMPENSATION. 


[§78. 


By  this  general  rule  the  party  thus  injured  by  a  total  breach 
is  entitled  to  recover  the  profits  of  the  particular  contract 
which  he  shows,  with  sufficient  certainty,  would  have  accrued 
if  the  other  party  had  performed.  He  is  entitled  to  recover 
proportionately  for  a  partial  breach.  And  to  ascertain  these 
profits  the  nature  and  the  special  purpose  of  the  contract,  a 
subcontract,  or  other  subsidiary  and  dependent  arrangement, 
within  the  contemplation  of  the  parties  at  the  time  of  con- 
tracting,  may  be  taken  into   consideration.^     The   objection 


let  V.  Rose,  39  Neb.  661,  58  N.  W.  Rep. 
216.    See  ch.  13. 

1  Mason  v.  Alabama  Iron  Co.,  73 
Ala.  270;  Jones  v.  Foster,  67  Wis. 
296,  30  N.  W.  Rep.  697;  Cameron  v. 
White,  74  Wis.  425,  43  N.  W.  Rep. 
1.55,  5  L.  R  A.  493;  Treat  v.  Hiles.  81 
Wis.  280,  50  N.  W.  Rep.  896;  Oliver  v. 
Perkins,  92  Mich.  304,  52  N.  W.  Rep. 
609;  Morgan  v.  Hefler,  68  Ma  131; 
Hadley  V.  Baxendale,  9  Ex.  341;  Mc- 
Hose  V.  Fulmer,  73  Pa.  305;  Van 
Arsdale  v.  Rundel,  82  111.  63;  True  v. 
International  Tel.  Co.,  60  Me.  9; 
Booth  V.  Spuyten  Duyvil  Rolling 
Mill  Co.,  60  N.  Y.  487;  Cassidy  v.  Le 
Fevre,  45  id.  562;  Hexter  v.  Knox, 
63  id.  561;  Frye  v.  Maine  Central  R, 
Co.,  67  Me.  414;  Fultz  v.  Wycoff,  25 
Ind.  321;  Holden  v.  Lake  Co.,  53  N. 
H.  552;  Coweta  Falls  Manuf.  Co.  v. 
Rogers,  19  Ga,  416,  65  Am.  Dec.  602; 
Fox  V.  Harding,  7  Cash.  516:  Fletcher 
V.  Tayleur.  17  C.  B.  21;  Masterton  v. 
Mayor,  7  Hill,  61;  Wolcott  v.  Mount, 
86  N.  J.  L.  262,  13  Am.  Rep.  438;  Pas- 
singer  V.  Thorburn,  34  N.  Y.  634; 
Smith  V.  Chicago,  etc.  R.  Co.,  38 
Iowa.  518;  Van  Wyck  v.  Allen,  69  N. 
Y.  61,  25  Am.  Rep.  136;  Ferris  v. 
Comstock,  33  Conn.  513;  France  v. 
Gaudet,  L.  R.  6  Q.  B.  199;  Richmond 
T.  D.  &  S.  C.  R  Co.,  40  Iowa,  264; 
Sisson  V.  Cleveland,  etc.  R.  Co.,  14 
Mich.  489;  Burrell  v.  New  York,  etc. 
Co.,  14  Mich.  34;  Maynard  v.  Pease, 
99  Mass.  555;  Bell  v.  Cunningham,  3 
Pet.  69;  Farwell  v.  Price,  30  Mo.  587; 


James  H.  Rice  Co.  v.  Penn  Plate 
Glass  Co.,  88  IlL  App.  407,  citing  the 
text;  Smith  v.  Los  Angeles  &  P.  R 
Co.,  98  CaL  210,  33  Pac.  Rep.  53; 
Post  V.  Davis,  7  Kan.  App.  217,  52 
Pac.  Rep.  903;  McNeill  v.  Richards, 
[1899]  1  Irish,  79;  Consolidated  Coal 
Co.  v.  Schneider,  93  111.  App.  88,  cit- 
ing the  text;  Curry  v.  Kansas,  etc.  R 
Co.,  58  Kan.  6,  48  Pac.  Rep.  579.  61 
Kan.  541,  60  Paa  Rep.  325;  Watson 
V.  Needham,  161  Mass.  404,  37  N.  E. 
Rep.  204,  24  L.  R  A.  287;  Knowles  v. 
Steele,  59  Minn.  452,  61  N.  W.  Rep. 
557;  Farr  v.  Griffith,  9  Utah,  416.  35 
Pac.  Rep.  506,  citing  the  text;  Ken- 
dall Bank  Note  Co.  v.  Commissioners 
of  Sinking  Fund,  79  Va.  563;  Bratt 
V.  Swift,  99  Wis.  579,  75  N.  W.  Rep. 
411;  Crosby  Lumber  Co.  v.  Smith,  2 
C.  C.  A.  97,  51  Fed.  Rep.  63;  Tinsley 
V.  Jemison,  20  C.  C.  A.  371,  74  Fed, 
Rep.  177;  Lindsay  v.  Stevenson,  17 
Vict.  L.  R  112;  Marcus  v.  Myers,  11 
T.  L.  Rep.  327. 

In  Pell  V.  Shearman,  10  Ex.  766, 
the  defendant  covenanted  with  the 
plaintiff  that  if  he  would  surrender 
to  his  lessor  a  certain  lease  they 
would,  within  two  years  or  such 
period  as  should  be  agreed  in  a  new 
lease,  which  the  lessor  had  agreed  to 
grant  them,  sink  upon  the  demised 
premises  a  pit  to  the  depth  of  one 
hundred  and  thirty  yards  for  the 
purpose  of  finding  coal,  and,  in  case 
a  marketable  vein  of  coal  should  be 
reached,    pay    the    plaintiff    2,500i, 


§   79.]  ELEMENTS    OF    DAMAGE.  237 

that  the  nature  of  the  business  to  which  the  contract  has 
reference  and  in  which  profits  might  have  been  earned  fur- 
nishes no  reasonable  basis  upon  which  to  malce  an  estimate  of 
loss  is  not  controlling  where  the  contract  sued  upon,  or  the 
collateral  contract,  if,  in  the  latter  case,  the  defendant  is  re- 
sponsible for  its  breach,  consists  of  an  undertaking  to  do  specific 
work  for  a  specified  price,  although  in  the  performance  of  that 
work  machinery  as  well  as  labor  may  be  employed  and  the 
weather  may  affect  the  profits  by  interfering  with  the  work.^ 
§  79.  What  losses  elements  of  damage.  Losses,  aside  from 
gains  prevented,  may  be  sustained  in  various  ways  in  conse- 
quence of  the  breach  of  a  contract.  First,  a  loss  may  consist 
of  money,  property  or  valuable  rights  which  may  be  directly 
taken  from  the  injured  party  by  the  breach,'^  A  servant  im- 
properly discharged  before  the  period  of  his  engagement  has 
expired  and  unable  to  find  any  other  employment,  or  one 
equally  remunerative,  is  thereby  deprived  of  the  right  to  earn 
the  stipulated  wages.  By  that  breach  of  contract  he  loses  the 
whole  or  a  part  of  what  he  was  entitled  to  earn  during  the 
term  he  was  engaged  for,  and  he  is  entitled  to  recover  accord- 
ingly.*   An  agent  or  bailee  who,  by  breach  of  duty,  converts 

There  was  a  breach  of  the  contract,  56  Kan.  614,  44  Pac.  Eep.  621,  54  Am. 

and  evidence  showing  a  reasonable  St.  598;  Hughes  v.  Robinson,  60  Mo. 

probability  that  if  the  pit  had  been  App.  194;  Athletic  Baseball  Ass'n  v. 

sunk  such  coal  would  have  been  dis-  St.  Louis  Sportsman's  P.  &  C.  Ass'n, 

covered.  Plaintiffs  measure  of  dam-  67  Mo.  App.  653;  Hutt  v.  Hickey,  67 

age  was  the  amount  of  his  loss  by  N.  H.  411,  29  Atl.  Rep.  456;  Friedland 

being  deprived  of  the  opportunity  to  v,  Myers,  139  N.  Y.  432,  34  N.  K  Rep. 

find  coal.  1055:  Cutting  v.  Miner,  30  App.  Div. 

Machinery  put  into  a  mill  failed  457,  52  N.  Y.   Supp.    288;   Wells    v. 

to  possess  the    capacity   as  to  the  National  L.  Ass'n,  39  C.  C.  A.  476,  99 

quantity  and  quality  of  flour  it  was  Fed.  Rep.  222;  Sutherland  v.  Wyer, 

warranted  to  produce.  The  damages  67  Me.  64;  Gifford  v.  Waters,  67  N.  Y. 

were  measured  by  the  amount  paid  80;  Gillis  v.  Space,  63  Barb.  177;  Em- 

upon  it.  the  loss  by  reason  of  its  de-  erson  v.  Howland.  1  Mason,  45;  Howe 

fects,  and  the  cost  incurred  in    re-  Machine  Co.  v.  Bryson,  44  Iowa,  159, 

pairing  the  mill  and  putting  it  in  24  Am.  Rep.  735;  Williams  v.  Ander- 

condition   to  produce  the  quantity  son,  9  Minn.  50;  Williams  v.  Chicago 

and  quality  of  flour  stipulated  for.  Coal  Co.,  60  111.  149;  Smith  v.  Thomp- 

Pennypacker  v.  Jones,  106  Pa.  237.  son,  8  C.  B.  44. 

1  Industrial  Works  v.  Mitchell,  114  The  measure  of  damages  recover- 

Mich.  29,  72  N.  W.  Rep.  25.  able  from  the  usurper  of  an  office  is 

-  Smith  V.  Los  Angeles  &  P.  R.  Co.,  the  salary  or  emoluments  received. 

98  Cal.  210,  33  Pac.  Rep.  53.  Palmer  v.  Darby,  64  Ohio  St.  520,  60 

3Paola  Gas  Co.  v.  Paola  Glass  Co.,  N.  K  Rep.  626. 


238 


COMPENSATION. 


[§79. 


his  principal's  property,  or  by  neglect  suffers  it  to  be  lost  or 
destroyed,  or  by  failure  to  assert  his  rights  or  by  doing  it  in  a 
careless  or  inefficient  manner  subjects  him  to  loss,  must  re- 
spond in  damages  according  to  the  injury  thus  occasioned.^ 
In  some  cases  such  losses  are  the  measure  of  recovery,  as 
where  there  is  a  breach  of  contract  by  one  person  to  adopt 
another  and  make  him  his  heir.     The  value  of  the  services 
rendered  or  outlay  incurred  on  the  faith  of  the  promise,  and 
not  the  value  of  the  promised  share  of  the  estate,  measures  the 
recovery.^    And  when  a  lessee  occupies  premises  for  the  entire 
term,  but  is  compelled  to  pay  more  rent  than  was  stipulated 
for,  he  may  recover  the  excess.'^    The  same  rule  applies  in  tort 
actions,  as  where  egress  and  ingress  is  cut  off  from  adjacent 
lands  or  water  is  caused  to  run  or  stand  on  them,  the  recovery 
is  measured  by  the  expense  of  remedying  the  wrong.^     One 
who  breaches  his  contract  to  permit  the  owner  of  mortgaged 
lands  to  redeem  them  after  foreclosure  and  sale  by  selling  the 
same  to  innocent  purchasers  is  liable  for  the  value  of  the  lands 
in  excess  of  the  mortgage  debt,  including  foreclosure  costs;  if 
but  a  small  part  of  the  lands  were  sold  at  the  time  suit  was  begun, 
the  remainder  not  being  thereby  depreciated  in  value,  he  is 
liable  for  the  value  of  those  sold  and  the  plaintiff  may  recover 
those  unsold  upon  payment  of  the  mortgage  debt  and  charges ; 
if  the  defendant  continued  to  sell  the  remaining  lands  after 
suit  was  begun  he  is  responsible  for  their  value,  unless  the 
plaintiff  elected  to  proceed  against  the  purchasers,  who  were 
not  entitled  to  the  rights  of  innocent  holders.* 


I  White  V.  Smith,  54  N.  Y.  523; 
Dodge  V.  Perkins,  9  Pick.  368;  Clark 
V.  Moody,  17  Mass.  145;  Frothingham 
V.  Everton,  12  N.  H.  239;  Webster  v. 
De  Tastet,  7  T.  R  157:  Blot  v.  Boiceau, 
3  N.  Y.  78;  Maynard  v.  Pease,  99 
Mass.  555;  Stearine,  etc.  Co.  v. 
Heintzmaun,  17  C.  B.  (N.  S.)  56; 
Allen  V.  Suydam,  20  Wend.  331,  33 
Am.  Dec.  555;  Mallough  v.  Barber,  4 
Camp.  150;  Nickerson  v.  Soesman,  98 
Mass.  364;  Trinidad  Nat.  Bank  v. 
Denver  Nat.  Bank,  4  Dill.  290;  De 
Tastet  V.  Crousillat,  2  Wash.  C.  C. 


133;  Lilley  v.  Doubleday,  7  Q.  B.  Div. 
510. 

2Sandham  v.  Grounds,  36  C.  C.  A. 
103,  94  Fed.  Rep.  83;  Graham  v. 
Graham,  34  Pa.  475,  overruling  Jack 
V,  McKee,  9  Pa.  240;  Kauss  v.  Rohner, 
173  Pa.  481,  33  AtL  Rep.  1016,  51  Am. 
St.  763. 

3  Myers  Tailoring  Co.  v.  Keeley,  58 
Mo.  App.  491. 

4  Louisville  &  N.  R,  Co.  v.  Finley,  7 
Ky.  L.  Rep.  139  (Ky.  Super.  Ct). 

5  Silliman  v.  Gano,  90  Tex.  637,  39 
S.  W.  Rep.  559. 


§  80.]  ELEMENTS   OF   DAMAGE.  239 

§80.  Same  subject;  labor  and  expenditures.  Second, 
losses  sustained  may  consist  of  labor  or  expenditures  prudently 
incurred  in  preparation  to  perform  or  in  part  performance  of 
the  contract  on  the  part  of  the  plaintiff.  Where  a  contract  is 
partly  performed  by  one  party  and,  without  his  being  in  any 
default,  the  other  stops  him  and  prevents  further  performance, 
such  part  performance,  in  addition  to  the  profits  which  could 
be  made  by  completing  the  contract,  will  enter  into  the  esti- 
mate of  damages  for  such  breach.  Should  a  vendor  who  had 
received  part  payment  for  goods  bargained  and  sold  refuse  to 
go  on  with  the  contract  the  vendee  would  be  entitled  to  [132] 
recover,  in  addition  to  the  profits  —  the  excess  of  the  value  of 
the  goods  above  the  contract  price  —  the  amount  which  he 
had  paid  towards  the  latter,  for  the  same  reason  which  sup- 
ports his  claim  where  he  has  paid  the  whole  purchase  price  for 
the  value  of  the  property.^  If  a  contract  for  particular  work 
is  partly  performed  and  the  employer  then  puts  an  end  to  the 
undertaking  recovery  may  be  had  against  him,  not  only  for 
the  profits  the  contractor  could  have  made  by  performing  the 
contract,  but  compensation  also  for  so  much  as  he  has  done 
towards  performance.^  Preparations  for  performance,  which 
were  a  necessary  preliminary  to  performance  or  within  the 
contemplation  of  the  parties  as  necessary  in  the  particular  case, 
rest  upon  the  same  principle.^    Maintaining  a  shop  and  waiting 

1  Copper  Co.  v.  Copper  Mining  Co.,  (quoting  the  two  preceding  proposi- 
33  Vt.  92;  Woodbury  v.  Jones,  44  N.  tions,  but  allowing  profits  only  under 
H.  206;  Owen  V.  Routh,  14  C.  B.  327;  the  circumstances);  Bernstein  v. 
Bush  V.  Canfield,  2  Conn.  485;  Loder  Meech,  130  N.  Y.  354,  29  N.  E.  Rep. 
V.  Kekule,  3  C.  B.  (N.  S.)  128;  Smith  255;  Friedland  v.  Myers,  139  N.  Y. 
V.  Berry,  18 Me.  122;  Berry  v.Dwinel,  433,  34  N.  E.  Rep.  1055;  Nelson  v. 
44  Me.  255;  Wyman  v.  American  Hatch,  70  App.  Div.  206,  75  N.  Y. 
Powder  Co.,  8  Cush.  168;  Pinkerton  Supp.  389;  Grififin  v.  Sprague Electric 
V.  Manchester  &  L.  R.,  42  N.  H.  424.  Co.,  116  Fed.   Rep.  749;  Masterton  v, 

2  McCuUough  V.  Baker,  47  Mo.  401 ;  Mayor,  7  Hill,  61.  In  the  last  case 
Jones  V.  Woodbury,  11  B.  Mon.  167;  the  marble  at  the  quarry  was  taken 
Derby  V.  Johnson,  21  Vt.  17;  Cham-  into  account  in  the  estimate  of  dani- 
berlin  v.  Scott,  33  Vt.  80;  Friedlander  ages. 

V.  Pugh,  43  Miss.  Ill;  Polsley  v.  An-  In  Nurse  v.  Barnes,  T.  Raym.  77, 

derson,  7  W.  Va.  202,  23  Am.  Rep.  613;  the   defendant,  in  consideration  of 

Danforth  v.  Walker,  37  Vt.  239.  lOZ.,  promised  to  demise  a  mill  to  the 

'United  States  v.  Behan,  110  U.  S.  plaintiff,  who  laid  in  a  large  stock 

338,  4  Sup.  Ct.  Rep.  81 ;  Hale  v.  Hess,  to  employ  it,  which  he  lost,  because 

30  Neb.   42,  58,  46  N.  W.   Rep.  261  the  defendant  refused  to  give  him 


240 


COMPENSATION. 


[§80. 


for  orders  which  are  dae  under  a  contract  is  the  equivalent  of 
an  expenditure  under  this  principle.^  If,  by  partial  perform- 
ance of  the  contract,  a  contractor  has  enjoyed  a  part  of  the 
benefits  of  his  expenditure  for  full  performance,  the  damages 
he  is  entitled  to  are  proportionately  lessened.^ 


possession.  A  verdict  of  500Z.  was 
approved.  The  stock  so  procured 
may  more  properly  be  classed  as  an 
expenditure  on  the  faith  of  perform- 
ance by  the  other  party.  See  §  81. 
But  the  allowance  of  a  loss  for  such 
expenditures  rests  on  a  similar  prin- 
ciple. 

In  Skinner  v.  Tinker,  34  Barb.  333, 
an  action  was  brought  to  recover 
damages  for  the  breach  of  a  contract 
for  a  partnership.  The  plaintiff,  a  den- 
tist of  Brooklyn,  and  the  defendant, 
a  dentist  of  Havana,  Cuba,  entered 
into  an  agreement,  in  writing,  at  the 
latter  place,  in  March,  1858,  by  which 
they  were  to  do  a  joint  business  as 
dentists  at  Havana,  to  begin  in  Octo- 
ber or  November  following,  if  the 
plaintiff  should  present  himself.  The 
agreement  was  silent  as  to  the  dura- 
tion of  the  partnership.  Thereupon 
the  plaintiff  sold  his  business  at 
Brooklyn  and  entered  into  bonds  not 
to  resume  practice  there,  and  made 
ail  preparations  for  carrying  out  his 
agreement.  In  May  he  received  a 
letter  from  the  defendant,  declining 
to  carry  out  the  agreement  on  his 
part  On  the  trial  the  plaintiff 
proved  these  facts,  and  his  readiness 
and  an  offer  to  fulfill,  and  recovered 
a  verdict  for  $4,000.  On  appeal  In- 
graham,  J.,  said:  "Performance  on 
the  part  of  the  plaintiff  by  appearing 
in  Havana,  in  October  or  November, 
as  stated  in  the  contract,  was  unnec- 
essary because  the  defendant  had 
given  notice  of  his  determination  not 
to  form  a  partnership.  The  plaintiff 
was    then    entitled  to   damages,   if 


any  were  sustained,  up  to  that  time,, 
but  not  to  prospective  damages." 

Johnson  v.  Arnold,  2  Gush.  46,  was 
an  action  to  recover  damages  for  the 
breach  of  a  special  contract  by  which, 
upon  certain  terms,  the  defendant 
agreed  to  furnish  and  keep  the  plaint- 
iff supplied  with  a  stock  of  goods  for 
carrying  on  business  in  the  defend- 
ant's store  in  another  state,  and  the 
plaintiff  undertook  to  carry  it  on  for 
a  share  of  the  profits  for  a  given 
term.  It  was  held  that  in  estimat- 
ing the  damages  it  was  competent  to 
allow  the  plaintiff  compensation  for 
the  loss  of  his  time  and  for  the  ex- 
penses of  removing  his.family  to  and 
from  the  place  where  the  business 
was  to  be  carried  on. 

Noble  V.  Ames  Manuf.  Co.,  112 
Mass.  492.  is  apparently  not  consist- 
ent with  the  principle  stated.  The 
defendant,  doing  business  in  Massa- 
chusetts, wrote  the  plaintiff  in  the 
Sandwich  Islands:  "I  am  ready  to 
offer  you  a  foreman's  situation  at 
these  works  as  soon  as  you  may  get 
here;  pay,  $1,500  a  year."  The  plaint- 
iff accepted  the  proposition  and  came^ 
but  the  defendant  refused  to  employ 
him.  The  court  rejected  the  claim  oJ 
compensation  for  the  time  and  ex- 
penses in  coming  from  the  Sandwich 
Islands  onthe  ground  thatthose  items 
preceded  the  takingeffect  of  the  con- 
tract, and  were  not  in  part  perform- 
ance. Morton,  J.,  said:  "All  the 
plaintiff  can  claim  is  that  he  should 
be  placed  in  as  good  condition  as  he 
would  have  been  in  if  the  contract 
had  been  performed.     But  the  ruling 


1  Speirs  v.  Union  Drop  Forge  Co., 
180  Mass.  87,  90,  61  N.  E.  Rep.  825. 


-  O'Connell  v.  Rosso,  56  Ark.  603,  20 
S.  W.  Rep.  531. 


§81.] 


ELEMENTS    OF    DAMAGE. 


241 


§81.  Same  subject;  damages  by  relying  on  performance. 

Third,  such  losses  may  consist  of  expenditures  made  by  [1*^3] 
one  party  to  a  contract  and  damages  from  his  own  acts  done 
on  the  faith  of  its  being  performed  by  the  other,  in  further- 
ance of  the  object  for  which  the  contract  purports  to  be  [l-J-i] 
made,  or  the  object  which  was  in  the  contemplation  of  the 
parties  at  the  time  of  contracting.^     Such  losses  cannot  be  re- 


(allowing  these  items)  puts  him  in  a 
better  condition."  On  the  trial  those 
were  the  only  items  claimed.  It  was 
stated  by  the  plaintiffs  counsel  that 
no  claim  was  made  for  business  sacri- 
fices in  leaving  the  Islands  and  com- 
ing to  the  defendant  to  perform  the 
contract,  and  none  for  any  loss  of 
time  or  other  loss  or  damage  after 
the  refusal  of  the  defendant  to  em- 
ploy him. 

The  contrary  view  is  expressed  in 
Moore  v.  Mountcastle,  73  Mo.  605, 
where  plaintiff  was  allowed  to  re- 
cover for  loss  of  time  and  expense 
in  going  to  perform  a  contract.  The 
expense  incurred  in  taking  another 
person  with  him  to  assist  in  the  work 
he  was  to  do  was  disallowed.  His 
personal  expenses  and  the  loss  of  his 
time  were  "such  damages  as  may  be 
presumed  necessarily  to  ha  ve  resulted 
from  the  breach  of  the  contract,"  and 
hence  did  not  need  to  be  specially 
pleaded. 

In  Smith  v.  Sherman,  4  Gush.  408, 
it  was  held  that  loss  of  time  and  ex- 
penses incurred  in  preparation  for 
marriage  are  directly  incidental  to 
the  breach  of  the  marriage  promisa 

In  Durkee  v.  Mott,  8  Barb.  423.  on 
a  contract  to  pay  a  certain  price  for 
rafting  logs  which  the  defendant  put 
an  end  to  before  the  labor  began,  it 
was  held  the  plaintiff  might  recover 
the  immediate  loss  in  preparing  to 
perform  the  contract  by  providing 
men  for  that  purpose. 

Woodbury  v.  Jones,  44  N.  H.  206, 
afiSrms  the  same  doctrina  There  the 
defendant  proposed  to  the  plaintiff, 
Vol.  1—16 


who  was  then  living  in  Minnesota, 
that  if  he  would  come  back  to  N.  B. 
he  might  move  into  the  defendant's 
house,  and  he  would  give  the  plaintiff 
and  his  wife  a  years  board,  and  he 
might  carry  on  the  defendant's  farm 
on  any  terms  he  might  elect,  lie  ac- 
cepted, and  came  back;  defendant 
failed  to  make  his  offer  good;  the 
court  held  that  it  was  competent  for 
the  jury  to  take  into  consideration  in 
assessing  the  damages  the  expenses 
of  removing  to  N.  B. 

In  an  action  against  the  proprietor 
of  a  school  for  the  breach  of  a  contract 
to  employ  the  plaintiff  as  a  teacher, 
made  for  her  by  her  father  during 
her  absence  in  Europe,  the  plaintiff 
was  held  not  entitled  to  recover  as 
part  of  her  damages  the  expenses  of 
her  journey  home,  it  not  appearing 
that  they  were  incurred  in  conse- 
quence of  the  contract,  or  were  in  the 
contemplation  of  the  parties  when  it 
was  made.  Benziger  v.  Miller,  50  Ala. 
206.  See  Williams  v.  Oliphant,  3  Ind, 
271;  Bulkley  v.  United  States,  19 
Wall.  37:  Dillon  v.  Anderson,  43  N. 
Y.  231;  Hosraer  v.  Wilson,  7  Mich. 
294,  74  Am.  Dec.  416. 

1  Wolters  V.  Schultz,  1  N.  Y.  Misc. 
196,  21  N.  Y.  Supp.  768;  Gordon  v. 
Constantino  Hydraulic  Co.,  117  Mich. 
620, 76  N.  W.  Rep.  142;  Cole  v.  Stearns, 
23  App.  Div.  446,  48  N.  Y.  Supp.  318; 
People's  Building,  Loan  &  Savings 
Ass'n  V.  Pickerell,  21  Ky.  L.  Rep. 
1386,  55  S.  W.  Rep.  194;  Kelly  v.  Da- 
vis. 9  Ky.  L.  Rep.  647  (Ky.  Super.  Ct.); 
Dean  v.  White,  5  Iowa,  266;  Grand 
Tower  Co.  v.  Phillips,  23  Wall.  471; 


242 


COMPENSATION. 


[§82. 


covered  if  incurred  after  notice  of  the  refusal  of  the  other 
party  to  perform  the  contract.^ 

§  82.  Same  subject ;  liability  to  third  persons ;  covenants 
of  indemnity.  Fourth,  such  losses  may  consist  of  sums  neces- 
sarily paid  to  third  persons,  or  of  suras  recovered  and  expenses 
incurred  in  actions  brought  by  third  persons  in  consequence 
of  the  defendant's  breach  of  contract.  They  are  those  losses 
[135]  which  may  result  from  suretyship  or  the  breach  of  any 
duty  or  obligation  of  indemnity.'-'  In  such  cases  the  practical 
question  will  always  be  what  the  plaintiff  was  obliged  or  au- 
thorized to  pay  both  in  respect  to  the  principal  and  incidental 
costs  or  expenses.  If  there  has  been  a  voluntary  payment  by 
the  indemnified  party  or  a  compulsory  payment  resulting  from 


Driggs  V.  Dwight,  17  Wend.  71.  31 
Am.  Dec.  283;  Bunney  v.  Hopkinson, 
1  L.  T.  (N.  S.)  53;  Smith  v.  Green,  1 
C.  P.  Div.  92;  Randall  v.  Newson,  2 
Q.  B.  Div.  102;  Leffingwell  v.  Elliott, 
10  Pick.  204;  Milburn  v.  Belloni,  39 
N.  Y.  53,  100  Am.  Dec.  403;  Thomas 
V.  Dingley,  70  Me.  100,  35  Am.  Rep. 
aiO;  Randall  v.  Raper,  E.  B.  &  E.  84 
Borradaile  v.  Bruntou,  8  Taunt.  535 
Brown  v.  Edgington,  2  M.  &  G.  279 
French  v.  Vining,  102  Mass.  132,  3 
Am.  Rep.  440;  Johnson  v.  Meyer's 
Ex'r,  34  Mo.  255;  Rowland's  Adm'r 
V.  Shelton,  25  Ala.  217;  Ferris  v. 
Comstock,  33  Conn.  513;  ZuUer  v. 
Rogers,  7  Hun,  540;  Fisk  v.  Tank,  12 
Wis.  276,  78  Am.  Dec.  737;  Reggio  v. 
Braggiotti,  7  Gush.  166;  Jeter  v. 
Glenn,  9  Rich.  374;  Skagit  R.  &  L. 
Co.  V.  Cole,  2  Wash.  57,  25  Pac.  Rep. 
1077:  Bernstein  v.  Meech,  130  N.  Y. 
354,  29  N.  E.  Rep.  255.  See  Mason  v. 
Alabama  Iron  Co.,  73  Ala.  270. 

1  James  H.  Rice  Co.  v.  Penn  Plate 
Glass  Co.,  88  111.  App.  407. 

2  Rogers  v.  Riverside  Land  &  Irri- 
gating Co.,  132  Cal.  9,  64  Pac.  Rep. 
95;  Mowbray  V.  Merry  weather,  [1895J 
1  Q.  B.  57,  [1895J  2  id.  640;  French  v. 
Parish,  14  N.  H,  496:  Newburgh  v. 
Galatian,  4  Cow.  340;  Holdgate  v. 
Clark,   10    Wend.    215;     Lincoln  v. 


Blanchard,  17  Vt.  464;  Chamberlain 
v.  Godfrey,  36  Vt.  380,  84  Am.  Dec. 
690;  Westervelt  v.  Smith,  2  Duer, 
449;  lilies  v.  Fitzgerald,  11  Tex.  417; 
Braman  v.  Dowse,  12  Cush.  227; 
Spear  v.  Stacy,  26  Vt.  61;  Howard  v. 
Lovegrove,  L.  R.  6  Ex.  43;  Fiuckh  v. 
Evers,  25  Ohio  St.  82;  Webb  v.  Pond, 
19  Wend.  423;  Rockfeller  v.  Don- 
nelly, 8  Cow.  623;  Warwick  v.  Rich- 
ardson, 10  M.  &  W.  284;  Gerrish  v. 
Smyth,  10  Allen,  303;  Ray  v.  Clemens, 
6  Leigh,  600;  Kip  v.  Brigham,  6 
Johns.  158:  Colter  v.  Morgan's  Adm'r, 
12  B.  Mon.  278;  Lowell  v.  Boston,  etc. 
R.  Co.,  23  Pick.  24;  Baynard  v.  Har- 
rity,  1  Houst.  200;  Robbins  v.  Chi- 
cago, 4  Wall.  657;  Crawford  v.  Turk, 
24  Gratt.  176;  Duxbury  v.  Vermont, 
etc.  R  Co.,  26  Vt.  751:  Annett  v. 
Terry,  35  N.  Y.  256:  Spalding  v. 
Cakes,  42  Vt.  343;  Chamberlain  v. 
Beller,  18  N.  Y.  115;  Bridgeport  Ins. 
Co.  V.  Wilson,  34  N.  Y.  275;  Propri- 
etors of  L.  &  C.  V.  Lowell  Horse  R 
Co.,  109  Mass.  221;  Briggs  v.  Boyd, 
37  Vt.  534;  Colburn  v.  Pomeroy,  44 
N.  H.  19;  Thomas  v.  Beck  man,  1  B. 
Mon.  31;  Robertson  v.  Morgan's 
Adm'r,  3  id.  309;  Littleton  v.  Rich- 
ardson, 32  N.  H.  59;  Gibson  v.  Love, 
2  Fla.  598. 


§  82.]  ELEMENTS    OF    DAMAGE.  243 

a  suit  by  which  the  indemnitor  is  not  bound  by  his  contract 
or  in  consequence  of  the  lack  of  notice  to  defend,  the  question 
of  the  liability  of  the  indemified  party  to  make  such  payment 
is,  according  to  some  authorities,  open  in  his  action  for  in- 
demnity.^ 

In  a  recent  case -a  contractor  for  machinery  supplied  an 
article  made  for  him  by  the  defendant.  It  was  defectively 
constructed  and  in  consequence  the  plaintiff  was  subjected  to 
a  judgment  for  damages  resulting  from  the  breaking  of  that 
article,  such  judgment  being  rendered  in  Canada.  No  offer  of 
the  defense  of  the  action  on  which  such  judgment  was  rendered 
was  made  to  the  plaintiff.  The  conclusion  of  the  court  was 
that  where  a  subvendee  or  a  subcontractor  has  a  legal  claim 
for  indemnification,  and  has,  under  fear  of  the  consequences, 
made  an  adjustment  or  been  compelled  to  yield  to  a  judgment 
under  circumstances  indicating  good  faith  and  a  reasonable 
amount  of  resistance,  the  amount  thus  determined,  either  by 
the  adjustment  or  by  the  litigation,  becomes  evidence  of  the 
amount  of  damages  to  be  awarded  against  the  principal  con- 
tractor.^ This  conclusion  was  aside  from  the  question  whether 
the  judgment  should  stand  as  of  conclusive  effect  or  only 
^rima  facie  evidence  as  to  the  measure  of  damages.  If  there 
is  an  express  indemnity  against  the  result  of  a  particular  suit, 
whether  the  indemnitor  is  a  party  or  not,  the  judgment  binds 
him  for  the  purposes  of  that  contract.^  But  under  a  general 
covenant  of  indemnity  against  suits  the  covenantor  has  a  right 
to  defend  either  in  the  action  against  the  indemnified  party  or 
in  the  latter's  action  upon  the  covenant  of  indemnity.  There 
is  a  marked  distinction  between  covenants  which  stipulate 
against  the  consequences  of  a  suit  and  those  which  contain  no 
such  undertaking.  In  the  latter  class  the  judgment  is  res  inter 
alios  acta^  and  proves  nothing  except  rem  ijjsam  against  the 

1  Douglas  V.  Howland,  24  Wend.  ^  citing  Smith  v,  ComiDton,  3  B.  & 
35;  Lee  v.  Clark,  1  Hill,  56;  Duffield     Ad.  407,  and  the  text. 

V.Scott,  3  T.  R.  374;    Aberdeen  v.        4  Patton   v.  Caldwell,  1  Dall.  419; 

Blackmar,  6  Hill,  324;    Rapelye   v.  Rapelye  v.  Prince.  4  Hill,  119,  40  Am. 

Prince,  4  Hill,  119,  40  Am.  Dec.  267.  Dec.  267;  Thomas  v.  Hubbeli,  15  N. 

2  Nashua  Iron  &  Steel  Co.  v.  Brush,  Y.  405,  69  Am,  Dec.  619:  Chamberlain 
33  C.  C.  A.  456,  91  Fed.  Rep.  213.          .  v.  Godfrey,  36  Vt.  380,  84  Am.  Dec. 

690. 


244:  COMPENSATION.  [§  82. 

indemnitor,  unless  he  has  had  notice  and  an  opportunity  to 
defend.  The  want  of  notice  does  not  go  to  the  cause  of  action ; 
the  judgment  is  prima  facie  evidence  only  against  the  indem- 
nitor and  he  is  at  liberty  to  defend  against  the  demand  on 
which  it  is  founded.'  If  notice  is  expressly  stipulated  for  the 
want  of  it  will  defeat  the  action.^ 

[130]  As  to  the  right  to  costs  and  expenses  of  defending  a 
former  suit  brought  to  enforce  a  liability,  against  which  there 
is  an  agreement  or  duty  to  indemnify,  there  is  some  conflict 
of  decision.  If  a  surety  for  a  liquidated  debt  is  sued  upon  it 
he  io  not  bound  to  pay  it  to  save  costs;  and  he  may  recover 
of  the  principal  the  costs  which  he  is  compelled  to  pay  as  in- 
cident to  a  default  judgment,  and,  in  addition,  the  sum  he  is 
obliged  to  pay  of  the  debt.*  And  where  the  action  is  founded 
on  a  disputable  liability  or  an  unliquidated  demand  the  rule 
in  England,  and  generally  in  this  country,  allows  the  surety 
or  indemnified  party  to  give  notice  of  the  suit  to  the  party 
ultimately  liable  and  abide  his  directions;  if  he  gives  none,  to 
make  no  defense;  or  if  the  facts  are  such  as  to  render  some 
defense  reasonable  and  judicious  and  there  is  a  probability  of 
success,  he  is  at  liberty  to  defend ;  and  such  costs  and  expenses 
as  are  reasonable  and  incurred  in  good  faith  he  will  be  entitled 
to  recover  as  part  of  his  indemnity.  He  may  recover  not  only 
the  costs  taxed  against  him  by  the  prevailing  adverse  party, 
but  the  costs  of  his  defense.*     A  man  has  no  right,  merely  be- 

1  Bridgeport  Ins.  Co.  v.  Wilson,  34  Weed,  24  Barb.  546;  Wynn  v.  Brooke, 

N.  Y.  275;  Smith  v.  Compton,  2  B.  &  5  Rawle,  lOG;  McKee  v.  Campbell,  27 

Ad.  407;  Reggie  V.  Braggiotti,  7Cush.  Mich.  497;    Wright   v.  Whiting,   40 

166;  Marlatt  v.  Clary,  20  Ark,  251;  Barb.  240;  Wallace  v.  Gilchrist,  24 

Boyd  V.  Whitfield,  19  Ark.  447;  Col-  Up.  Can.  C.  P.  40;  Craig  v.  Craig,  5 

lingwoodv.  Irwin,  3  Watts,  306:  Paul  Rawle,    91;    Robertson    v.  Morgan's 

V.  Witman,  3  W.  &  S.  407:  Pitkin  v,  Adm'r,  3  B.  Hon.  307;  Colter  v.  Same, 

Leavitt,  13  Vt.  379;  Train  v.  Gold,  5  12  id.  278.     See  Pierce  v.  Williams. 

Pick.   380;    Baynard    v.  Harrity,    1  23  L.  J.  (Ex.)  322. 

Houst.  200.  4  Duxbury  v.  Vermont  Central  R. 

2 Bridgeport  Ins.  Co.  v.  Wilson,  34  Co.,  26  Vt.  751;  Smith  v.  Compton,  3 

N.  Y.  275.  B.  &  Ad.  407;  Pitkin  v.  Leavitt,  13 

3Hulett  V.   Soullard,   26  Vt.    295;  Vt.  379;  Hayden  v.  Cabot,  17  Mass. 

Kemp  V.  Finden,  12  M.  &  W.  421;  169;  Wynn  v.  Brooke,  5  Rawle,  106; 

Ex  parte  Marshall,  1  Atk.  262;  Baker  New  Haven  &  N.  Co.  v.  Hayden,  117 

V.  Martin,  3  Barb.   634;    Elwood   v.  Mass.  433;  Bonney  v.  Seely,  2  Wend. 

Deifendorf,  5  Barb.  412;  Bleaden  v.  481;  Howard  v.  Lovegrove,  L.  R  6 

Charles,    7    Bing.    246;    Holmes  v.  Ex.  43;  Ottumwa  v.  Parks,  43  Iowa, 


§  83.]  ELEMENTS    OF   DAMAGE.  245 

cause  he  has  an  indemnity,  to  defend  a  hopeless  action  and  put 
the  person  guarantying  to  useless  expense.'  The  rule  formerly 
laid  down  was  that  if  the  defendant  in  the  first  action  placed 
the  facts  before  the  person  whom  he  sought  ultimately  to 
charge,  and  that  person  declined  to  intervene  and  left  him  to 
take  his  own  course,  it  would  be  a  question  for  the  jury 
whether  it  was  reasonable  to  defend  or  whether  the  de-  [137] 
fense  was  conducted  in  a  fair  manner;  in  deciding  that  ques- 
tion the  jury  would  have  to  consider  whether  it  was  more  pru- 
dent to  settle  the  matter  by  compromise,  pay  the  money  into 
court,  or  let  judgment  go  by  default.^  And  this  is  still  prob- 
ably the  law.  An  agent,  surety,  or  one  expressly  indemnified 
in  respect  to  the  liability  sought  by  action  to  be  fixed  on  him, 
who  relies  on  the  indemnit}'  for  security  against  loss,  has  no 
personal  interest  to  defend  where  he  can  connect  the  indem- 
nitor with  that  action  so  as  to  conclude  him.  But  where  no- 
tice cannot  be  given  or  for  any  reason  is  omitted,  the  defend- 
ant who  depends  on  another  for  indemnity  must  necessarily 
so  far  defend  the  action  as  to  obtain  the  best  practicable  assur- 
ance that  the  amount  which  he  pays  he  will  have  a  legal  right 
to  have  reimbursed. 

§83.  Same  subject;  indemnity  to  municipalities  ;  counsel 
fees.  Municipal  corporations  charged  with  the  duty  of  keep- 
ing public  ways  in  repair  have  a  right  of  indemnity  against 
parties  contracting  to  perform  this  duty  if  they  fail  to  fulfill; 
and  against  parties  who,  by  abuse  of  license  or  tortiously,  put 
such  ways  out  of  repair,  when  such  corporations  have  been  com- 
pelled to  pay  damages  to  some  person  injured  in  consequence 
of  such  defect  or  want  of  repair.*     The  corporation,  not  being 

119;    Baxendale  v.  London,  etc.  R.  the  judgment  was  rendered.  Nashua 

Co.,  L.  R.  10  Ex.  35;  CoUen  v.  Wright,  Iron  &  Steel  Co.  v.  Brush,  33  C.  C.  A. 

7  El.  &  Bl.  301;  Westfield   v.  Mayo,  456,  91  Fed.  Rep.  213. 

122  Mass.  100,23  Am.  Rep.  292;  Aguis  i  Wrightup     v.      Chamberlain,    7 

V.  Great  Western  Colliery  Co.,  [1899]  Scott,  598;  Kiddle  v.  Lovett,  IG  Q. 

1  Q.  B.  413.  B.  Div.  605;  Gillett  v.  Rippon,  Moody 

But  if  the  action  is  to  enforce  an  &  M.  406. 

unliquidated  demand  and  the  person  2  M^yne  on  Dam.,  6th  ed.,  p.  95; 

against    whom   the   judgment    has  Mors-le-Blanch  v.  Wilson,  L.  R  8  C. 

been  rendered  has  had  no  opportu-  P.  227. 

nity  to  defend  it,  he  is  not  liable  for  ^  Rochester  v.  Montgomery,  72  N. 

the  costs  and  expenses  of  the  defense  Y.  65;  Port  Jervis  v.  First  Nat  Bank, 

made  by  the  person  against  whom  96   id.    550;   Chicago  v.   Robbins,   2 


246  COMPENSATION.  [§  83. 

injpari  delicto^  is  not  subject  to  the  principle  which  excludes 
contribution  or  indemnity  between  wrong-doers,  and  has  aright 
of  recovery  over  against  the  party  by  whose  fault  the  injury 
was  suffered.  Where  notice  has  been  given  to  the  person  pri- 
marily at  fault  to  take  upon  himself  the  defense,  he  is  bound  by 
the  judgment  as  to  the  damages  paid  and  costs.'  In  such  cases 
[138]  the  demands  for  damages  are  unliquidated  and  gener- 
ally disputable,  and  a  defense  would  be  proper  and  judicious, 
whether  the  party  ultimately  liable  has  notice  and  assumes  it 
or  not.  The  costs  taxed  against  the  corporation,  where  a  rea- 
sonable defense  is  made,  in  case  of  recovery,  and  the  expense 
of  the  defense,  including  counsel  fees,  are  proper  items  of  dam- 
age for  which  it  may  claim  indemnity.  They  are  among  the 
direct  consequences  of  the  defendant's  fault  and  the  breach  of 
the  implied  promise  or  duty  to  save  harmless. 

In  a  Massachusetts  case^  Lord,  J.,  said:  "The  diflRculty  is 
not  in  stating  the  rule  of  damages,  but  in  determining  whether 
in  the  particular  case  the  damages  claimed  are  within  the  rule. 
Natural  and  necessary  consequences  are  subjects  of  damages^ 
remote,  uncertain  and  contingent  consequences  are  not. 
Whether  counsel  fees  are  natural  or  necessary,  or  remote  and 
contingent,  in  a  particular  case,  we  think  may  be  determined 
upon  satisfactory  principles;  and,  as  a  general  rule,  when  a 
party  is  called  upon  to  defend  a  suit  founded  upon  a  wrong  for 
which  he  is  held  responsible  in  law  without  misfeasance  on  his 
part,  but  because  of  the  wrongful  act  of  another  against  whom 
he  had  a  remedy  over,  counsel  fees  are  the  natural  and  reason- 
Black,  418;  Eobbins  v.  Chicago,  4  i  Id.;  Mayor  r.  Brady,  151  N.  Y.  611, 
Wall.  657;  Woburn  v.  Henshaw,  101  45  N.  E.  Rep.  1122. 
Mass.  193,  3  Am.  Rep.  833;  Stoughton  In  Ottumwa  v.  Parks,  43  Iowa, 
V.  Porter,  13  Allen,  191;  Boston  v.  119,  where  the  party  sought  to  be 
Worthington,  10  Gray,  496,  71  Am.  made  liable  to  the  city  assumed  the 
Dec.  678;  Lowell  v.  Boston,  etc.  R.  defense  of  the  action  against  it,  the 
Co.,  23  Pick.  24;  Brooklyn  v.  Brook-  taxable  costs  of  that  action  were  al- 
lyn  City  R,  Co.,  47  N.  Y.  475,  7  Am.  lowed  so  far  as  they  were  paid  by 
Rep.  469;  Ottumwa  v.  Parks,  43  Iowa,  the  city;  but  the  costs  of  an  appeal 
119;  Duxbury  v.  Vermont  Central  were  disallowed,  there  being  no  evi- 
R.  Co.,  26  Vt.  751;  Littleton  v.  Rich-  dence  that  the  appeal  was  taken  at 
irdson,  32  N.  H.  59;  Proprietors  of  L.  the  defendant's  request. 
&  C.  V.  Lowell  H.  R.  Co.,  109  Mass.  2  Westfield  v.  Mayo,  122  Mass.  100, 
221;  Corsicana  v.  Tobin,  23  Tex.  Civ.  23  Am.  Rep.  292. 
App.  492,  57  S.  W.  Rep.  319. 


§83.] 


ELEMENTS    OF   DAMAGE. 


24^ 


ably  necessary  consequence  of  the  wrongful  act  of  the  other,  if 
he  has  notified  the  other  to  appear  and  defend  the  suit.  When, 
however,  the  claim  against  him  is  upon  his  own  contract  or  for 
his  own  misfeasance,  though  he  may  have  a  remedy  against 
another,  and  the  damages  recoverable  may  be  the  same  as  the 
amount  of  the  judgment  recovered  against  himself,  counsel 
fees  paid  in  defense  of  the  suit  against  himself  are  not  recov- 
erable." ^  It  appears  to  the  writer  that  such  expenses  being  rec- 
ognized as  not  remote  and  contingent,  the  test  here  given  for 
their  allowance  or  rejection  is  not  sound.  They  were  allowed 
in  that  case,  the  plaintiff,  a  municipal  corporation,  having  de- 
fended a  suit  for  damages  brought  against  it  for  a  defect  in 
a  sidewalk  caused  by  the  defendant;  but  by  the  rule  laid  down, 
an  innocent  agent  who  does  at  the  request  of  his  principal  a 
wrongful  and  injurious  act,  on  being  sued  therefor  would  have 
no  recourse  for  fees  of  counsel  employed  to  defend  that  action.^ 


1  In  Chase  v.  Bennett.  59  N.  H.  394, 
an  action  for  neglect  of  a  clerk  to 
indexamortgage,whereby  the  plaint- 
iff was  induced  to  take  a  mortgage 
of  tlie  property  supposing  it  to  be 
unincumbered,  it  was  held  that 
counsel  fees  paid  in  defending  a  suit 
by  the  prior  mortgagee  for  the  proi> 
erty  were  not  damages  for  which 
the  defendant  was  liable  because 
they  were  not  the  natural  and  rea- 
sonable consequence  of  his  neglect, 
and  because  he  was  not  notified  to 
defend  that  suit. 

Such  fees  are  not  recoverable 
against  the  person  liable  over  for  a 
defect  in  a  highway.  Corsicana  v. 
Tobin.  23  Tex.  Civ.  App.  492,  500,  57 
a  W.  Rep.  319. 

2  See  Howe  V.  Buffalo,  etc.  R.  Co., 
37  N.  Y.  297. 

Ill  Reggio  V.  Braggiotti,  7  Cush. 
166,  the  defendant  sold  to  the  plaint- 
iff an  article  which  he  warranted 
to  be  one  known  in  commerce  as 
opium,  with  a  view  of  its  being  sold 
as  such;  but  it  was  not  opium,  or  of 
any  value;  the  plaintiff  having  sold 
with  like  warranty,  relying  on  the 


defendant's  warranty,  had  been  sued 
by  his  vendee  and  compelled  to  pay 
damages  and  costs;  he  gave  the  de- 
fendant notice  of  that  suit  and  re- 
quested him  to  defend  it,  and  in- 
curred large  expense  in  and  about 
it.  Shaw,  C.  J.,  said:  "As  they  (the 
plaintiffs)  gave  notice  to  the  defend- 
ants of  the  pendency  of  the  first  ac- 
tion, they  are  entitled  to  recover 
their  taxable  costs.  See  Coolidge  v. 
Brigham,  5  Met.  68.  But  the  counsel 
fees  cannot  be  allowed.  They  are 
expenses  incurred  by  the  party  for 
his  own  satisfaction,  and  they  vary 
so  much  with  the  character  and  dis- 
tinction of  the  counsel  that  it  would 
be  dangerous  to  permit  him  to  im- 
pose such  a  charge  upon  an  oppo- 
nent; and  the  law  measures  the 
expenses  incurred  in  the  manage- 
ment of  a  suit  by  the  taxable  costs." 
Counsel  fees  are  here  treated  as  in 
some  sense  uncertain  in  amount,  and 
for  this  reason  the  party  having  a 
right  of  recovery  over  should  not 
impose  such  a  charge;  but  it  is  not 
correct  to  say  that  such  services  are 
so  uncertain  iq  value  as  to  be  inca- 


24:8  COMPENSATION.  [§  84. 

And  yet  in  this  opinion  the  learned  judge  says:  "  Within  this 
[139]  rule  a  master  who  is  immediately  responsible  for  the 
wrongful  acts  of  a  servant,  though  there  is  no  misfeasance  on 
his  part,  might  recover  against  such  servant  not  only  the 
amount  of  the  judgment  recovered  against  him,  but  his  reason- 
able expenses,  including  counsel  fees,  if  notified  to  defend  the 
suit."  Where  there  is  an  implied  or  express  indemnity  which 
covers  the  consequences  of  being  sued  and  having  to  defend 
an  action,  all  the  usual  concomitants  of  such  a  situation  are 
necessarily  within  the  contemplation  of  the  parties;  and  if 
there  is  no  objection  of  improvidence  or  bad  faith  the  expense 
of  counsel  is  obviously  as  proper  to  be  allowed  as  the  fees  of 
witnesses,  the  clerk  of  the  court  or  the  sheriff.  Davis,  J.,^  said, 
speaking  generally:  "  All  the  cases  recognize  fully  the  liability 
of  the  principal  where  the  relation  of  master  and  servant  or 
principal  and  agent  exists;  but  there  is  a  conflict  of  authority 
in  fixing  the  proper  degree  of  responsibility  where  an  inde- 
pendent contractor  mtervenes."  ^ 

§  84.  Same  subject;  liability  for  losses  and  expenses.  In 
cases  of  express  indemnity  or  where  there  is  a  duty  of  that 
[14:0]  nature  springing  from  those  relations  the  obligation  is 

pable  of  being  estimated.     Nor  is  it  Pennell  v.  Woodburn,  7  C.  &  P.  117; 

satisfactory  reasoning  that  because  Penley  v.   Watts,    7  M.  &  W.  601; 

the  charges  of  counsel  vary  no  allow-  Jones  v.  Williams,  id.  493;  Walker  v. 

ance  whatever  should  be  made  for  Hatton,  10  id.  249;  Smith  v.  Howell, 

such  an  expense  when  it  is  among  6  Ex.  730. 

the  natural  and  proximate  conse-  In  Kiddle  v.  Lovett,  16  Q.  B.  Div. 
quences  of  the  breach  of  contract.  605,  a  platform  put  up,  under  con- 
It  was  obviously  as  natural  and  prox-  tract,  for  the  plaintiff  by  the  defend- 
imate  a  consequence  as  the  other  ex-  ant,  to  enable  the  former  to  paint  a 
pensesof  the  suit.  house,  fell  because  of  defective  con- 
1  Chicago  V.  Robbins,  2  Black,  418.  struction  and  hurt  a  workman  in  the 
2See  Randell  v,  Trimen,  18  C.  B.  plaintiff's  employ.  The  latter  settled 
786;  Moule  v.  Garrett,  L.  R  7  Ex.  101;  an  action  brought  by  his  employee, 
Baxendale  v.  London,  etc.  R.,  L.  R.  and  then  sued  defendant.  The  latter 
10  Ex.  85;  Fisher  v.  Val  de  Travers  was  held  liable  for  nominal  damages 
Asphalte  Co.,  1  C.  P.  Div.  511;  Mors-  for  the  breach  of  his  contract:  but 
le-Blanch  v.  Wilson,  L.  R.  8  C.  P.  inasmuch  as  the  plaintiff  had  era- 
227;  Randall  v.  Raper,  96  Eng.  C.  L.  ployed  a  competent  contractor  to 
84;  Richardson  v.  Dunn,  8  C.  B.  (N.  build  the  platform  and  was  free  from 
S.)  655;  Ronneberg  v.  Falkland  Isl-  negligence,  he  was  not  liable  to  the 
ands  Co.,  17  id.  1;  Brown  v.  Haven,  injured  man  and  the  amount  paid 
37  Vt.  439;  Neale  v.  Wyllie,  3  B.  &  C.  him  could  not  be  recovered  from  the 
533;  Lewis  v.  Peake,  7  Taunt.  153:  defendant. 


I 


§  84:.]  ELEMENTS    OF    DAMAGE.  249 

directly  to  reimburse  expenses  and  losses;  they  are  the  im- 
mediate subjects  of  the  contract  or  duty  rather  than  the  dam- 
Ages  for  the  breach  of  either.  But  in  many  other  cases  suits 
against  one  person  or  party  may  result  from  the  tort  or  breach 
of  contract  of  another;  and  then,  whether  damages  therefor, 
including  the  cost  and  expenses,  may  be  recovered  for  such 
wrong  or  breach  of  contract  will  depend  on  whether  such 
suits,  with  the  consequences  and  incidents  in  question,  were 
the  natural  and  proximate  result  of  the  act  complained  of  or 
were  within  the  contemplation  of  the  parties.^  Where  a  per- 
son falsely  profess'^sto  act  as  an  agent  there  is  an  implied  war- 
ranty that  he  is  such.  If  he  have  no  authority  and  his  pre- 
tense is  false,  either  the  party  whom  he  assumed  to  represent^ 
or  the  party  dealing  with  him  on  the  faith  of  his  being  an 
agent  ^  may  hold  him  answerable  for  all  damages  resulting  from 
his  unauthorized  contracts ;  and  among  other  things  for  costs  of 
actions  brought  or  defended  in  consequence  of  such  contracts. 
So  a  party  who  sells  property  with  an  express  or  implied  war- 
ranty of  title  is  liable  for  the  costs  of  a  successful  action,  as 
well  as  damages  recovered  therein  against  his  vendee,  by  which 
such  title  is  overthrown  and  the  vendee  dispossessed  or  com- 
pelled to  pay  for  the  property  to  another  person.^ 

The  right  of  a  party  who  has  bought  ])roperty  with  a  war- 
ranty of  title  to  defend  a  suit  brought  against  him  based  upon 
an  adverse  claim,  after  he  has  given  notice  to  the  vendor  [111] 
and  requested  him  to  assume  the  defense,  and  his  failure  to 
reply  or  refusal  to  defend,  stands  upon  somewhat  different 
considerations  from  those  which  apply  to  sureties  and  others 
in  similar  situations.     A  vendee  has  a  right  to  the  property 

1  Agius  V.  Great  Western  Colliery  Am.  Eep.  480;  Boyd  v.  "Whitfield,  19 

Co.,  [1899]  1  Q.  B.  413.  Ark.   447;   Ryerson  v.  Chapamn,  66 

ijPhilpot  V.  Taylor,  75  111.  309,  20  Me.  557;  Williamson  v.  Williamson, 

Am.  Rep.  241.  71  Me.  442;  Brewster  v.  Countryman, 

sCoUen  v.  Wright,  7  El.  &  B.  301;  12   Wend.  446:   Marlattv.  Clar3%   20 

Hughes  V.  Graeme,  33  L.  J.  (Q.  B.)  Ark.   251;   Giffert  v.  West,  33   Wis. 

335.  617;  Eaton  v.  Lyman,   24  Wis.  438; 

4Staatsv.  Ten  Eyck,3  Caines,  111;  Stewart  v.  Drake,   9  N.   J.   L.    139; 

Pitcher  v.  Livingston,  4  Johns.    1,  4  Holmes  v.  Sinnickson,  15  id.   313,  29 

Am.  Dec.  229;   Rickert  v.  Snyder,  9  Am.    Dec.    687;  Monis  v.  Rowan,  17 

Wend.   416;   Bennet  v.  Jenkins,  13  N.  J.  L.  304;   Coleman  v.   Clark,  80 

Johns.  50;  Harding  v.  Larkin,  41  111.  Mo.  App.  339,  citing  the  text. 
-113;  Crisfield  v.  Storr.  86  Md.  129,  11 


250  COMPENSATION.  [§  Si. 

which  he  has  purchased,  as  between  him  and  the  vendor;  and 
unless  he  is  made  aware  that  the  vendor's  title  was  defective, 
or  that  the  suit  of  a  third  person  for  the  property  cannot  for- 
some  reason  be  defended,  he  has  a  right  to  defend  in  reliance 
upon  the  warrant}''  to  the  end  that  he  may  have  and  enjoy  the 
fruit  of  his  purchase.  So  if  there  is  a  warranty  of  kind  or- 
quality  the  purchaser  has  a  right  to  act  upon  the  assumption 
that  such  warranty  is  true,  and  sell  with  like  warranty,  and 
defend  suits  for  its  breach.^  But  if  he  has  notice  that  his- 
title  is  bad  or  that  the  warranty  cannot  be  maintained  he  is- 
under  the  same  restrictions  as  all  other  parties  who  have  a 
right  of  recovery  over  against  unnecessary  expense  or  an  un- 
righteous resistance  of  an  action  which  cannot  be  defended.^ 
In  an  action  on  a  warranty  of  the  soundness  of  a  horse  which 
had  been  sold  with  like  warranty,  and  in  which  the  plaintiff 
had  been  beaten  in  a  suit  against  him  on  his  warranty,  it  was 
held  he  was  not  entitled  to  recover  as  special  damage  the  cost 
incurred  by  him  in  the  defense  of  the  former  action,  for  the 
jury  found  that  by  reasonable  examination  of  the  horse  he 
might  have  discovered  that  it  was  unsound  at  the  time  he  sold 
it.'  An  examiner  and  guarantor  of  titles  to  real  estate  em- 
ployed to  conduct  the  purchase  of  a  house  procured  from  its 
owner,  who  also  owned  the  adjoining  house,  a  deed  which 
through  its  negligence  covered  the  wrong  house;  the  grantee 
procured  the  reformation  of  such  deed  and,  on  obtaining  pos- 
session of  the  house  he  desired,  found  it  incumbered  by  a  mort- 
gage not  disclosed  to  him  by  the  examiner.  After  eviction 
by  foreclosure,  the  grantor  being  insolvent,  he  recovered  from 
the  examiner  the  money  paid  on  the  purchase  price,  that  being 
less  than  the  amount  of  the  undisclosed  mortgage.* 

1  Hammond  v.  Bussey,  20  Q.  B.  *  Ehmer  v.  Title  Guarantee  &  Trust 
Div.  79,  stated  in  note  to  §  87;  Clare    Co.,  156  N.  Y.  10,  50  N.  E.  Rep.  420. 

V.  Maynard,  7  C.  &  P.  741;   Curtis  v.         Moneys  paid  by  a  corporation  to 

Hannay,  3  Esp.  82;  Sweet  v.  Patrick,  establish  the  business   in  which  it  is 

12  Me.   9;  Ryerson  v.  Chapman,  66  engaged  cannot  be  recovered  by  the 

Me.  561.  shareholders  in  an  action    against 

2  Sliort  V.  Kalloway,  11  A.  &  E.  the  directors  for  negligence.  Bloom 
28;  Wrightup  v.  Chamberlain,  7  v.  National  United  Benefit  Savings 
Scott,  598;  Lunt  v.  Wrenn,  113  111.  &  Loan  Co.,  152  N.  Y.  114,  46  N.  E.. 
168.  Rep.  166. 

'  Wrightup  v.  Chamberlain,  supra. 


§85.] 


ELEMENTS   OF   DAMAGE. 


251 


§85.  Same  subject;  bonds  and  undertakings ;  damages 
and  costs.  Upon  statutory  bonds  and  undertakings  to  pay 
damages  and  costs  resulting  from  the  issue  of  certain  writs,  as 
an  injunction,  sequestration  or  attachment,  incase  it  shall  be 
decided  that  the  party  obtaining  it  was  not  entitled  to  it,  the 
recovery  depends  mainly  upon  the  terms  of  the  instrument; 
but  "  damages  and  costs  "  include,  among  other  things,  the  costs 
incident  to  the  particular  writ  and  of  the  proceedings  to  procure 
its  discharge,  including  counsel  fees,  except  in  the  fed-  [142] 
eral  courts.^  On  principle  and  the  weight  of  authority,  where 
the  prosecution  or  defense  of  suits  is  rendered  naturally  and 
proximately  necessary  by  a  breach  of  contract  or  any  wrong- 
ful act,  the  costs  of  that  litigation,  reasonably  and  judiciously 
conducted,  paid  or  incurred,  including  reasonable  counsel  fees, 
are  recoverable  as  part  of  the  damages.^ 


1  Corcoran  v.  Judson,  24  N.  Y.  106; 
Hovey  v.  Rubber  Tip  Pencil  Co.,  50 
N.  Y.  335;  Groat  v.  Gillespie,  25 
Wend.  383;  Edwards  v.  Bodine,  11 
Paige,  223;  Rose  v.  Post,  56  N.  Y.603; 
Rosser  v.  Timberlake.  .78  Ala.  162; 
Pettit  V,  Mercer,  8  B.  Mon.  51 ;  Meshke 
V.  Van  Doren,  16  Wis.  319;  An- 
drews V.  Glenville  Woolen  Co.,  50  N. 
Y.  282;  Gear  v.  Shaw,  1  Pin.  608; 
Barton  v.  Fisk,  30  N.  Y.  171;  Tama- 
roa  V.  Southern  Illinois  University, 
54  111.  334;  Elder  v.  Sabin,  66  111.  126; 
Wilson  V.  McEvoy,  25  Cal.  170;  Cum- 
mings  V.  Burleson,  78  111.  281;  Prader 
V.  Grim,  13  Cal.  585;  Guild  v.  Guild, 
2  Met.  22'J;  Brown  v.  Jones,  5  Nev. 
874;  Baggett  v.  Beard,  43  Miss.  120; 
Raupman  v.  Evansville,  44  Ind.  392; 
Alexander  v.  Colcord,  85  111.  323; 
Steele  v.  Thatcher,  56  111.  257;  Miller 
V.  Garrett,  35  Ala.  96;  Holmes  v. 
Weaver,  52  id.  516;  Noble  v.  Arnold, 
23  Ohio  St.  264;  Riddle  v.  Cheadle, 
25  id.  278;  McRae  v.  Brown,  12  La, 
Ann.  181;  Campbell  v.  Metcalf,  1 
Mont.  378;  Derry  Bank  v.  Heath,  45 
N.  H.  524;  Langworthy  v.  McKelvy, 
25  Iowa,  48;  Behrens  v.  McKenzie, 
23  Iowa,  333,  92  Am.  Dec.  428:  Wal- 
lace V.  York,  45  Iowa,  81 ;  Bonner  v. 


Copley,  15  La.  Ann.  504;  Sandback 
V.  Thomas,  1  Stark.  306;  Pritchet  v. 
Boevey,  1  Cr.  &  M.  775;  Holloway  v. 
Turner,  6  Q.  B.  928.  See  Day  v.  Wood- 
worth,  13  How.  363;  Oelrichs  v.  Spain, 
15  Wall  211:  §§512.  524. 

Attorney  fees  not  allowed  in  an 
action  for  infringement  of  a  patent. 
Teese  v.  Huntingdon,  23  How.  2. 

Counsel  fees  for  services  rendered 
in  the  supreme  court  on  appeal  may 
be  recovered  for.  Boiling  v.  Tate, 
65  Ala.  417,  overruling  earlier  cases, 

2  Hughes  v.  Graeme,  33  L.  J.  (Q.  B.) 
335';  Ziegler  v.  Powell,  54  Ind.  173; 
Lawrence  v.  Hagerman,  56  111.  68,  8 
Am.  Rep.  674;  Krug  v.  Ward,  77  111. 
603;  Westfield  v.  Mayo,  122  Mass.  100, 
23  Am.  Rep.  292;  New  Haven  &  N. 
Co.  V.  Hayden,  117  Mass.  433;  Noyes 
V.  Ward,  19  Conn.  2)0;  Pond  v.  Har- 
ris, 113  Mass.  114;  White  v.  Madison, 
26  N.  Y.  117;  Henderson  v.  Squire, 
L.  R.  4  Q.  B.  170;  Webber  v.  Nicholas, 
4  Bing.  16;  Noble  v.  Arnold,  23  Ohio 
St.  264;  Alexander  v.  Jacoby,  id. 358; 
Godwin  v.  Francis.  L.  R.  5  C.  P.  295; 
Ryerson  v.  Chapman,  66  Me.  557;  Du- 
bois V.  Hermance,  56  N.  Y.  673;  Call 
V.  Hagar,  69  Me.  521;  Bonesteel  v. 
Bonesteel,  30  Wis.  511;  Ah  Thaie  v. 


252  COMPENSATION.  [§  86. 

§  8G.  Same  subject;  necessity  of  notice  to  indemnitor  to 
fix  liability.  Where  a  judgment  recovered  may,  by  notice 
to  one  ultimately  liable,  fix  the  amount  which  the  latter  is 
liable  to  pay  to  the  party  against  whom  the  judgment  is  ob- 
tained, in  some  states  notice  is  required  in  order  to  entitle  the 
party  sued  to  the  ulterior  recourse  for  the  costs  of  defending; 
because  the  defense  is  to  be  made  or  not  solely  in  the  interest 
[143]  of  the  party  who  must  in  the  end  be  chargeable  with  the 
proper  consequences  of  the  liability  upon  which  the  judgment 
is  founded;  therefore,  he  is  entitled  to  be  consulted,  and  to 
have  no  expenses  incurred  and  charged  to  him  except  at  his 
request  or  with  his  sanction.  Confined  to  cases  covered  b}'^  an 
obligation  of  indemnity  and  those  where  there  is  no  right  of 
the  immediate  defendant  or  party  to  the  suit  peculiar  to  him- 
self to  be  asserted  in  the  action,  the  rule  is  a  wholesome  one 
and  rests  upon  sound  principles.  Of  this  class  are  actions 
against  an  agent,  servant  or  surety  for  acts  of  which  the  mas- 
ter or  principal  must  bear  the  whole  responsibility;  suits 
against  which  there  is  an  express  indemnity  and  those  in 
which  the  party  proceeded  against  is  sought  to  be  made  liable 
without  actual  misfeasance  for  the  acts  of  another  who  must 
respond  for  the  consequences  of  that  liability.^  The  object  of 
the  notice  is  not  to  give  a  ground  of  action.  If  a  demand  be 
sued  which  the  person  indemnifying  is  bound  to  pay,  and  no- 
tice be  given  to  him  and  he  refuse  to  defend  the  action,  in 
consequence  of  which  the  person  to  be  indemnified  is  obliged 
to  pay  the  demand,  the  other  party  is  estopped  after  such  no- 
tice from  disputing  it  or  from  claiming  that  the  party  sued 
was  not  bound  to  pay  it.^    Its  effect  is  to  let  in  the  party  who 

Quan  Wan, 3 Cal.  216 ;Henay  V.Hand,  79;  Murrell  v.  Fysh,  1  Cab.  &  E.  80; 

36  Ora  492,  59  Pac.  Rep.  330,  citing  §  58. 

the  text     See  Barnard  v.  Poor,  21        i  Lowell  v.  Boston,  etc.  R.  Co.,   23 

Pick.  878;  Rice  v.  Austin,  17  Mass.  Pick.  24;  Proprietors  of  L.  &  C.  v. 

197;  Guild  v.  Guild,  2  Met.  229;  Ar-  Lowell  H.  R.  Co.,  109  Mass.  221;  Ot- 

canibel  v.    Wiseman,  3   Dall.    306;  tuniwa  v.  Parks,  43  Iowa,  119;  Apgar 

Gould  V.  Barratt,  2  Mood.   &   Rob.  v.  Hiler,  24N.  J.  L.  812;  Beckley  v. 

171;  Maiden  v.  Fyson.  11  Q.   B.  292;  Munson,   22    Conn.   299;    Holmes  v. 

In  re  United  Service  Co.,  L.  R.  6  Ch.  Weed,  24  Barb.    546;  Fisher   v.  Fal- 

212;  Tindall  v.  Bell,  11  M.  &  W.  228;  lows,  5  Esp.  171;  Brooklyn  v.  Brook- 

Dixon   V.    Fawcas,   3  E.    &   E.   537;  lyn  City  R.  Co.,  57  Barb.  497;  Finckh 

Hammond    v.  Bussey,   20  Q.  B.  Div.  v.  Evers,  25  Ohio  St.  82. 

2  Duffield  V.  Scott,  3  T.  R  374 


§  87.]  ELEMENTS    OF   DAMAGE.  253 

is  bound  to  indemnify  to  defend  the  suit  against  the  indemni- 
fied party  and  to  preclude  the  former  from  showing,  when 
sued  for  such  indemnity,  that  the  phiintiff  has  no  claim  for  the 
alleged  loss,  or  not  to  the  amount  alleged;  that  he  made  an 
improvident  bargain,  and  that  the  defendant  might  have  ob- 
tained better  terms  if  the  opportunity  had  been  given  to  him.' 
It  is  not  necessary  to  the  production  of  this  result  that  the 
indemnitor  should  have  notice  in  writing,  or  even  express  no- 
tice, of  the  action;  notice  may  be  implied  from  his  knowledge 
of  the  action  and  participation  in  its  defense.^  A  formal  re- 
quest that  he  assume  the  defense  of  the  action  is  not  essential.' 

In  such  actions  two  questions  arise:  first,  has  the  plaintiff  a 
legal  cause  of  action;  second,  to  what  extent  has  he  been  dam- 
nified? The  indemnifying  party  is  entitled  to  his  day  in  court 
on  these  questions.  If  he  has  notice  to  defend  a  suit  brought 
against  another  who  has  a  right  of  recovery  over  against  him, 
that  opportunity  is  offered  him;  and  the  right  to  defend  [144] 
at  his  expense  will  depend  on  his  answer,  and  he  cannot  be 
charged  with  costs  of  an  improvident  defense  or  one  made  con- 
trary to  his  expressed  will.'*  If  notice  cannot  be  given  it  is 
reasonable  that  the  indemnified  party  should  exercise  some 
judgment  whether  to  defend  or  not,  where  the  amount  is  un- 
liquidated or  the  demand  disputable.  AVhere  he  does  so  with- 
out notice  and  judgment  is  recovered  against  him  it  is  res  inter 
alios  acta  as  to  the  first  of  these  questions,  and  jprivia  facie 
evidence  on  the  second,  though  the  contract  of  indemnity  is 
general. 

§  87.  Same  subject.  There  are  not  the  same  reasons  for 
notice  to  the  party  ultimately  liable,  though  there  are  reasons 
for  notice,  where  the  action,  the  costs  of  which  are  claimed,  is 
brought  on  some  independent  contract,  or  is  the  alleged  result 
of  a  tortious  act  of  such  party;  and  where  the  party  claiming 
for  the  costs  of  defending  such  action  defended  it  to  maintain 


1  Smith  V.  Compton,   3  B.  &  Ad.  Y.   614;   Port  Jervis  v.    First   Nat. 
407;  French  v.  Parish,  14  N.  H.  496;  Bank,  96  id.  550. 

Port  Jervis  v.  First  Nat.  Bank,  96  N.  3  jjeiser  v.  Hatch,  svpra;  Nashua 

Y.  550.  Iron  &  Steel  Co.  v.  Brush,  33  C.  C.  A. 

2  Barney  v.  Dewey,  13  Johns.  224,  456,  91  Fed.  Rep.  213. 

7  Am.  Dec.  372;  Beers  v.   Pinney,  12  *  See  New  York  State  M.  Ins.  Co. 

Wend.  309;  Heiser  v.  Hatch,  86  N.  t.  Protection  Ins.  Co.,  1  Story,  458. 


254:  COMPENSATION.  [§  87. 

his  own  legal  rights  derived  from  that  party,  and  does  not 
make  the  defense  in  his  interest,  he  may  still  have  his  recourse 
to  him  for  indemnity.  A  vendee,  having  a  warranty  of  title, 
may  defend  a  suit  brought  by  a  third  person  for  the  property 
without  consulting  his  vendor.  He  has  a  right,  as  between 
himself  and  the  latter,  to  retain  the  property  and  maintain, 
if  he  can,  the  title  warranted  to  him;  he  is  not  obliged  to  con- 
tent himself  with  a  remedy  on  his  warranty  and  acquiesce  in 
any  adverse  claim  that  may  be  set  up  unless  the  circumstances 
show  that  it  cannot  be  contested ;  he  may  defend  a  suit  brought 
on  his  own  warranty  made  to  his  vendee  on  the  faith  of  the 
warranty  of  his  vendor.  A  person  purchasing  from  another 
who  falsely  pretends  to  be  an  agent  may  sue  the  supposed 
principal  on  that  contract  to  enforce  it.  In  case  of  defeat  the 
expenses  of  such  litigation  are  the  natural  and  proximate  re- 
sult of  the  breach  of  contract  and,  if  not  improvidently  in- 
curred, are  recoverable  on  the  same  principle  as  expenses 
incurred  in  other  ways  after  a  breach  in  furtherance  of  the 
object  of  a  contract,  or  to  lessen  the  damages  which  would 
otherwise  result  from  its  infraction.^  And  such  items  will 
presently  be  considered  as  a  distinct  topic- 
[145]  The  authorities  are  in  conflict  on  the  necessity  of  no- 
tice, and  no  clear  rule  or  principle  can  be  deduced  from  them; 
but  the  foregoing  views  appear  to  be  those  supported  by  the 
best  considered  cases  and  most  in  harmony  with  the  principles 
applied  in  other  analogous  cases.  Under  certain  conditions  a 
notice  may  make  the  judgment  conclusive  evidence  against 
the  party  notified  in  favor  of  one  giving  the  notice  and  having 
a  right  of  recovery  over  against  him.  This  is  the  case  where 
notice  is  given  to  a  vendor  by  his  vendee  of  proceedings  founded 
upon  an  adverse  title  which  becomes  paramount.^  So  in  case 
of  other  warranties,  where  the  warrantee  has  acted  upon  them 
in  such  manner  as  was  within  the  contemplation  of  the  parties 
[146]  at  the  time  of  contracting,  as  by  giving  like  warranty  and 

iSee  Nashua  Iron  &  Steel  Co.   v.        3  Thurston  v,  Spratt,  52  Me.  202; 

Brush.  33  C.  C.  A.  456,  91  Fed.  Rep.  Boyd  v.  Whitfield,  19  Ark.  447;  Mar- 

218;  Chase  v.  Bennett,  59  N.  H.  394.  latt  v.  Clary,  20  Ark.  251;  Harding 

2  Hughes  V.  Graeme,  39  L.  J.  (Q.  B.)  v.    Larkin.   41  111.  413;  Castleton  v. 

335;Ryersonv.  Chapman,  66  Me.  561;  Miner,  8  Vt.  209;  Crisfield  v.  Storr, 

§  88.  36  Md.  129,  11  Am.  Rep.  480. 


■-§  ST.] 


ELEMENTS    OF    DAMAGE. 


255 


has  been  sued  upon  it.'  It  is  a  part  of  the  contract  of  war- 
ranty that  the  warrantor  shall  defend  the  title;  and  by  the 
warrantee  giving  notice  when  the  title  is  attacked  two  objects 
are  attained:  first,  it  gives  the  defendant  the  advantage  of  the 


iReggio  V.  Braggiotti,  7  Cush.  166; 
CoUen  V.  Wriglit,  8  El.  &  B.  647; 
Randell  v.  Trimen,  18  C.  B.  786; 
Brown  v.  Haven,  37  Vt.  439;  Moule 
V.  Garrett,  L.  R.  7  Ex.  101;  Mors-le- 
Blanch  v.  Wilson,  L.  R.  8  C.  P.  227. 

In  Baxendale  v.  London,  etc.  R 
Co.,  L.  R.  10  Ex.  35,  tiie  case  was 
•that  H.  having  contracted  with  the 
plaintiffs  who  were  carriers  for  the 
carriage  of  two  pictures  from  Lon- 
don to  Paris,  the  plaintiffs  contracted 
with  the  defendants  for  the  carriage 
by  them  of  the  pictures  over  a  part 
■of  the  distance.  The  pictures  were 
damaged  on  the  journey  by  the  de- 
fendants' negligence.  H.  thereupon 
brought  an  action  against  the  plaint- 
iffs, who  gave  notice  of  it  to  the  de- 
fendants and  requested  them  to  de- 
fend it.  They  refused  and  told  the 
plaintiffs  to  take  their  own  course. 
The  latter  defended  the  action 
brought  against  them  by  BL  without 
success,  and  then  sued  the  defend- 
ants to  recover  not  only  the  dam- 
ages found  by  the  jury  to  have  been 
sustained  by  H.,  but  also  the  costs  of 
the  unsuccessful  defense.  The  court 
held  that  the  costs  were  not  recover- 
able, inasmuch  as  they  could  not  be 
regarded  as  the  natural  consequence 
of  the  defendants'  default,  the  con- 
ti'acts  between  H.  and  the  plaintiffs, 
and  between  the  plaintiffs  and  the 
defendants,  being  separate  and  inde- 
pendent. The  decision  of  the  court 
of  exchequer  was  in  favor  of  recov- 
ery for  these  costs.  Cleasby,  B.,  said : 
"Now,  in  the  first  instance,  the 
plaintiffs  could  obtain  very  little  in- 
formation to  guide  them  either  in 
defending  the  action  or  in  settling  it. 
They  could  not  pay  money  into 
'Court,  for  the  damage  done  by  the 


water  to  the  pictures  was  diflScult  to 
ascertain  without  a  regular  inquiry 
by  persons  con)petent  to  deal  with 
the  matter.  Having  regard  to  the 
nature  of  the  claim,  we  certainly 
think  they  could  not  be  expected 
either  to  settle  the  claim  before  ac- 
tion or  to  pay  money  into  court;  and 
we  think  it  was  the  necessary  con- 
sequence of  the  defendants'  neglect 
that  the  plamtiffs  should  be  put  to 
the  expense  of  ascertaining  in  a 
proper  way  the  amount  of  their  lia- 
bility to  Harding,  in  order  that  they 
might  recover  over  against  the  de- 
fendants. .  .  .  Clearly  the  plaint- 
iffs were  entitled  to  some  costs. 
.  .  .  The  plaintiffs  are  entitled  to 
recover  from  the  defendants  all  costs 
incurred  in  having  the  amount  of 
their  liability  ascertamed.  .  .  . 
They  are  not  entitled  to  the  costs  of 
any  defense  peculiar  to  themselves, 
such  as  that  they  were  mere  for- 
warding agents  and  not  carriers." 
But  a  different  view  was  taken  in 
the  exchequer  chamber.  Coleridge, 
C.  J.,  said:  "  The  defense  was  not,  in 
my  judgment,  a  reasonable  defensa 
It  was  without  any  foundation  in 
law,  and  there  was  no  authority  from 
the  defendants,  either  express  or  im- 
plied, to  set  it  up.  This,  however, 
does  not  dispose  of  the  whole  of  the 
plaintiffs'  claim.  For  it  may  be  said, 
•True,  the  defense  was  ill-advised 
and  unauthorized;  still  tlie  plaintiffs 
were  obliged  to  do  something  to  as- 
certain their  liability,  and  they  at 
least  are  entitled  to  such  an  amount 
of  costs  as  they  would  have  incurred 
had  they  allowed  judgment  to  go  by 
default  upon  a  writ  of  inquiry.'  But 
I  think  this  contention  fails  also  be- 
cause it  seems  to  me  that  the  whole 


256 


COMPENSATION. 


[§87 


better  information  which  the  warrantor  is  supposed  to  possess 
in  relation  to  the  title;  and  second,  saves  the  necessity  of  try- 
[147]  ing  the  same  title  again  in  an  action  against  the  war- 
rantor. The  notice  to  the  latter  makes  him  privy  to  the  rec- 
ord, and  he  is  bound  by  it  to  the  extent  to  which  his  rights 
have  been  tried  and  adjudged;  and,  in  an  action  against  him 
at  the  suit  of  the  warrantee,  in  addition  to  the  record,  all  that 
is  necessary  to  be  shown  is  that  his  title  was  in  issue,  and  judg- 
ment given  upon  it.'  The  warrantor  is  at  liberty  to  show  any 
other  fact  not  involved  in  that  adjudication  which  will  be  bene- 
ficial to  his  defense,  as  that  the  defect  of  title  arose  after  he  sold 
the  property,  and,  therefore,  that  he  had  no  interest  in  the 
determination  of  the  question  tried.^ 


of  the  costs  were  incurred  for  the 
plaintiff's  own  benefit,  and  were  not 
in  any  sense  the  natural  or  proxi- 
mate result  of  the  defendants'  breach 
of  duty."  Keating.  Quain  and  Lush, 
JJ.,  were  of  the  same  opinion,  and 
tliought  the  damages  too  remote. 
The  case  of  Mors-le-Blanch  v.  Wilson, 
supra,  was  overruled. 

The  latest  exposition  of  English 
law  upon  this  question  is  given  in 
Hammond  v,  Bussey,  20  Q.  B.  Div. 
(1887),  79,  where  Baxendale  v.  London, 
etc.  R.  Co.,  supra,  is  distinguished. 
The  question  decided  is  thus  stated 
by  the  reporter:  "The  defendant  con- 
tracted for  the  sale  of  coal  of  a  par- 
ticular description  to  the  plaintiffs, 
knowing  that  they  were  buying  such 
coal  for  the  purpose  of  reselling  it  as 
coal  of  the  same  description.  The 
plaintiffs  did  so  resell  the  coal.  The 
coal  delivered  by  the  defendant  to 
the  plaintiffs  under  the  contract  and 
by  them  delivered  to  their  sub-ven- 
dees did  not  answer  such  description, 
but  this  could  not  be  ascertained  by 
inspection  of  the  coal,  and  only  be- 
came apparent  upon  its  use  by  the 
sub-vendees.  The  sub- vendees  there- 
upon brought  an  action  for  breach 
of  contract  against  the  plaintiffs. 
The  plaintiffs  gave  notice  of  the  ac- 
tion to  the  defendant,  who,  however, 
repudiated  all  liability,  insisting  that 


the  coal  was  according  to  contract. 
The  plaintiffs  defended  the  action 
against  them,  but  at  the  trial  the 
verdict  was  that  the  coal  was  not 
according  to  contract,  and  the  sub- 
vendees  accordingly  recovered  dam- 
ages from  the  plaintiffs.  The  plaint- 
iffs thereupon  sued  the  defendant  for 
breach  of  contract,  claiming  as  dam- 
ages the  amount  of  the  damages  re- 
covered from  them  in  the  action  by 
their  sub-vendees,  and  the  costs 
wliich  had  been  incurred  in  such  ac- 
tion." Liability  for  costs  was  de- 
nied. Held,  that  the  defense  of  the 
previous  action  being,  under  the  cir- 
cumstances, reasonable,  the  costs 
incurred  by  the  plaintiffs  as  defend- 
ants in  such  action  were  recoverable 
under  the  rule  in  Hadley  v.  Baxen- 
dale as  being  damages  which  might 
reasonably  be  supposed  to  have  been 
in  the  contemplation  of  the  parties, 
at  the  time  when  they  made  the  con- 
tract, as  the  probable  result  of  a 
breach  of  it. 

1  Davis  V.  Wilbourne,  1  Hill  (S.  C), 
27,  26  Am.  Dec.  154;  Miner  v.  Clark, 
15  Wend.  425;  Barney  v.  Dewey,  13 
Johns.  225,  7  Am.  Dec.  372;  Pickett 
V.  Ford,  4  How.  (Miss.)  246:  Col  burn 
v.  Pomeroy,  44  N.  H.  19;  Shelby  v. 
Missouri  Pacific  R.  Co.,  77  Mo.  App. 
205,  citing  the  text. 

■i  Thurston  v.  Spratt,  52  Me.  202. 


§88.] 


ELEMENTS   OF   DAMAGE. 


25: 


§  88.  Expenses  incurred  to  prevent  or  lessen  damages. 

Fifth,  such  losses  may  consist  of  labor  done  and  expenses  [148] 
incurred  to  prevent  or  lessen  damages  which  would  otherwise  ■ 
result  from  the  defendant's  default  or  misconduct.  The  law 
imposes  upon  a  party  injured  by  another's  breach  of  contract 
or  tort  the  active  duty  of  using  all  ordinary  care  and  making 
all  reasonable  exertions  to  render  the  injury  as  light  as  pos- 
sible. If  by  his  negligence  or  wilfulness  he  allows  the  dam- 
ages to  be  unnecessarily  enhanced,  the  increased  loss,  that  which 
was  avoidable  by  the  performance  of  his  duty,  falls  upon  him.* 
This  is  a  practical  obligation  under  a  great  variety  of  circum- 
stances, and  as  the  damages  which  are  suffered  by  a  failure  to 
perform  it  are  not  recoverable  it  is  of  much  importance.  Where 
it  exists  the  labor  or  expense  which  its  performance  involves 


1  Ohio  &  M.  R.  Co.  V.  McGehee,  47 
111.  App.  348;  Hartford  Deposit  Co.  v. 
Calkins,  18G  III.  104,  57  N.  E.  Rep.  863, 
quoting  the  text;  Southern  R.  Co.  v. 
Ward,  110  Ga.  793,  36  S.  E.  Rep.  78; 
McCarty  v.  Boise  City  Canal  Co.,  2 
Idaho,  225,  10  Pac.  Rep.  623;  Factors' 
&  Traders'  Ins.  Co.  v.  Werlein,  42  La. 
Ann.  1046,  8  So.  Rep.  435,  11  L.  R.  A. 
361;  Gniadck  v.  Northwestern  Imp. 
&  Boom  Co.,  73  Minn.  87,  75  N.  W. 
Rep.  894;  Sweeney  v.  Montana  Cen- 
tral R.  Co.,  19  Mont.  163,  47  Pac.  Rep. 
791;  Loomer  v.  Thomas,  38  Neb.  277, 
56  N.  W.  Rep.  973,  quoting  the  text; 
Gulf,  etc.  R.  Co.  V.  Simonton,  2  Tex. 
Civ.  App.  558,  22  S.  W.  Rep.  285; 
Southern  Kansas  R.  Co.  v.  Isaacs,  20 
Tex.  Civ.  App.  466,  49  S.  W.  Rep.  690; 
Austin  V.  Chicago,  etc.  R.  Co.,  93 
Wis.  496,  67  N.  W.  Rep.  1129;  Culler- 
ton  V.  Miller,  26  Ont.  36,  45,  quoting 
the  text;  FuUerton  v.  Fordyce,  144 
Mo.  519,  44  S.  W.  Rep.  1053:  Sherman 
Center  Town  Co.  v.  Leonard,  46  Kan. 
854,  26  Pac.  Rep.  717,  26  Am.  St.  101; 
Fowle  V.  Park,  48  Fed.  Rep.  789; 
Pennsylvania  R.  Co.  v.  Washburn,  50 
id.  335;  Hamilton  v.  McPherson,  28 
N.  Y.  72,  8 1  Am.  Dec.  380-,  Rexter  v. 
Starin,  73  N.  Y.  601;  Costigan  v.  Mo- 
hawk, etc.  R.  Co.,  2  Denio,  609;  Tay- 
VOL.  1  —  17 


lor  V.  Read,  4  Paige,  572;  Dillon  v. 
Anderson,  43  N.  Y.  231;  Dorwiu  v. 
Potter,  5  Denio,  306;  Hochster  v.  De 
la  Tour,  2  El.  &  B.  678;  Loker  v. 
Damon,  17  Pick.  284;  French  v.  Vin- 
ing,  102  Mass.  132,  3  Am.  Rep.  440; 
Cherry  v.  Thompson,  L.  R.  7  Q.  B. 
573;  Driver  v.  Maxwell,  56  Ga.  11; 
Roper  V.  Johnson,  L.  R.  8  C.  P.  167; 
Simpson  v.  Keokuk,  34  Iowa,  568; 
Beymer  v.  McBride,  37  Iowa,  114; 
Frost  V.  Knight,  L.  R.  7  Ex.  Ill; 
Hecksher  v.  McCrea,  24  Wend.  304; 
Davis  V.  Fish,  1  G.  Greene,  406,  48 
Am.  Dec.  387;  Allender  v.  C.  K.  I.  & 
P.  R.  Co.,  37  Iowa,  264;  Dobbins  v. 
Duquid,  65  111.  464;  Chamberlain  v. 
Morgan,  68  Pa.  168;  New  Orleans,  etc. 
Co.  V.  Echols,  54  Miss.  264;  Hathorn 
V.  Richmond,  48  Vt.  557;  Pinuey  v. 
Andrus,  41  Vt.  631;  Bradley  v.  Den- 
ton, 3  Wis.  557;  Gordon  v.  Brewster, 
7  Wis.  355;  Fitzpatrick  v.  Boston  & 
M.  R.,  84  Me.  33,  24  Atl.  Rep.  432; 
Williams  v.  Yoe,  19  Tex.  Civ.  App. 
281,  46  S.  W.  Rep.  659;  Dietrich  v. 
Hannibal,  etc.  R.  Co.,  89  Mo.  App.  36; 
Webb  V.  Metropolitan  Street  R.  Co., 
id.  604;  Warren  v.  Stoddart,  105  U.  S. 
224;  William  E.  Peck  &  Co.  v.  Kansas 
City  Metal  Roofing  &  C.  Co.,  —  Mo. 
App.  — ,  70  S.  W.  Rep.  169. 


258 


COMPENSATION. 


II 


is  chnt'geable  to  the  party  liable  for  the  injury  thus  mitigated; 
in  other  words,  the  reasonable  cost  of  the  measures  which  the 
injured  party  is  bound  to  take  to  lessen  the  damages,  whether 
adopted  or  not,  will  measure  the  compensation  the  party  in- 
jured can  recover  for  the  injury  or  the  part  of  it  that  such 
measures  have  or  would  have  prevented,^  This  is  on  the  prin- 
ciple that  if  the  efforts  made  are  successful  the  defendant  will 
have  the  benefit  of  them ;  if  they  prove  abortive  it  is  but  just 
that  the  expense  attending  them  shall  be  borne  by  him.^ 


» Id. ;  Monroe  v.  Lattin,  25  Kan.  351; 
Board  of  Com'rs  v.  Arnett,  116  Ind. 
438,  19  N.  E.  Rep.  299;  Texas  &  P.  R. 
Co.  V.  Levi,  59  Tex.  674;  Long  v. 
Clapp.  15  Neb.  417.  19  N.  W.  Rep.  467, 
quoting  the  text;  Travis  v.  Pierson, 
48  Hi.  App.  579;  Hewson-Herzog  Suj)- 
ply  Co.  V.  Minnesota  Brick  Co.,  55 
Minn.  530,  57  N.  W.  Rep.  129;  Monroe 
V.  Connecticut  River  Lumber  Co.,  68 
N.  H.  89,  39  AtL  Rep.  1019;  Hughes 
V.  Austin.  12  Tex.  Civ.  App.  178,  33 
S.  W.  Rep.  607,  citing  the  text;  Nad- 
ing  V.  Deuisou  &  P.  R.  Co.,  22  Tex. 
Civ.  App.  173,  54  S.  W.  Rep.  412, 
quoting  the  text;  Nelson  v.  St.  Louis, 
etc.  R.  Co.,  49  Kan.  165,  30  Pac.  Rep. 
178;  Uhlig  v.  Barnum,  43  Neb.  584, 
594,  61  N.  W.  Rep.  749,  quoting  the 
text;  Galbreath  v.  Carnes,  91  Mo. 
App.  512,  quoting  the  text;  Armi- 
Btead  V.  Shreveport,  etc.  R.  Co.,  — 
La.  — ,  32  So.  Rep.  456,  citing  the 
text. 

"Legal  expenses  are  recoverable 
as  damages  when  incurred  in  pro- 
ceedings taken  by  the  injured  party 
to  prevent  or  reduce  the  damage 
which  he  would  incur  by  the  con- 
tinuance of  the  wrong  which  he  has 
abated  by  resort  to  such  proceed- 
ings." Clason  V.  Nassau  Ferry  Co.. 
20  N.  Y.  Misc.  315,  45  N.  Y.  Supp.  675, 
citing  this  section. 

In  an  action  to  punish  defendants 
for  contempt  in  violating  an  injunc- 
tion the  expense  of  a  second  injunc- 
tion  was  included  in  the  fine  im- 


posed on  them,  it  being  considered 
that  such  expense  was  incurred  in 
an  action  brought  expressly  to  re- 
strain a  continuance  of  the  damaga 
Jewelers'  Mercantile  Agency  v. 
Rothschild,  6  App.  Div.  499,  39  N.  Y. 
Supp.  700. 

A  corporation  which  wrongfully 
refuses  to  register  shares  in  the 
name  of  a  purchaser  must  respond 
to  him  for  the  value  of  other  shares 
he  bought  to  lessen  the  responsibility 
he  was  under  to  his  vendee.  Balkis 
Consolidated  Co.  v.  Tomkinson,  [1893] 
App.  Cas.  396;  Tomkinson  v.  Balkis 
Consolidated  Co.,  [1891]  2  Q.  B.  614 

2  Watson  V.  Proprietors  Lisbon 
Bridge,  14  Me.  201,  31  Am.  Dec.  49; 
Summers  v.  Tarney,  123  Ind.  560,  24 
N.  K  Rep.  678.     See  §  693. 

In  Miller  v.  Mariner's  Church,  7 
Ma  51,  20  Am.  Dec.  341,  is  a  sound 
exposition  of  this  dutj'.  Weston,  J., 
said:  '■  If  the  party  injured  has  it  in 
his  power '.to  take  measures  by  which 
his  loss  may  be  less  aggravated  this 
will  be  expected  of  him.  Thus  in  a 
contract  of  assurance,  where  the  as- 
sured may  be  entitled  to  recover  for 
a  total  loss,  he,  or  the  master  em- 
ployed by  him,  becomes  the  agent  of 
the  assurer  to  save  and  turn  to  the 
best  account  such  of  the  property  as- 
sured as  can  be  preserved.  The  pur- 
chaser of  perishable  goods  at  auction 
fails  to  complete  his  contract.  What 
shall  be  done  ?  Shall  the  auctioneer 
leave  the  goods  to  perish  and  throw 


§8S.] 


ELEMENTS    OF   DAMAGE. 


259 


"When,  after  a  contract  has  been  entered  into,  notice  is  [140] 
given  by  one  of  the  parties  that  it  is  rescinded  on  his  part,  he 
is  only  liable  for  such  damages  and  loss  as  the  other  has  suf- 
fered by  reason  of  such  rescinding;  and  it  is  the  duty  [150] 
of  the  latter,  upon  receiving  such  notice,  to  save  the  former, 
as  far  as  it  is  in  his  power,  all  further  damages  though  to  do  so 
may  call  for  affirmative  action.^  If  a  person  hired  for  service 
for  a  given  term  is  wrongfully  dismissed  he  is  entitled  to  the 
stipulated  wages  for  the  terra  of  his  engagement  if  that  is  his 
loss.     It  is  prima  facie  his  loss;  but  the  law  imposes  on  him 


the  wliole  loss  upon  the  purchaser  ? 
That  would  be  to  aggravate  it  un- 
reasonably and  unnecessarily.  It  is 
his  duty  to  sell  them  a  second  time, 
and  if  they  bring  less  he  may  recover 
the  difference,  with  commissions,  and 
other  expenses  of  resale,  from  the 
first  purchaser.  If  the  party  entitled 
to  the  benefit  of  a  contract  can  pro- 
tect himself  from  a  loss  arising  from 
a  breach  at  a  trifling  expense  or  with 
reasonable  exertions,  he  fails  in  social 
duty  if  he  omits  to  do  so,  regardless 
of  the  increased  amount  of  damages 
for  which  he  may  intend  to  hold  the 
other  contracting  party  liable.  Qui 
non  proJiibet,  cuvi  proliibere  possit, 
mbet.  And  he  who  has  it  in  his 
power  to  prevent  an  injury  to  his 
neighbor  and  does  not  exercise  it  is 
often  in  a  moral,  if  not  in  a  legal, 
point  of  view,  accountable  for  it.  The 
law  will  not  not  permit  him  to  throw 
a  loss,  resulting  from  a  damage  to 
himself,  upon  another,  arising  from 
causes  for  which  the  latter  ma}'  be  re- 
sponsible, which  the  party  sustaining 
the  damage  might  by  common  pru- 
dence have  prevented.  For  example, 
a  party  contracts  for  a  quantity  of 
bricks  to  build  a  bouse,  to  be  deliv- 
ered at  a  given  time;  and  engages 
masons  and  carpenters  to  go  on  with 
the  work.  The  bricks  are  not  de- 
livered. If  other  bricks  of  an  equal 
qualitj'  and  for  tlie  stipulated  price 
■can  be  at  once  purchased  on  the  spot 


it  would  be  unreasonable,  by  neglect- 
ing to  make  the  purchase,  to  claim 
and  receive  of  the  delinquent  party 
damages  for  the  workmen,  and  the 
amount  of  rent  whicli  might  be  ob- 
tained for  the  house  if  it  had  been 
built.  The  party  vvlio  is  not  charge- 
able with  a  violation  of  his  contract 
should  do  the  best  he  can  in  such 
cases;  and  for  any  unavoidable  loss 
occasioned  by  the  failure  of  the  other 
he  is  justly  entitled  to  a  liberal  and 
complete  indemnity." 

In  Hogle  V.  New  York,  etc.  R.  Co., 
28  Hun,  363.  the  trial  court  refused 
to  charge  that  when  plaintiff  discov- 
ered a  fire  on  his  premises  he  could 
not  recover  for  subsequent  damages 
if  he  neglected  to  use  reasonable 
practicable  means  to  suppress  it,  on 
the  ground  that  the  fire  was  not  at- 
tributable to  his  fault.  This  was 
considered  as  not  being  far  from  say- 
ing that  he  might  do  what  he  could 
to  increase  it.  He  was  bound  to  use 
all  reasonable  efforts  in  his  power  to 
stop  the  fire.  Bevier  v.  D.  &  H.  C. 
Co.,  13  Hun,  254;  Milton  v.  Hudson 
River  S.  Co.,  37  N.  Y.  214.  See  O'Neill 
v.  New  York,  etc.  R.  Co.,  45  Hun, 
458,  as  to  an  excuse  for  non-perform- 
ance of  duty. 

1  Hewson-Herzog  Supply  Co.  v. 
Minnesota  Brick  Co.,  55  Minn.  530, 
57  N.  W.  Rep.  129,  quoting  the  text; 
Dillon  V.  Anderson,  43  N.  Y.  231. 


2G0  COMPENSATION.  [§  88. 

the  duty  to  seek  other  employment;  and  to  the  extent  that  he 
obtains  it  and  earns  wages,  or  might  have  done  so,  his  dam- 
ages will  be  reduced.^  The  rule  as  stated  was  deemed  appli- 
cable where  the  owner  of  water  lots  upon  a  lake  front,  subject 
to  the  reservation  of  free  passage  thereon,  refused  to  allow  the 
plaintiff  to  haul  ice  cut  from  the  lake  over  such  lots,  when 
frozen,  to  the  wharf  from  which  the  plaintiff  desired  to  ship 
the  ice  for  the  purposes  of  his  business,  unless  he  paid  toll, 
which  he  refused  to  do;  the  defendant  having  acted  without 
malice  and  under  a  honafide  mistake  as  to  his  rights,  the  plaint- 
iff ought  to  have  paid  the  toll  under  protest,  and  because  he 
did  not,  he  could  not  recover  for  the  loss  of  his  business  conse- 
quent on  the  failure  to  ship  ice.^  In  an  action  for  damages  re- 
sulting from  alleged  defects  in  the  construction  of  a  building 
so  that  the  roof  leaked  and  injured  the  interior  work  or  prop- 
erty therein,^  or  for  breach  of  a  contract  to  repair  a  building 
from  which  similar  injuries  ensued,''  or  for  injury  to  crops 
through  default  of  the  defendant  in  not  building  or  repairing 
a  fence,  or  his  tortious  opening  of  the  same,^  where  the  party 
suffering  from  the  injury  is  aware  of  the  fact  and  the  cause 
and  that  by  a  little  timely  labor  and  expense  the  damage  could 
be  avoided,  the  law  imposes  the  duty  on  him  to  stay  the  in- 
jury, when  he  is  in  a  favorable  situation  to  do  it,  and  enforces 
the  duty  by  confining  his  redress  for  the  injury  thus  avoid- 
able to  compensation  for  the  necessary  and  proper  means 
of  prevention.^  The  duty  in  such  cases  is  not  arbitrarily  im- 
posed on  the  injured  party  and  exacted  of  him  in  all  cases,  to 
do  or  amend  the  work  of  the  other  party,  or  to  finish  it;  but 

1  Borden  Mining  Co.  v.  Barry,  17  Cook  v.  Soule,  56  N.  Y.  420;  Thomp- 

Md.  419;  Sutherland  v.  Wyer,67  Me.  ^on  v.  Shattuck,  2  Met.  615. 

64;  Gillis  v.    S|jace,   63    Barb.    177;  5 Andrews  v.   Jones,  36  Tex.  149; 

Heavilon   v.  Ki-amer,    31    Ind.   241;  Campbell    v.   Miltenberger,   20    La. 

Heilbrouer  v.  Hancock,  83  Tex.  714;  Ann.  72;  Loker  v.  Damon,  17  Pick. 

Howard  V.  Daly,  61  N.  Y.  362,  19  Am.  284;   Fisher  v.  Goebel,  40  Mo.  475; 

Rep.  285;  Williams  v.  Chicago  Coal  Waters  v.    Brown,  44  Mo.  302;  St. 

Co.,  60  111.  149;  Raleigh  v.  Clark,  71  Louis,  etc.  R.  Co.  v.  Ritz.  33  Kan.  404; 

S.  W.  Rep.  857, Ky. ,  quoting  Same  v.  Sharp.   27  id.  134;  Smith  v. 

the  text.  C.  C.  &  D.  R.  Co.,  38  Iowa,  518. 

2CuUerton  v.  Miller,  26  On t.  36.  egherman    Center    Town    Co.    v. 

3  Mather  v.  Butler  County,  28  Iowa,  Leonard,  46  Kan.  354,  26  Am.  St.  101. 
253;  Haysler  v.  Owen,  61  Mo.  270.  26  Pac.  Rt^p.  717. 

4  Dor  win  v.    Potter,  5  Denio,  306; 


§  89.]  ELEMENTS   OF    DAMAGE.  261 

only  when  in  view  of  all  the  circumstances  of  the  particular 
case  it  is  a  reasonable  duty  which  he  ought  to  perform  instead 
of  passively  allowing  a  greater  damage.^  AVhere  the  party 
whose  duty  it  is  primarily  to  do  the  work  necessary  to  fulfill 
the  contract  and  to  prevent  damage  from  past  failure  or  to  stay 
injuries  resulting  from  his  negligence  or  other  wrong  is  [151] 
in  possession  or  has  equal  knowledge  and  opportunity,  he  alone 
may  be  looked  to  to  fulfill  that  duty,  and  it  will  not  avail  him 
to  say  the  injured  party  might  have  lessened  the  damages  by 
performing  the  duty  for  him.^ 

§  89.  Same  subject;  between  Tendor  and  vendee.  If  the 
party  claiming  damages  is  a  purchaser  he  can  recover  no  more 
than  it  would  cost  him,  with  reasonable  diligence,  to  supply  him- 
self with  the  same  property  by  resort  to  the  market '  or  other 
source  or  means  of  supply.*  So  where  property  is  sold  with  a 
warranty  of  fitness  for  a  particular  purpose,  if  it  be  of  such  a 
nature  that  its  defects  can  be  readily,  and  in  fact  are,  ascer- 
tained, yet  the  purchaser  persists  in  using  it,  whereby  losses 
and  expenses  are  incurred,  they  come  of  his  own  Avrong  and 
he  cannot  recover  damages  for  them  as  consequences  of  the 
breach  of  warranty .•"*  A.  sold  toB.  a  quantity  of  pork  in  bar- 
rels with  a  warranty  that  the  barrels  would  not  leak;  B.  stored 
it  in  a  suitable  place,  but  found  afterwards  that  some  of  the 
barrels  were  leaking.     In  order  to  preserve  the  pork  he  filled 

1  Armistead  v.  Shreveport,  etc.  R.  Mackie,  71  Tex.  491,  10  Am.  St.  766, 
Co.,  —  La. ,32  So.  Rep.  456, 459,quot.    9  S.  W.  Rep.  451,  1  L.  R.  A.  667. 

ing  the  text;   Raleigh  v.  Clark,  —         »  Parsons  v.  Sutton,  66  N.   Y.   92; 

Ky. ,  71  S.  W.   Rep.  857,  quoting  McHose  v.  Fulmer.  73  Pa.  365;Gains- 

the  text.  ford  v.  Carroll,  2  B.  &  C.  624;  Barrow 

2  Myers  v.  Burns,  35  N.  Y.  269;  t.  Arnaud,  8  Q.  B.  604;  Hassard- 
Hexter  v.  Knox.  63  id.  561;  Schwin-  Short  v.  Hardison,  114  N.  C.  483,  19 
ger  V.  Raymond,  83  id.  192,  38  Am.  S.  E.  Rep.  728;  Creve  Couer  Lake  Ice 
Rep.  415;  Keys  v.  Western  Vermont  Co.  v.  Tamm,  90  Mo.  App.  189;  Law- 
Slate  Co.,  34  Vt.  81;  Haysler  v.  rence  v.  Porter,  63  Fed.  Rep.  62. 
Owen,  61  Mo.  270;  Fisher  v.  Goebel,  *  Benton  v.  Fay,  64  III.  417;  Bey- 
40  Mo.  475;  Green  v.  Mann,  11  111.  mer  v.  McBride.  37  Iowa,  114;  Grand 
613;  Waters  v.  Brown,  44  Mo.  302;  Tower  Co.  v.  Phillips,  23  Wall.  471; 
Smith  V.  Chicago,  etc.  R.  Co.,  38  Iowa,  Hinde  v.  Liddell,  L.  R.  10  Q.  B.  265. 
518;  Chicago,  etc.  R.  Co.  v.  Ward,  16  *  Draper  v.  Sweet,  66  Barb.  145; 
111.  522;  Flynn  v.  Trask,  11  Allen,  Maynard  v.  Maynard,  49  Vt.  297; 
550;  Priest  V.  Nichols,  116  Mass.  401;  Frick  Co.  v.  Falk,  50  Kan.  644,33 
Gardner  v.  Smith,  7  Mich.  410, 74  Am.  Pac.  Rep.  360. 

Dec.   722;   St.   Louis,  etc.   R.  Co.  v. 


2()2  COMPENSATION.  [§  90. 

the  leakinir  barrels  from  time  to  time  with  new  brine;  but 
they  continued  to  leak  and  a  considerable  quantity  of  the 
pork  was  spoiled.  B.  did  not  give  notice  to  A.  of  the  condi- 
tion of  the  barrels,  nor  offer  to  return  the  pork.  It  was  the 
established  practice  among  persons  dealing  in  pork,  of  which 
B.  was  presumed  to  be  cognizant,  where  the  leaking  of  the 
barrels  continued  after  they  had  been  filled  with  new  brine,  to 
take  out  the  pork  and  repack  it  in  new  barrels.  In  a  suit 
brought  by  A.  for  the  price  of  the  pork,  B.  claimed  a  deduc- 
tion of  the  damages  for  breach  of  the  warranty;  it  was  held 
that  the  only  deduction  he  was  entitled  to  w^as  the  sum  which 
[152]  he  would  have  been  compelled  to  pay  for  new  barrels  in 
the  place  of  the  leaky  ones,  and  for  the  repacking  of  the  pork 
in  them.  If  B.,  without  knowledge  that  the  barrels  were 
leaky,  and  without  care  in  informing  himself  of  their  condi. 
tion,  had  suffered  the  pork  to  remain  in  them  for  a  reasonable 
time,  and  it  had  thereby  become  spoiled,  he  could  have  recov- 
ered in  an  action  on  the  warranty  the  value  of  the  pork  spoiled. 
But  as  he  knew  that  the  barrels  were  leaky  and  might  have 
prevented  the  injury  to  the  pork  by  procuring  new  ones  and 
repacking  it,  the  loss  of  the  pork  should  be  regarded  as  attrib- 
utable to  his  own  want  of  care  rather  than  to  the  defect  of 
the  barrels.^ 

§90.  Same  subject;  extent  of  the  duty.  The  principle 
that  the  injured  party  must  reasonably  exert  himself  to  pre- 
vent damage  applies  alike  to  cases  of  contract  and  tort.^  He 
is  not  required  to  commit  a  tort  to  prevent  damages;'  nor  to 
anticipate  and  provide  against  a  threatened  trespass.*  The 
plaintiff  had  a  lease  of  a  grazing  farm,  which  he  had  occasion 
to  use  to  its  capacity  in  grazing  his  cattle  intended  for  sale; 
the  defendant  wrongfully  turned  other  cattle  of  bis  own  upon 
the  farm  and  persisted,  against  the  plaintiff's  remonstrance,  in 
keeping  them  there;  in  consequence  the  plaintiff  suffered  seri- 

1  Hitchcock  V.  Hunt,  28  Conn.  343.  Meigs,  50  N.  Y.  480.  See  Wing  Chung 

2  Factors'  &  Traders'   Ins.    Co.  v.  v,  Los  Angeles.  47  Cal.  531. 
Werlein,  43  La.  Ann.  1046, 1053,  8  So.  *  Plummer  v.  Penobscot  Lumber- 
Eep.  435,  11  L.  R.  A.  361,  quoting  the  ing  Ass'n,  67   Me.  363;  Reynolds  v. 
text:  Sutherland  v.  Wyer,  67  Me. 64.  Chandler  River  Co.,  43  Me.  513.     See 

^  Wolf  V.  St.  Louis  Independent  Driver  v.  Western  Union  R.  Co.,  32 
Water  Co.,  15   Cal.  319;  Hubbell  v.     Wis.  569,  14  Am.  Rep.  726. 


00.1 


ELEMENTS    OF   DAMAGE. 


2G: 


ous  loss  to  his  stock  for  want  of  suflBcient  pasturage.  It  was 
held  not  to  be  the  duty  of  the  plaintiff  under  such  circum- 
stances to  provide  other  pasturage  for  his  cattle  to  lessen 

The  measure  of 


damages  in  exoneration  of  the  defendant,^ 


iGilbert  v.  Kennedy,  22  Mich.  117. 
Compare  Hughes  v.  Austin,  12  Tex. 
Civ.  App.  17S,  33  S.  W.  Rep.  607. 

In  tlie  Michigan  case  the  duty  in 
question  is  recognized,  but  Christ- 
iancy,  J.,  said:  "  Whether  it  is  appli- 
cable at  all  to  the  facts  of  the  present 
case  is  only  important,  so  far  as  it 
bears  on  the  duty  of  the  plaintiff, 
when  the  defendant's  cattle  were 
wrongfully  turned  in,  to  remove  his 
own  cattle  from  the  pasture  before 
they  should  be  injuriously  affected 
by  the  overfeeding  of  the  defend- 
ant's cattle;  or  to  prevent  at  any  par- 
ticular time  further  injury  from  this 
cause.  .  .  .  The  rule  in  question 
(if  based  upon  the  supposed  duty)  is 
simply  one  of  good  faith  and  fair 
dealing.  If  a  man  tortiously  injures 
the  roof  of  my  dwelling,  and  I  obsti- 
nately leave  it  in  that  condition,  and, 
having  the  opportunity,  refuse  or  neg- 
lect to  repair  until  the  furniture  and 
the  bedding  in  the  house  are  injured 
or  destroyed  by  the  rains,  I  cannot 
recover  of  him  for  this  injury  to  my 
furniture  and  bedding,  which  I 
might  have  avoided  by  timely  re- 
pairs. And  if  a  man  come  to  my 
field,  where  my  cattle  are  grazing, 
turn  them  out  into  the  street,  and 
turn  his  own  cattle  in,  thus  ousting 
me  from  the  possession,  and  claim- 
ing and  holding  exclusive  possession 
against  me,  I  cannot  leave  my  cattle 
in  the  street  to  starve,  and  then 
charge  him  with  their  full  value,  if 
it  be  practicable  by  reasonable  effort 
on  my  part  to  procure  other  pasture 
or  feed  for  them;  but  I  can  recover 
only  such  damages  as  I  have  suffered 
beyond  what  I  might  have  avoided 
by  reasonable  diligence.  But,  if  h<j 
come  to  the  same  field,  and  wronj^- 


fully  turn  his  cattle  in  with  mine, 
neither  taking  nor  claiming  any  ex- 
clusive possession,  and,  as  often  as  I 
turn  his  cattle  out,  he  persists  in 
turning  them  in  again  till  I  find  it 
impracticable  to  keep  them  out  with- 
out coming  to  blows,  and  cease  to 
attempt  it.  and  my  cattle  from  this 
cause  are  depri%'ed  of  necessary  feed, 
and  I  resort  to  a  suit  as  my  only  rem- 
edy, which  is  substantially  the  pres- 
ent case,  at  wliat  particular  point 
in  this  series  of  tortious  conduct  does 
good  faith  to  him  require  me  to  turn 
my  own  cattle  from  my  own  field 
and  find  pasture  for  them  elsewhere 
to  save  him  from  liability  for  their 
further  injury  from  his  repeated  or 
continuous  wrongs?  Have  I  not  a 
better  right  to  insist  that  he  shall, 
and  to  presume  that  he  will,  relent, 
and  cease  the  continuance  of  his  tor- 
tious acts  than  he  has  to  claim  that  I 
shall  remove  my  cattle  from  my  own 
field  and  leave  it  to  him?  Is  it  not 
rather  his  duty  to  cease  the  continu- 
ance of  his  wrongs  than  mine  to  give 
up  my  acknowledged  right?  The 
damages,  in  such  a  case,  are  in  no 
proper  sense  increased  by  any  actor 
negligence  of  mine,  but  by  the  con- 
tinuance of  his  own  tortious  con- 
duct. As  to  the  question  of  duty,  as 
well  might  it  be  said  if  he  had  re- 
peatedly assaulted  and  beaten  me 
and  my  family  in  my  own  house,  and 
declared  his  intention  of  repeating 
the  process  as  long  as  we  should  re- 
main there,  it  would  be  my  duty  to 
remove  myself  and  family  from  the 
house  to  avoid  increasing  the  dam- 
ages which  might  otherwise  accrue 
from  his  further  continuance  or 
repetition  of  the  like  conduct. 


264 


COMPENSATION. 


[§  90, 


the  duty  is  such  care  and  diligence  as  a  man  of  ordinary  pru- 
dence would  use  under  the  circumstances.  One  may  not  have 
done  the  very  thing  nor  used  the  very  means  that  should  have 
oeen  used,  as  developed  by  subsequent  information,  and  yet 
not  be  in  fault.  One  is  not  bound  to  inquire  as  to  the  means 
of  e'cttinfi-  what  his  vendor  has  deprived  him  of  unless  he  knew 
such  facts  as  would  put  a  prudent  man  upon  inquiry.^  A  les- 
see is  not  bound  to  go  to  an  expenditure  of  $300  in  construct- 
ino"  a  ditch  to  protect  his  property  from  injury  resulting  from 
neo-liffence  in  the  construction  of  a  railroad.^  The  efforts  made 
to  reduce  the  effects  of  the  wrong  must  be  confined  to  such  as 
are  reasonable  and  made  in  good  faith.*  The  expense  result- 
ing from  them  can  be  recovered  only  to  the  extent  that  it  is 
within  the  loss  which  would  otherwise  have  been  sustained.* 


"  There  was  no  duty  resting  upon 
the  plaintiff  at  any  time  to  remove 
liis  cattle  and  procure  pasturage  for 
them  elsewhere  if  this  could  have 
been  done.  In  perfect  good  faith,  the 
plaintiff  had  a  right  to  keep  his  cattle 
there,  and  to  hold  the  defendant  lia- 
ble for  the  continuous  injury  arising 
from  his  continuous  wrong.  But  if 
the  plaintiff  chose  to  take  any  of  his 
cattle  out  to  prevent  further  injury, 
it  would  then,  as  to  such  cattle,  be- 
come his  duty  to  make  a  reasonable 
effort  to  procure  other  food  or  past- 
urage for  them,  in  the  most  prudent 
way  he  reasonably  could."  See  Law- 
son  V.  Price,  45  J\Id.  123. 

1  Waco  Artesian  Water  Co.  v.  Cau- 
ble,  19  Tex.  Civ.  App.  417,  47  S.  W. 
Rep.  538. 

2  Galveston,  etc.  R.  Co.  v.  Borsky, 
2  Tex.  Civ.  App.  545,  21  S.  W.  Rep. 
1011. 

3  Murphy  v.  McGraw,  74  Mich.  318, 
41  N.  W.  Rep.  917;  Ellis  v.  Hilton,  78 
Mich.  150,  43  N.  W.  Rep.  1048,  18 
Am.  St.  438,  6  L,  R.  A.  454;  Mt.  Ster- 
ling V.  Crummy,  73  111.  App.  572. 

Expenses  incurred  by  a  party  to  a 
contract  in  apprehension  of  damage, 
if  based  upon  mere  rumors,  are  not 
recoverable.  Holt  v.  Silver,  169  Mass. 
435,  45G,  48  N.  E.  Rep.  837. 


4  Murphy  v.  McGraw,  Ellis  v.  Hil- 
ton, SMj3ra;  Keyes  v.  Minneapolis,  etc. 
R.  Co.,  36  Minn.  290, 30  N.  W.  Rep.  888; 
St.  Louis,  etc.  R.  Co.  v.  Ritz,  33  Kan. 
404.  Contra,  Gulf.  etc.  R.  Co.  v.  Keith, 
74  Tex.  287,  11  S.  W.  Rep.  1117. 

In  an  action  against  a  railroad 
company  wJiich  had  failed  to  con- 
struct cattle-guards,  as  required  by 
statute,  the  plaintiff  was  entitled  to 
recover  for  services  in  herding  his 
cattle  up  to,  but  only  up  to,  the  value 
of  the  things  belonging  to  himself 
and  others  which  might  have  been 
injured  by  the  cattle  if  they  had 
been  permitted  to  run  at  large,  and 
which  things  the  plaintiff  had  tiie 
right  to  protect,  or  which  he  was 
imder  obligation  to  protect  from  the 
depredations  of  his  cattle.  In  answer 
to  the  contention  that  the  defendant 
was  liable  for  the  value  of  the  herd- 
ing only  up  to  the  amount  of  the 
damages  which  the  cattle  would 
have  committed  if  they  had  been 
permitted  to  run  at  large,  it  was  said 
that  it  would  be  in  a  degree  correct 
if  it  could  be  ascertained  with  any 
degree  of  certainty  just  the  amount 
of  the  damage  which  would  have  re- 
sulted in  that  event.  But  it  was  not 
shown  how  much  or  how  little  dam- 
age, or  how  much  or  how  little  injury 


§  90.]  ELEMENTS    OF   DAMAGE.  265 

If  the  courts  can  protect  the  rights  of  the  injured  party  he 
must  resort  to  them  instead  of  using  his  individual  efforts  to 
counteract  the  wrong  being  done.^ 

A  surety  is  not  bound  to  pay  his  principal's  debt  as  a  [153] 
duty  to  prevent  the  costs  incident  to  a  suit  for  its  collection.'^ 
Any  loss  or  expense  occasioned  by  an  attempt  to  avoid  pay- 
ment of  an  obligation  cannot  be  contemplated  by  the  parties 
as  a  subject  of  indemnity,  the  true  meaning  of  the  contract 
being  tliat  if  the  surety  pays  voluntarily  he  shall  be  re-  [154-] 
imbursed;  if  he  is  compelled  by  suit  to  pay  he  shall  also  be  in- 
demnified for  his  costs  and  expenses.  Flight  to  avoid  payment 
of  the  debt  is  an  accident  wholly  unforeseen,  and  its  conse- 
quences cannot  be  considered  as  provided  for.  The  principal 
had  a  right  to  calculate  upon  the  surety's  ability  to  pay,  and 
did  not  stipulate  to  save  him  harmless  from  anything  but  the 
payment  of  money.  If  the  suretj'  were  put  in  prison  or  if  his 
goods  were  sold  at  a  sacrifice,  these  would  not  be  legal  grounds 
of  suit  for  indemnity  because  they  might  be  avoided  by  pay- 
ment, which  he  must  be  considered  as  stipulating  he  could 
make.' 

If  work  is  improperly  done  or  is  not  done  within  the  agreed 
time,  but  is  of  use  to  and  appropriated  by  the  employer,  the 
quantum  meruit  claim  for  it  is  reducible  by  allowance  of  the 
damages  for  failure  to  perform  the  contract  in  manner  and 
time;  but  in  such  a  case  if  the  emplo3'er  can  protect  himself 
from  damage  by  reason  of  the  defective  or  dilatory  work  at  a 
moderate  expense,  or  by  ordinary  and  reasonable  efforts,  he  is 
bound   to  do   so,  and   he  can   charge   the   delinquent  party 

the  cattle  might  have  done  if  they  trouble  and  expense  in  hunting  for 

had  been  permitted  to  run  at  large,  and  recovering  his  cattle?    Chicago, 

Besides,  if  the  plaintiff  is  to  recover  etc.  R.  Co.  v.  Behney,  48  Kan.  47,  28 

for    the    herding    only    up    to    the  Pac.  Rep.  9S0.     In  so  far  as  it  is  inti- 

amount  of  the  damages  which  the  mated  that  a  recovery  might  be  had 

cattle  might  have  done  if  they  had  for  possible  loss,  the  language  used 

been  permitted  to  run  at  large,  then  is  contrary  to  the  fundamental  idea 

how  is  the  plaintiff  to  obtain  com-  governing  the  law  of  compensation, 

pensation  for  the  loss  of  his  pasture  i  Fowle  v.  Park,  48  Fed.  Rep.  789. 

and  the  possible   loss  of  his   cattle  Contra,   Cole   v.   Stearns.   20  N.   Y. 

and  the  possible  shrinkage  in  their  Misc.  502,  505,  46  N.  Y.  Supp.  23S. 

value  because  of  a  possible  loss  of  2]\icKee  v.  Campbell,  27  Mich.  497; 

proper  food,  and  how  is  he  to  obtain  Holmes  v.  Weed,  24  Barb.  546. 

compensation    for    his    time     and  3  jjayden  v.  Cabot,  17  Mass.  1G9. 


260 


COMPENSATION. 


[§  530. 


therefor,  and   with   the  damages  which   could    not  be   thus 
avoided.^ 

In  case  of  wrongful  injury  to  per.-on  or  property  the  injured 
party  is  required  to  use  reasonable  exertion  to  lessen  or  mod- 
erate the  resulting  damage.^  Land  adjacent  to  a  railroad  was 
flooded  by  water  turned  on  to  it  by  the  construction  of  the 
road;  it  got  into  the  cellar  of  the  house  thereon  and  injured 
the  walls.  It  was  held  that  the  owner  was  bound  to  use  rea- 
sonable care,  skill  and  diligence  adapted  to  the  occasion  to  pre- 
vent this  consequence,  notwithstanding  the  wrongful  agency 
of  the  railroad  company  in  turning  the  water  upon  the  prem- 
ises.^ Eecovery  cannot  be  had  against  a  notary  for  negligent 
omission  to  give  notice  of  protest  to  an  indorser  where  the 
holder  could,  but  would  not,  resort  to  other  grounds  for  charg- 
ing the  latter."*  Persons  whose  goods  are  destroyed  by  a  riot- 
[155]  ous  mob  in  a  city  are  not  entitled  to  recover  from  the 
city  the  value  of  the  goods  destroj^ed  unless  such  persons,  if 
they  had  knowledge  of  the  impending  peril,  use  reasonable 
diligence  to  notify  the  mayor  or  sheriff  of  the  threatened  riot 
and  the  apprehended  danger  to  their  property.^  The  owner 
of  land  on  which  a  personalty  tax  has  been  irregularly  charged 
by  a  tax  collector  will  be  denied  any  remedy  against  him 
therefor  if  it  is  in  the  power  of  the  former  with  very  little 
trouble  and  expense  to  appear  before  the  board  or  tribunal 
having  authority  in  the  premises  and  procure  a  correction.^ 
A  party  interested  in  a  decree  for  a  fund  invested  can  claim 
no  indemnity  for  depreciation  of  the  fund  during  his  delay  to 
enforce  the  decree,  it  being  his  duty  to  apply  seasonably  to  the 
court  for  its  enforcement.^  A  claimant  of  damages  is  bound 
to  accept  reasonable  offers  of  the  other  party  or  a  third  person 


i  Davis  V.  Fish,  1  G.  Greene,  406,  48 
Am.  Dec  387;  Mather  v.  Butler 
County,  28  Iowa,  259. 

2  French  v,  Vining,  102  Mass.  132, 
3  Am.  Rep.  440;  AUender  v.  C.,  R.  I. 
&  P.  R  Co.,  37  Iowa,  264;  The  Balti- 
more, 8  Wall.  377;  Little  v.  McGuire, 
43  Iowa,  447;  Fullerton  v.  Fordyce, 
144  Mo.  519.  44  S.  W.  Rep.  1053;  Webb 
V.  Metropolitan  Street  R  Co.,  89  Mo. 
App.  604.     See  ch.  36. 


3  Chase  v.  New  York  Central  R  Co.,. 
24  Barb.  273;  Louisville  &  N,  R.  Co. 
V.  Goodin,  14  Ky.  L.  Rep.  622;  Same 
V.  Finley,  7  id.  129. 

4  Franklin  v.  Smith,  21  Wend.  6-,M. 

5  AVmg  Chung  v.  Los  Angeles,  47 
Cal.  531. 

estate  v.  Powell,  44  Mo.  436: 
Wright  V.  Keith,  24  Me.  158, 

7  Carson's  Ex'r  v.  Jennings,  1  Wasli^ 
C.  C.  129. 


§  00.]  ELEMENTS    OF    DAMAGE.  267 

having  direct  reference  to  the  subject  of  the  loss  which  would 
have  the  effect  of  reducing  or  preventing  damage.'  Where 
damages  can  be  thus  saved  by  timely  preventive  measures  by 
the  injured  party  it  is  his  duty  to  exert  himself  for  that  pur- 
pose; but  he  has  a  correlative  right  in  similar  cases  to  employ 
other  means  to  attain  the  object  of  the  contract  broken  which 
was  within  the  contemplation  of  the  parties  at  the  time  of  con- 
tracting, or  to  extricate  himself  from  any  predicament  in  which 
the  wrong  complaine'd  of  may  have  placed  him.* 

In  an  action  to  recover  for  personal  injuries  the  defendant 
insisted  that  the  plaintiff  should  submit  to  a  surgical  opera- 
tion, the  testimony  as  to  the  certainty  of  a  cure  in  that  event 
being  that  it  would  probably  be  effected.  The  court  said: 
"While  the  person  who  inflicts  the  damage  has  the  right  to  say 
that  sure  and  safe  means  to  diminish  the  evil  results  of  the 
accident  must  be  used,  that  is  the  extent  of  his  right.  Whether 
further  means  should  be  resorted  to  is  for  the  plaintiff  to  de- 
termine. In  making  that  determination  the  plaintiff  has 
the  right  to  consider  the  nature  of  the  means  used  to  ef- 
fect a  cure,  and  the  possible  or  probable  effect  upon  himself. 
In  any  given  case  it  may  be  that  the  treatment  which  is  given 
to  the  plaintiff  is  not  the  best  that  could  be  devised,  but  he  is  not 
the  less  entitled  to  his  damages  on  that  account  if,  in  taking 
that  treatment,  he  has  consulted  such  a  physician  as  a  reason- 
ably prudent  man  would  consult.  Having  done  that,  he  is  en- 
titled to  his  damages.  If  he  did  not,  and  the  jury  can  say 
that  some  other  treatment  would  have  brought  about  a  cure, 
and  that  treatment  was  one  that  a  reasonably  prudent  man 
would  have  submitted  to,  then  they  must  say  that  he  has  not 
used  the  care  which  he  ought  to  have  used,  and  must  take  that 
into  consideration  in  reaching  their  verdict.^  An  injured  per- 
son is  not  affected  by  the  mistake  of  the  physician  chosen  by 

1  Dobbins   v.    Duquid,  65  IlL   464:  2  Hoffman  v.  Union  Ferry,  68  N.  Y. 

Parsons  v.  Sutton.  66  N.  Y.  92;  Bey-  385;  Kelsey  v.  Remer,  43  Conn.   129, 

mer  v.  McBride.  37  Iowa,  114;  Bisher  21  Am.  Rep.  638;   Williams  v.  Van- 

V.  Richards,  9  Ohio  St  495;  Ashley  derbiit,  28  N.  Y.  217,  84  Am.  Dec.  333; 

V.  Rocky  Mountain   Bell  Telephone  James  v.  Hodsden,  47  Vt.  127. 

Co.,  25  Mont.  286,  296,  64  Pac   Rep.  3  Blate  v.  Third  Avenue  R.  Ca,  44 

765,  quoting  the  text;   Lawrence  v.  App.  Div.  163,  60  N.  Y.  Supp.  232. 
Porter,  63  Fed.  Rep.  62,  11  C.  C.  A. 
27, 26  L.  R.  A.  167. 


2GS  COMPENSATION.  [§  91. 

liim  in  the  exercise  of  ordinary  care*/  and  the  question  of  good 
faith  in  rejecting  the  advice  of  a  physician  is  for  the  jury." 
Inability  to  secure  the  best  medical  attendance  will  not  bar  a 
recovery.' 

§  91.  Same  subject;  employer  may  finish  work  at  con- 
tractor's expense.  On  the  failure  of  a  contractor  to  finish 
his  contract  the  employer  may  cause  it  to  be  done  by  others, 
and  the  reasonable  sum  required  to  be  paid  therefor  may  be 
recovered  of  the  delinquent  party.*  One  who  has  contracted 
[156]  for  the  shipment  of  goods,  or  to  be  carried  as  a  passen- 
ger, may  employ  other  reasonable  means  of  transportation  if 
the  carrier  fails  to  fulfill  his  contract,  and  recover  the  excess 
of  cost  as  well  as  other  damages.^  The  question  whether  the 
expense  of  the  substituted  mode  of  conveyance,  as,  indeed, 
whether  any  expense  for  a  substituted  performance  or  to  coun- 
teract the  injurious  effect  of  the  act  complained  of  may  be 
recovered,  will  depend  on  whether  the  act  done  for  which  such 
expense  was  incurred  was  a  reasonable  thing  to  do,  consider- 
ing all  the  circumstances.  A  party  to  a  contract  which  has 
been  broken  by  the  other  has  a  right  to  fulfill  it  for  himself, 
as  nearly  as  may  be,  but  he  must  not  do  this  unreasonably  as 
regards  the  other  party,  nor  extravagantly;*   but  he  may  ex- 

1  Lyons  v.  Erie  R.  Ck).,  57  N.  Y.  489;  ing  lands  of  the  plaintiff  was  not 
Sauter  v.  New  York,  etc.  R  Co.,  66  N.  diminished  by  the  non-observance  of 
Y.  50,  23  Am.  Rep.  18 ;  Caven  v.  Troy,  the  covenant  to  anything  like  the 
15  App.  Div.  163.  44  N.  Y.  Supp.  244.  sum   which  it   would  have  cost  to 

2  Sullivan  v.  Tioga  R.  Co..  112  N.  Y.  build  the  wall  The  measure  of  dam- 
Y.  643,  8  Am.  St.  T93,  20  N.  E.  Rep.  ages  was  held  to  be  the  difference 
569:  Hope  v.  Troy  &  L.  R.  Ca,  40  between  the  plaintiff 's  position  with 
Hun,  438.  and  without  the  wall,  and  the  cost 

3  Alberti  v.  New  York,  etc.  R.  Co.,  of  building  it  was  not  the  correct 
118  N.  Y.  77,  23  N.  K  Rep.  35,  6  L.  R.  standard  to  be  applied. 

A.  765.  *  Hamlin  v.  Great  Northern  R.  Co., 

4  Clark  V.  Russell,  110  Mass.  133;  1  H.  &  N.  408;  Denton  v.  Same,  5  El. 
Smeed  v.  Foord,  1  R  «fe  E.  602:  Paine  &  B.  860;  Cranston  v.  Marshall,  5  Ex. 
V.  Sherwood,  21  Minn.  225;  Hinde  v.  395;  Ogden  v.  Marshall,  8  N.  Y.  349; 
Liddel,  L.  R.  10  Q.  R  265.  Collins  v.  Baumgardner,  52  Pa.  461; 

In  Wigseli  v.  School  for  the  Indi-  Le  Blanche  v.  London,  etc.  R  Co.,  1 

gent  Blind,   8  Q.   B.    Div.    357,   the  C.  P.  Div.  286;  Ward's  Central  &  P. 

grantee  of  land  covenanted  with  his  Lake  Co.  v.  Elkins,  34  Mich.  439,  22 

grantor  that  the  land  should  be  and  Am.  Rep.  544;  Williams  v.  Vander- 

be  kept  inclosed  with  a  brick  wall,  bilt,  38  N.  Y.  217,  84  Am.  Dec.  333. 

In  an  action  to  recover  damages  for  •'Le  Blanche  v.  London,  etc.  R  Co., 

tiie  breach  of  this  covenant  it  was  1  C.  P.  Div.  286. 
shown  that  the  value  of  the  adjoin- 


§  92.]  ELEMENTS    OF    DAMAGE.  269 

pend  such  sum  as  Avill  give  him  what  he  was  entitled  to  under 
his  contract  though  that  be  more  than  the  price  for  which  the 
contractor  was  to  have  done  the  work.^  On  breach  of  a  con- 
tract to  carry  by  vessel  an  ordinary  article  of  merchandise, 
the  shipper  will  not  be  justified  in  procuring  shipment  by  rail 
if  the  railroad  prices  would  render  it  unprofitable.  A  person 
has  no  right  to  put  others  to  an  expense  of  such  a  nature  as 
he  would  not,  as  a  reasonable  man,  incur  on  his  own  account.^ 
§  92.  May  damages  for  breach  of  contract  include  other 
than  pecuniary  elements?  In  actions  upon  contract  the  losses 
sustained  do  not,  by  reason  of  the  nature  of  the  transactions 
which  they  involve,  ordinarily  embrace  any  other  than  pecun- 
iary elements.  There  is,  however,  no  reason  why  other  natural 
and  direct  injuries  may  not  justify  and  require  compensation. 
Contracts  are  not  often  made  for  a  purpose  the  defeat  or  im- 
pairment of  which  can,  in  a  legal  sense,  inflict  a  direct  and 
natural  injury  to  the  feelings  of  the  wronged  party.  A  breach 
of  promise  of  marriage  is  an  instance  of  such  a  contract,  in 
which  such  considerations  enter  into  the  estimate  of  the  dam- 
ages.* The  action  for  such  a  cause  is  often  referred  to  as  an 
exceptional  one.  In  a  certain  sense  it  is  so;  but  only  in  [157] 
the  particular  under  consideration.  It  is  an  action  upon  con- 
tract; the  damages  allowed  are  such  as  will  adequately  com- 
pensate the  person  injured,  the  nature  and  benefits  of  the  thing 
promised  being  considered.  Being  of  a  personal  nature  the 
damages  cannot  be  wholly  measured  by  a  pecuniary  standard; 
the  cause  of  action,  for  the  same  reason,  dies  with  the  person, 
as  all  demands  for  personal  injuries  do.  The  damages  are  re- 
coverable by  the  injured  party  because  they  proceed  directly 
and  naturally  from  the  breach.  Other  actions  upon  contract 
may  embrace  like  damages.*    Blackburn,  J.,^  said:  "Where 

1  Spink  V.  Mueller,  77  Mo.  App.  85,  Dec.  547;  Wilbur  v.  Johnson,  58  Mo. 
citing  the  text;  Wright  v.  Sander-  600;  Wadsworth  v.  Western  U.  Tel. 
son,  20  Mo.  App.  524;  Haysler  v.  Co.,  86  Tenn.  695,  6  Am.  St.  864,  8  S. 
Owen,  61    Mo.  276;  Hirt  v.  Hahn,  61  W,  Rep.  574.  quoting  the  text. 

Mo.  496;  2  Sedgwick  on  Dam.,  sec.        ^Hale  v.  Bonner,   83  Tex.   33,   27 

617.  Am.  St.  850,  17  S.  W.  Rep.    605, 14  L. 

2  Ward's  Central  &  P.  Lake  Co.  v.  R.  A.  336;  Western  U.  Tel.  Co.  v. 
Elkins,  34  Mich.  439,  22  Am.  Rep.  Simpson,  73  Tex.  422,  11  S.  W.  Rept 
544.  385.     See  ch.  22, 

swells  V.  Padgett,  8  Barb.  323;  ^In  Hobbs  v.  London, etc.  R.  Ca, 
Tobin  V.  Shaw,  45  Me.  331,  71  Am.     L.  R.  10  Q.  B.  111. 


•270  COMPENSATION.  [§  92. 

tliere  is  a  contract  to  supply  a  thing,  and  it  is  not  supplied, 
the  damages  are  the  difference  between  that  which  ought  to 
have  been  supplied  and  that  which  you  have  to  pay  for  it,  if  it 
be  equall}' good ;  or  if  the  thing  is  not  obtainable,  the  damages 
would  be  the  difference  between  the  thing  which  you  ought  to 
have  had  and  the  best  substitute  you  can  get  upon  the  occasion 
for  the  purpose.  It  was  urged  that  though,  when  the  plaintiff 
was  .  .  ,  (left  by  a  carrier  short  of  his  destination),  .  .  . 
if  he  had  been  able  to  hire  a  fly  or  obtain  a  carriage,  and  paid 
money  for  it,  it  was  admitted  he  could  recover  that  money, — 
yet  inasmuch  as  he  could  get  no  carriage,  and  was  compelled 
to  walk  under  penalty  of  staying  where  he  was  all  night,  he 
was  not  entitled  to  get  anything.  .  .  .  Now,  as  1  have  said, 
what  the  passenger  is  entitled  to  recover  is  the  difference  be- 
tween what  he  ought  to  have  had  and  what  he  did  have;  and 
when  he  is  not  able  to  get  a  conveyance  at  all,  but  has  to  make 
the  journey  on  foot,  I  do  not  see  how  you  can  have  a  better 
rule  than  that  .  .  .  the  jury  were  to  see  what  was  the  incon- 
venience to  the  plaintiffs  in  having  to  walk,  as  they  could  not 
get  a  carriage."  While  it  is  true  that  if  the  breach  causes  no 
actual  injury  beyond  vexation  and  annoyance,  as  all  breaches 
of  contract  do  more  or  less,  they  are  not  subjects  of  compen- 
sation unless  to  the  extent  that  the  contract  was  made  spe- 
cially to  procure  exemption  from  them,  nevertheless  to  the  ex- 
tent that  a  contract  is  made  to  secure  relief  from  a  particular 
inconvenience  or  annoyance  or  to  confer  a  special  enjoyment, 
[158]  the  breach,  so  far  as  it  disappoints  in  respect  of  that 
purpose,  may  give  a  right  to  damages  appropriate  to  the  objects 
of  the  contract.  Inconvenience,  in  the  case  quoted  from,  was 
a  prominent  element  of  damage;  that  consisted  in  a  disagree- 
able walk  of  three  miles  when  the  contract  entitled  the  injured 
party  to  be  carried  in  a  railway  car  a  greater  portion  of  the 
distance.  It  was  a  rainy  night,  and  he  had  with  him  his  wife 
and  small  children.  Sickness  ensued  to  som-e  of  them  from 
taking  cold;  damages  for  this  were  excluded  by  perhaps  too 
rigid  an  application  of  the  rule  that  they  must  be  the  natural 
and  proximate  consequence  of  the  breach ;  ^  but  a  verdict  alio  w- 

1  See  §§  48,  49. 


§  92.]  ELEMENTS    OF    DAMAGE.  271 

ing  lOl.  damages  for  the  inconvenience  was  sustained.'  In  an 
action  for  breach  of  a  contract  to  convey  the  plaintiff  on  a 
steamship  from  London  to  Sheerness,  where  the  breach  con- 
sisted in  putting  the  plaintiff  off,  without  just  cause  and  with 
circumstances  of  aggravation,  short  of  his  destination,  it  was 
held  proper  to  show  these  circumstances,  and  Parke,  B.,  thus 
remarked  upon  their  admissibility:  "  Suppose,  instead  of  a  man 
landed  eft  Gravesend  from  a  steamboat,  this  had  been  the  case 
■of  a  passenger  in  a  ship  bound  to  the  West  Indies,  and  he  were 
put  ashore  on  a  desert  island,  without  food,  and  exposed  to  the 
burning  sun  and  danger  of  wild  beasts,  or  even  landed  among 
savages,  would  not  evidence  be  receivable  to  show  the  state  of 
the  island  where  he  was  left  and  the  circumstances  attending 
the  violation  of  the  contract?^ 

The  views  expressed  in  the  opening  part  of  this  section  have 
found  acceptance  in  a  well-considered  case  sustaining  the  right 
to  recover  damages  for  mental  suffering  resulting  from  delay 
in  delivering  a  telegram  announcing  the  time  of  holding  the 
funeral  of  the  plaintiff's  mother,  and  determining  that  there 
might  be  a  recovery  either  ex  contractu  or  ex  delicto:  We  find 
a  well-recognized  exception  to  the  general  rule  that  damages 
cannot  be  had  for  mental  anguish  in  cases  of  breach  of  con- 
tract, in  the  action  for  breach  of  promise  of  marriage,  and  the 
reason  for  this  exception  is  quite  applicable  here.  In  such 
cases  the  defendant,  in  making  his  contract,  is  dealing  with 
the  feelings  and  emotions.  The  contract  relates  almost  wholly 
to  the  affections,  and  one  is  not  allowed  to  so  trifle  with  an- 
other's feelings.  He  knows  at  the  time  he  makes  the  contract 
that  if  he  breaks  it  the  other  will  suffer  great  mental  pain,  and 
the  courts,  without  exception,  have  allowed  recovery  in  such 
a  case.^     In  another  and  similar  case  the  text  is  quoted,  and  it 

iSee  Ward  v.  Smith,  11  Price,  19;  consider  the  outrage  to  the  feelings 

Williams  v.  Vanderbilt,  28  N.  Y.  217,  of  the  plaintiff,   although  the  acts 

84  Am.  Dec.  333;  Jones  v.  Steamship  done  were  not  directed  against  him 

Cortes,  17  Cal.  487,  79  Am.   Dec.  143;  in  person,  but  against  his  son  and 

Wadsworth  v.  Western  U.  Tel.  Co..  employees.     Enders  v.   Skannal,  35 

86  Tenn.  695,  6  Am.  St.  864,  8  S.  W.  La.  Ann.  1000. 

Rep.  574,  quoting  the  text.  2  Coppin  v.  Braithwalte,8  Jur.  875. 

If  a  contract  is  broken  in  a  way  See  Rose  v.  Beattie,  2  N.  &  McC.  538. 

and  by  such  acts  as  constitute  an  of-  3  Mentzer  v.  Western  U.  Tel.  Co., 

^fense  against  the  law,  the  jury  may  93  Iowa,  752,  762,  62  N.  W.  Rep.  1.  57 


272 


COMPENSATION. 


[§  93. 


is  said  that  it  serves  the  purpose  of  showing  that  in  the  ordi- 
nary contract  only  pecuniary  benefits  are  contemplated  and 
that  therefore  the  damages  resulting  from  the  breach  of  such 
a  contract  must  be  measured  by  pecuniary  standards,  and  that 
where  other  than  pecuniary  benefits  are  contracted  for,  other 
than  pecuniary  standards  will  be  applied  in  the  ascertainment 
of  the  damages  flowing  from  the  breach.  The  case  before  us 
(so  far  as  it  is  an  action  for  breach  of  contract)  is  subject  tO' 
the  same  general  rule,  and  the  defendant  is  answerable  in  dam- 
ages for  the  breach  according  to  the  nature  of  the  contract, 
and  the  character  and  extent  of  the  injury  suffered  by  reason 
of  its  non-performance.^ 

§  93.  Elements  of  damage  for  personal  torts.  In  actions 
for  torts  and  personal  injuries  damages  to  relative  rights  are 
frequently  in  question;  then  every  particular  and  phase  of 
the  injury  may  enter  into  the  consideration  of  the  jury  in  es- 
timating compensation,-  loss  of  time,  with  reference  to  the  in- 
jured party's  condition  and  ability  to  earn  money  in  his  busi- 
[159]  ness  or  calling;^  his  loss  from  permanent  impairment 
of  faculties,  mental  and  physical  pain  and  suffering,  disfigure- 
ment and  expenses.*  Where  injury  to  a  young  girl  results  in 
her  permanent  disfigurement  the  jury  may  consider  what  the 


Am.  St.  294,  28  L.  R.  A.  72.  citing 
HoUoway  v.  Griffith,  32  Iowa.  409; 
Royal  V.  Smith,  40  Iowa,  615,  and 
saying  that  the  distinction  pointed 
out  is  well  stated  in  the  text. 

iWadsworth  v.  Western  U.  Tel. 
Co.,' 86  Tenn.  695,  8  S.  W.  Rep.  574,  6 
Am.  St.  864.     See  §§  77,  915. 

2  Grimes  v.  Bowerman,  92  Mich. 
258,  52  N.  W.  Rep.  751,  quoting  the 
text. 

3  Welch  V.  Ware,  32  Mich.  77; 
Whalen  v.  St.  Louis  R.  Co.,  60  Mo. 
323;  Pennsylvania  R.  Co.  v.  Books, 
57  Pa,  339,  98  Am.  Dec.  229;  Ward 
V.  Vanderbilt,  4  Abb.  App.  Dec.  521; 
Walker  v.  Erie  R.  Co.,  63  Barb.  260; 
McKinley  v.  Chicago,  etc.  R.  Co.,  44 
Iowa.  314,  24  Am.  Rep.  748;  Pittsburg, 
etc.  R  Co.  V.  Andrews,  39  Md.  329, 17 
Am.  Rep.  568:  Toledo,  etc.  R.  Co.  v. 
Baddeley,  54  IlL  19,  5  Am.  Rep.  71; 


Southern  R.  Co.  v.  Myers,  32  C.  C.  A. 
19,  87  Fed.  Rep.  149.    See  ch.  36. 

4  Id. ;  Memphis  &  C.  R.  Co.  v.  Whit- 
field, 44  Miss.  466:  Johnson  v.  Weils, 
etc.  Co.,  6  Nev.  224,  3  Am.  Rep.  245; 
Muldowney  v.  Illinois,  etc.  R.  Co.,  36 
Ipwa,  462:  Mason  v.  Ellsworth,  32  Me. 
271;  Morse  v.  Auburn,  etc.  R.  Co.,  10 
Barb.  621;  Lucas  v.  Flinn,  35  Iowa,  9; 
Stewart  v.  Ripon,  38  Wis.  584;  West 
V.  Forrest,  22  Mo.  344;  Filer  v.  New 
York  Central  R.  Co.,  49  N.  Y.  42 
Donnell  v.  Sandford,  11  La.  Ann.  645 
Lynch  v.  Knight,  9  H.  of  L.  Cas.  577 
Sterner  v.  Moran,  2  Mo.  App.  47:  Ash- 
craft  V.  Chapman.  38  Conn.  230;  Seger 
V.  Barkhamsted,  22  Conn.  290:  Penn- 
sylvania &  O.  C.  Co.  V.  Graham,  63 
Pa.  290,  3  Am.  Rep.  549;  Smith  v. 
Overby,  30  Ga.  241;  Smith  v.  Hol- 
comb,  99  Mass.  552;  Ford  v.  Jones,  62 
Barb.  484;  Hamilton  v.  Third  Avenue 


I  94.]  ELEMENTS    OF   DAMAGE.  273 

effect  will  probably  be  on  the  prospects  of  her  marriage  when 
she  reaches  the  age  of  womanhood,  and  how  far  the  money 
value  of  her  life  may  be  damaged  by  that  circumstance.  Such 
an  element  of  damages  is  not  speculative  because  it  is  difhcult 
to  estimate,  nor  in  any  other  sense  than  almost  every  element 
of  damages  is  speculative  where  the  ascertainment  depends  on 
what  the  jury  or  other  trior  of  the  fact  shall  deem  fair  and 
just,  and  where,  being  uncertain  and  indefinite,  the  damages 
are  not  capable  of  adjustment  with  precision  and  accuracy.  In 
such  a  case  there  may  be  a  recovery  on  account  of  that  loss 
without  a  special  allegation  of  damage,  the  loss  being  a  gen- 
eral prospect  and  not  a  particular  one.^ 

§  94.  Cliaracter  as  affecting  damages  for  personal  inju- 
ries. In  an  action  to  recover  for  personal  injuries  sustained 
while  traveling  as  a  passenger  on  a  railroad  the  question 
arose  as  to  the  effect  of  the  plaintiff's  character  for  chastity 
upon  the  measure  of  damages.  The  trial  court  charged  that 
the  fact  that  the  plaintiff  is  an  unchaste  woman,  or  has  more 
than  one  husband,  has  nothing  to  do  with  the  damages;  that 
she  is  entitled  to  recover  the  same  damages  for  injuries  re- 
ceived as  a  chaste  woman,  or  a  woman  who  has  only  one  hus- 
band. The  appellate  court,  Cole,  C.  J.,  writing  the  opinion, 
says  it  thinks  the  charge  had  a  tendency  to  mislead  the  jury : 
"  We  do  not  wish  to  intimate  that  an  unchaste  woman  who 
is  maimed  and  disabled  by  an  accident  on  the  railroad  may 
not  suffer  as  much  pain  of  body  or  anxiety  of  mind  as  a  vir- 
tuous woman  would  from  a  like  injury;  but  still,  when  it 
comes  to  a  question  of  awarding  damages,  it  may  be  that  a 
jury  would  not  give  —  perhaps  ought  not  to  give  —  the  sa7ne 
damages  for  injuries  to  an  unchaste  woman  that  they  would 

R  Co.,  53  N.  Y.  25;  Holyoke  v.  Grand  209,  9  So.  Rep.  363;  Gibney  v.  Lewis, 

Trunk  R.  Co.,  48  N.  H.  541;  Ripon  v.  68  Conn.  392,  36  Atl.  Rep.  799;  Louis- 

Bittel,  30  Wis.  614;  Moore  v.  Central  ville  &  N.  R.  Co.  v.  Logsdon,  71  S.  W, 

R.,  47  Iowa,  688;  Ballou  v.  Farnum,  Rep.  905  (Ky.);  Newbury  v.  Getchell 

II  Allen,  73;  Nones  v.  Northouse,  46  &  Martin  Lumber  &  Manuf.  Co., 
Vt.  587;  Johnson  v.  Holyoke,  105  100  Iowa.  441.  457,  69  N.  W.  Rep.  743, 
Mass.  80;  Blackman  v.  Gardiner  63  Am.  St.  582,  citing  the  text.  See 
Bridge,  75  Me.   214;    Bovee   v.  Dan-  ch.  36. 

ville,  53  Vt.  183;  Mayor,  etc.  v.  Lewis,        i  Smith  v.  Pittsburgh  &  W.  R  Co., 
92  Ala.  352,9  So.  Rep.  243;  Montgom-    90  Fed.  Rep.  78a 
ery  &  E.  R  Co.  v.  Mallette,  92  Ala. 
Vol.  1  —  18 


274  COMPENSATION".  [§  94. 

allow  a  virtuous,  intelligent,  and  industrious  woman,  who 
could  command  good  wages  or  take  care  of  a  family.  The 
fact  of  chastity,  as  well  as  other  personal  virtues  and  business 
qualifications,  would  be  proper  matters  for  a  jury  to  consider 
in  making  up  their  verdict  as  to  what  damages  should  be 
given  as  a  compensation  for  the  injury  received,  in  view  of 
all  the  facts."  •  The  opposing  view  is  expressed  by  Judge 
Deady  in  a  case^  where  it  might  have  been  omitted  (if  the 
Wisconsin  case  announces  the  law  under  any  circumstances) 
with  more  propriety  than  in  the  case  stated.  He  charged 
that  compensatory  damages  for  physical  pain  and  mental 
anguish  are  not  to  be  diminished  by  the  fact  that  the  plaintiff 
is  an  obscure  man,  that  he  is  a  bartender,  a  professional  gam- 
bler or  even  a  vagrant.  In  another  case,  brought  by  the  next 
of  kin  to  recover  damages  for  the  negligent  killing  of  the  de- 
ceased, Shiras  and  Brewer,  JJ.,  held  that  proof  of  the  good 
or  bad  reputation  of  the  plaintiffs  could  not  be  received.'  We 
think  that  a  carrier  cannot  refuse  to  transport  a  person  who 
presents  himself  as  a  passenger  and  who  is  properly  dressed 
and  whose  conduct  is  not  such  as  to  enhance  the  risk  of  car- 
rying him  or  endanger  the  comfort  or  safety  of  his  fellow 
passengers,  on  the  ground  that  he  is  immoral  or  vicious  in. 
some  of  the  relations  of  life.  The  right  to  be  carried  exist- 
ing, a  necessary  result  of  it  is  that  the  rights  and  obligations 
of  passenger  and  carrier  attach.  These  cannot  be  affected 
by  the  character  of  the  passenger  so  long  as  his  conduct  as 
such  is  correct.  The  law  does  not  discriminate  as  to  the 
rights  of  persons  to  redress  for  wrongs  to  their  physical  being 
or  their  property.  If  bad  character  should  be  ground  for  re- 
ducing damages,  good  character  would  be  reason  for  increas- 
ing them.     Rights  given  by  statute  are  not  denied  because  of 

1  Abbot  V.  Tolliver,  71  Wis.  64,  36  In  Brown  v.  Memphis  &  C.  R.  Co., 
N.  W.  Rep.  622.  It  is  to  be  observed  7  Fed.  Rep.  51,  5  id.  499,  Hammond, 
of  this  case  that  it  would  doubtless  J.,  ruled,  after  full  consideration, 
have  been  decided  as  it  was  independ-  that  the  presence  of  an  alleged  pres- 
ently of  this  proposition.  titute  in  a  ladies'  car,  no  misconduct 
-  Boyle  V.  Case,  18  Fed.  Rep.  880.  being  indulged  in  there,  and  the  im- 
3  Johnson  v.  Wells,  etc.  Co.,  6  Nev.  morality  being  confined  to  the  pri- 
224,  240,  3  Am.  Rep.  245;  Hardy  v.  vate  life  of  the  passenger,  was  not 
Minneapolis,  etc.  R.  Co.,  36  Fed.  Rep.  sufficient  ground  for  excluding  her 
657.  therefrom. 


§95.] 


ELEMENTS   OF   DAMAGE. 


275 


the  character  of  the  citizen  if  there  is  no  exception  made  by 
the  legislature.  A  homestead  right  is  not  lost  because  the 
owner  uses  the  property  for  an  immoral  and  unlawful  pur- 
pose.^ Another  reason  for  disapproving  the  Wisconsin  case 
is  that  the  introduction  of  such  a  question  opens  up  too  wide  a 
field  for  the  consideration  of  courts  and  juries,  and  adds  vast 
elements  of  uncertainty  to  verdicts.  So  far  as  we  have  been 
able  to  ascertain,  the  character  of  a  plaintiff  is  not  material 
when  he  seeks  to  recover  for  an  injury  to  his  person  or 
property,  unless  it  contributed  to  provoke  the  wrong  com- 
plained of.^ 

§  95.  Mental  suffering.  There  has  been  a  marked  devel- 
opment of  the  law  concerning  liability  for  mental  anguish  or 
pain  since  the  publication  of  the  first  edition  of  this  work.  It 
was  then  well  settled  that  such  pain,  when  it  resulted  from 
physical  injury,  was  an  element  of  damages.  There  was  origi- 
nally a  little  hesitancy  on  the  part  of  some  courts  in  reaching 


1  Prince  v.  Hake,  75  Wis.  638,  44  N. 
W.  Rep.  825, 

2  Where  the  plaintiff  was  unem- 
ployed when  injured  and  the  testi- 
mony tended  to  show  that  his  habits 
were  dissolute,  that  he  kept  a  house 
of  doubtful  character  and  had,  before 
his  injury,  been  discharged  from 
several  employments,  it  was  con- 
tended that  the  defendant  had  the 
right  to  lay  before  the  jury  any  facts 
concerning  the  plaintiff's  conduct, 
habits,  character  or  repute  which 
might  throw  light  on  the  probability 
of  his  securing  employment,  and  the 
character  and  continuity  of  the  same. 
Th®  answer  was  that  the  doctrine 
could  not  be  carried  to  that  extent. 
The  defendant  undoubtedly  had  the 
right  to  lay  before  the  jury  any  facts 
concerning  the  plaintiff's  habits  or 
conduct  which  might  throw  light  on 
the  probability  of  his  securing  em- 
ployment, and  the  character  and 
continuity  of  the  same,  but  we  know 
of  no  rule  which  would  permit  the 
defendant  to  go  into  proof  of  the 
plaintiff's  character  or  repute.  Kings- 


ton V.  Fort  Wayne  &  E.  R.  Co.,  113 
Micii.  40,  40  L.  R.  A.  131,  74  N.  W. 
Rep.  230. 

It  may  be  shown  that  the  plaintiff 
was  a  sober  and  industrious  man,  his 
earning  power  being  an  element  of 
damages.  Metropolitan  St.  R.  Co.  v. 
Kennedy,  82  Fed.  Rep.  158. 

If  the  injuries  for  which  a  recovery 
is  sought  were  the  result  of  a  life  of 
dissipation,  or  commonly  follow  such 
a  life,  the  fact  may  be  shown.  State 
V.  Detroit,  113  Mich.  643,  72  N.  W. 
Rep.  8. 

In  a  civil  action  for  an  assault  with 
intent  to  ravish,  the  defendant  may 
show  in  mitigation  of  actual  dam- 
ages that  the  plaintiff  was  vulgar 
and  obscene  in  conduct  and  lan- 
guage. Parker  v.  Coture,  63  Vt.  155, 
21  AtU  Rep.  494,  25  Am.  St.  750.  But 
in  such  an  action  the  general  good 
character  of  the  defendant  cannot 
be  shown,  nor  can  the  general  repu- 
tation of  the  defendant  as  to  chastity. 
Sayen  v.  Ryan,  9  Ohio  Ct.  Ct.  631. 
See  ch.  36. 


276  COMPENSATION.  [§  85. 

that  conclusion,'  but  there  is  now  no  dissent  from  it.^  The 
mental  suffering  which  can  thus  be  recovered  for  must  pro- 
ceed from  and  be  caused  by  the  act  or  neglect  which  pro- 
duced the  physical  injury.'  The  bodily  hurt  which  gives  a 
right  of  recovery  for  the  resulting  mental  suffering  may  be 
very  small ;  if  it  is  a  ground  of  action  it  is  enough.^  In  ac- 
tions for  assault  and  battery  the  jury  may  consider,  not  only 
the  mental  distress  which  accompanies  and  is  a  part  of  the 
bodily  pain,  but  that  other  condition  of  the  mind  of  the  in- 
jured person  which  is  caused  by  the  insult  of  the  blows  he  re- 
ceived.* The  same  state  of  mind  is  an  element  of  damage 
when  an  assault  has  been  maliciously  made,^  though  no  actual 
physical  harm  was  done.''  Thus  one  who  assaults  a  woman 
with  criminal  intent,  "  though  her  body  be  not  touched,  except 
by  his  foul  breath  and  speech,  should  respond  in  damages  for 
an  outrage  to  her  feelings  which  proceeds  so  directly  from  his 
concurrent  criminal  purpose  and  act."  ^  In  an  action  of  tort 
for  a  wilful  injury  to  the  person  the  manner  and  manifest  mo- 
tive of  the  act  may  be  given  in  evidence  as  affecting  the  ques- 
tion of  damages,  for  when  the  mere  physical  injury  is  the  same 
it  may  be  more  aggravated  in  its  effects  upon  the  mind  if  it  is 
done  in  wanton  disreo:ard  of  the  rights  and  feelino-s  of  the 


1  Johnson  v.  Wells,  etc.  Co.,  6  Nev.  *  Curtis  v.  Sioux  City,  etc.  R  Co.,  87 
224.  3  Am.  Rep.  245.  Iowa,  622,  54  N.  W.  Rep.  339;  Birming- 

2  Bovee  v.  Danville,  53  Vt.  183;  Fer-  ham  R.  &  E.  Co.  v.  Ward,  124  Ala.  409, 
guson  V.  Davis  County,  57  Iowa,  601,  27  So.  Rep.  471;  Canning  v.  Williams- 
10  N.  W.  Rep.  906;  Porter  v.  Hanni-  town,  1  Cush.  452,  48  Am.  Dec.  613. 
bal,  etc.  R.  Co.,  71  Mo.  66, 36  Am.  Rep.  5  Prentiss  v.  Shaw,  56  Me.  427.  96 
454;  Indianapolis,  etc.  R.  Co.  v.  Sta-  Am.  Dec.  475;  Wadsworth  v.  Treat, 
bles,  63  111.  313;  Saiina  v.  Trosper,  27  43  Me.  163;  Smith  v.  Holcomb,  99 
Kan.  544.     See  ch.  36.  Mass.  552;  Birmingham  R  &  E.  Co. 

3  Bovee  v.  Danville,  supra;  Chicago  v.  Ward,  supra. 

City  R  Co.  v.  Taylor,  170  111.  49,  48  «  McKinley  v.  C.  &  N.  W.  R  Co.,  44 

N.  E.  Rep.  831.  Iowa,  314,  24  Am.  Rep.  748. 

If  injury  done  to  the  person  results  '  Ford  v.  Jones,  62  Barb.  484;  God- 
in  a  miscarriage  the  physical  and  dard  v.  Grand  Trunk  R,  57  Me.  202; 
mental  suffering  connected  there-  Beach  v.  Hancock,  27  N.  H.  223,  59 
with  is  to  be  considered;  but  injured  Am.  Dec.  373;  Craker  v.  Chicago  & 
feelings  following  the  miscarriage  N.  R.  Co.,  36  Wis.  657, 17  Am.  Rep.  504; 
and  not  part  of  the  pain  naturally  at-  Cooper  v.  Hopkins,  70  N.  H.  271,  48 
tending  it  are  too  remote.  Western  U.  Atl.  Rep.  100. 

Tel.  Co.  V.  Cooper,  71  Tex.  507,  9  S.  8  Leach  v.  Leach,  11  Tex.  Civ.  App. 

W.  Rep.  598,  1  L.  R  A.  728.  699,  33  S.  W.  Rep.  703. 


§  95.]  ELEMENTS   OF   DAMAGE.  277 

plaintiff  than  if  it  is  the  result  of  mere  carelessness.^  Mental 
suffering  is  an  element  of  damage  in  suits  for  malicious  prose- 
cution, independent  of  other  injury,'^  for  false  imprisonment,' 
and  in  some  jurisdictions  for  the  illegal  issuance  of  an  attach- 
ment against  property.*  A  husband  may  recover  exemplary 
damages  for  injury  to  his  feelings  in  an  action  against  one 
who  has  had  criminal  conversation  with  his  wife.  His  right 
grows  out  of  the  marital  relation  and  is  independent  of  her 
right  to  recover  damages  for  the  same  wrong  in  an  action  by 
her.*  A  parent  may  recover  for  mental  suffering  resulting 
from  the  abduction,^  seduction,"'  or  the  harboring  and  secreting 
of  a  minor  daughter.®  These  actions  are  brought  upon  the 
legal  principle  or  fiction  which  imports  the  loss  of  service  as 
the  ground  upon  which  a  recover}^  is  had.  The  damages 
awarded  in  them,  however,  are  largely  given  as  compensation 
for  wounds  inflicted  on  the  mind.  Such  actions  are  distin- 
guishable from  another  class  in  which  mental  distress  is  an  ele- 
ment of  damage,  because  the  facts  out  of  which  they  arise  af- 
fect the  social  and  business  standing  of  the  parties  plaintiff, 
and  in  many  ways  tend  to  harass  and  annoy  and  even  degrade 
them  in  the  eyes  of  the  community.  To  some  extent  this  is 
the  effect  of  various  indignities  which  are  suffered;  and  be- 
cause of  it  a  passenger  who  is  wrongfully  and  publicly  ejected 
from  a  train  may  recover  for  the  effect  of  the  insult  and  in- 
dignity to  his  feelings,  though  the  case  does  not  warrant  the 
imposition  of  punitory  damages.'     In  Texas  mental  suffering 

1  Hawes  v.  Knowles,  114  Mas&  518,  ^Magee  v.  Holland,  27  N.  J.  L.  86, 

19  Am.  Rep.  383.  73  Am.  Dec.  341. 

2Parkhurst  v.  Masteller,  57  Iowa,  ^  Lunt  v.  Philbrick.  59  N.  H.  59; 

474,  10  N.    W.   Rep.   864;  Fisher  v.  Barbour  v.  Stephenson,  32  Fed.  Rep. 

Hamilton,  49  Ind.  341.  66;  Stevenson  v.  Belknap,  6  Iowa,  97. 

3  Stewart   v.   Maddox,  63  Ind.  51;  sgtowe  v.  Hey  wood,  7  Allen,  118. 

Gibney  v.  Lewis,  68  Conn.  392,  86  Atl.  9  Smith  v.  Pittsburgh,  etc.  R  Co., 

Rep.  799.  23  Ohio  St  10;  Lake  Erie,  etc.  R.  Co. 

*  Byrne  v.  Gardner,  33  La.  Ann.  6;  v.  Fix,  88  Ind.  381,  45  Am.  Rep.  464; 

City  Nat.  Bank  v.  Jeffries,  73  Ala,  183.  Quigley  v.  Central  Pacific  R.  Co.,  11 

Contra,  Tisdale  v.  Major,  106  Iowa,  Nev.  350,  21  Am.  Rep.  757;  Hays  v. 

1,  75  N.  W.  Rep.  663,  68  Am.  St.  263;  Houston,   etc.   R,   Co.,   46  Tex.  272; 

Travick  v.  Martin-Brown  Co.,  79  Tex.  Smith  v.  Leo,  92  Hun,  242.  36  N.  Y. 

640,  14  S.  W.  Rep.  564  Supp.  949;  Mabry  v.  City  Electric  R. 

5  Johnston  v.  Disbrow,  47  Midi.  59,  Co.,  —  Ga.  — ,  42  S.  E.  Rep.  1025,  59 

10  N.  W.  Rep.  79.  L.  R.  A,  590;  Curtis  v.  Sioux  City,  etc. 


278  COMPENSATION.  [§  95. 

is  an  element  of  damage  where  it  results  from  the  breach  of 
a  carrier's  contract.^  The  authorities  generally  do  not  go  so 
far  as  to  allow  damages  for  the  disappointment,  annoyance  and 
vexation  which  result  from  the  breach  of  such  a  contract."^ 
A  bank  which  maliciously  and  wilfully  refuses  to  honor  its 
depositor's  checks  is  liable,  in  addition  to  actual  money  dam- 
ages, for  "  such  substantial  damages  for  the  impairment  of  his 
credit  and  for  his  feelings  and  mental  anxiety  over  the  matter 
as  directly  and  proximately  resulted  from  "  its  acts.' 

Injured  feelings  are  not  to  be  regarded  in  awarding  dam- 
ages for  wrongs  done  to  property  through  gross  carelessness, 
no  act  or  word  of  insult  or  contumely  or  any  intentional  vio- 
lation of  plaintiff's  rights  being  shown.*  Thus  in  an  action 
growing  out  of  negligence  in  blasting  rocks  and  throwing 
them  upon  the  plaintiff's  land  and  buildings,  his  mental  anxiety 
concerning  his  personal  safety  or  that  of  his  family,  no  harm 
being  done  to  his  or  their  persons,  is  not  an  element  of  damage. 
The  court  was  unable  to  find  any  case  which  held  that  mental 
suffering  alone,  caused  by  simple  actionable  negligence,  can 
sustain  an  action.^  But  if  property  is  injured  in  wilful  disre- 
gard of  the  rights  of  its  owner,  injuries  to  his  feelings  may  be 
compensated ;  as  where  the  remains  of  a  deceased  child  are  re- 
moved from  a  burial  lot  in  which  they  are  rightfully  interred,^ 
or  the  right  to  inter  a  dead  body  is  denied  after  all  prepara- 

R  Co.,  87  Iowa,  622,  54  N.  W.  Rep.  his  baggage  was  $90;  a  verdict  for 

339.  $500  was  sustained.     See  §  953. 

In  the  last  case  a  girl  was  ejected  2  Walsh  v.  Chicago,  etc.  R  Co.,  42 

in  the  presence  of  her  schoolmates  Wis.  23,  24  Am.  Eep.  376;  Hamlin  v. 

and    other    acquaintances    without  Great  Northern  R  Co.,  1  H.  &  N.  408. 

malice  or  unnecessary  rudeness,  not-  See  ch.  21, 

withstanding  there  was  both  indig-  '■^  Davis  v.  Standard  Nat.  Bank,  50 

nity  and  insult  in  the  sense  that  the  App.  Div.  210,  63  N.  Y.  Supp.  764. 

wrong  was  done  in  a  humiliating  and  *  White  v.  Dresser,  135  Mass.  150, 

offensive  manner;  the  mental  pain  46  Am.  Rep.  454. 

resulting  was  a  proper    element  of  ^  Wyman  v.  Leavitt,   71  Ma   227; 

compensatory  damages.  Contra,  Illi-  Trigg  v.  St.  Louis,  eta  R  Co.,  74  Ma 

nois  R  Co.  V.  Sutton,  53  111.  397,  in  147;  Ewing  v.  Pittsburgh,  etc.  R  Co., 

the  absence  of  wilfulness  or  malice.  147  Pa.  40,  23  Atl.  Rep.  340,  14  L.  R 

See  §  943.  A.  66a 

1  St.  Louis,  etc.  R  v.  Berry,  15  S.  «  Meagher  v.  Driscoll,  99  Mass.  281, 

W.  Rep.  48.     The  extra  expense  in-  96  Am.  Dec.  759;  Jacobus  v.  Children 

curred  by  the  plaintiff  on  account  of  of  Israel,  107  Ga.  522,  33  S.  E.  Rep. 

his  delay  and  the  failure  to  receive  853,  73  Am.  St.  141. 


§  96.]  ELEMENTS    OF   DAMAGE.  .  279 

tioas  for  the  burial  have  been  made.'  ]Vrental  pain  cannot  bo 
compensated  for  in  an  action  for  forcible  entry  and  detainer,- 
nor  in  an  action  to  recover  for  adding  to  the  height  of  a  divis- 
ion fence  and  refusing  to  remove  it.'  Inconvenience,  unaccom- 
panied by  pecuniary  loss,  is  not  an  element  of  damage  for 
being  deprived  of  the  use  of  property.*  Annoyance  and  vexa- 
tion, though  accompanied  by  the  expenditure  of  money  in 
consequence  of  the  wrongful  issue  of  a  distress  warrant,  are 
not  ground  for  compensatory  damages;'  and  so  where  they 
result  from  the  invasion  of  a  privilege,  though  such  invasion 
was  accompanied  by  pecuniary  loss." 

§  OG.  Same  subject.  In  some  jurisdictions  mental  suffer- 
ing which  occurs  independently  of  physical  harm,  as  the  re- 
sult of  mere  negligence,  is  too  remote  to  be  the  ground  of  an 
action.'  This  rule  extends  to  sickness  resulting  from  the  purely 
internal  operation  of  fright  though  the  latter  is  caused  by 
gross  negligence  and  the  defendant  ought  to  have  known  that 
the  result  which  ensued  would  follow  his  act.  The  question 
whether,  if  the  result  was  actually  foreseen  and  intended,  the 
rule  would  be  otherwise,  is  undecided.^    The  rule  of  non-lia- 

1  Wright  V.  Hollywood  Cemetery  Tex,  412,  40  Am.  St.  866,  25  S.  W.  Rep. 
Corporation,  113  Ga,  884,  38  S,  E.  419;  Lynch  v.  Knight,  9  H.  of  L.  Cas. 
Rep.  94,  53  L.  R.  A.  631.  577;  Ewing  v.  Pittsburgh,  etc.  R.  Co., 

2  Anderson  v.  Taylor,  56  Cal.  131,  147  Pa.  40,  14  L.  R.  A,  666,  30  Am. 
38  Am.  Rep.  53.  St.  709,  23  Atl.  Rep,  340;  Mitchell  v. 

sWolf  V.   Stewart,   48    La.    Ann,  Rochester  R.  Co.,  151  N.Y.  107,  34  L.R. 

1431,  20  So.  Rep.  908,  A.  783,  56  Am.  St,  605,  45  N.  E.  Rep, 

*  Detroit  Gas  Co.  v.  Moreton  Truck  354;  Washington  &  G.  R,  Co,  v.  Dash- 

&  Storage  Co.,  Ill  Mich.  401,  69  N.  iell,  7  D.  C.  App.  Cas.  507;   Rock  v. 

W.   Rep,    659;    Williams  v.  Yoe,    19  Denis,  4  Montreal  L.  R,   (Super,  Ct.) 

Tex.  Civ.  App.  281,  46  S.  W.  Rep.  659.  356;  Russell  v.  Western  U.  Tel.  Co., 

5  Smith  V.  Jones,  11  Tex.  Civ.  App.  3  Dak.  315,  19  N.  W.  Rep.  408;  Dor- 

18.  31  S.  W.  Rep.  306.  rah  v.  Ilhnois  Central  R.  Co.,  65  Miss. 

«  Mason   v.   Dewis,  71  S.  W.  Rep.  14,  3  So.  Rep.  36,  7  Am.  St.  629;  Sa- 

434  (Ky.).  lina  v.  Trosper,  27  Kan.  544;  West  v. 

7  Spade  V.  Lynn  &  B.  R.  Co.,  168  Western  U.  Tel.  Co.,  39  id.  93, 17  Pac. 

Mass.  285,  38  L,  R.  A.  512,  60  Am.  St.  Rep.  807,  7  Am.  St.  530;  Canning  v. 

393,  47  N.  E.  Rep.  88;  White  v.  Sander,  Williamstown,  1  Cush.  452;  Johnson 

168  Mass.  296.  47  N.  E.  Rep.  90,  60  v.  Wells,   etc.  Co.,  6  Nev.  224,  3  Am. 

Am.  St.  390  (the  last  case  was  one  of  Rep.  245;  The  Queen,  40  Fed.  Rep. 

a  wilful  attempt  to  injure  property,  694.     See  §§  21-23a, 
and  the  claim  for  damages  for  men-        8  Smith   v.    Postal  Tel.  Cable  Ca, 

tal   suffering  grew  out  of  such  at-  174  Masa  576,  55  N.  E.  Rep.  380,  75 

tempt);   Gulf,  etc.  R.  Co.  v.  Trott,  86  Am.  St.  374,  47  L.  R,  A.  323;  Atch- 


280  COMPENSATION.  [§  96. 

bility  has  been  applied  where  the  defendant,  without  malice 
or  evil  intent,  dressed  himself  in  a  woman's  clothes  and  went 
at  dusk  to  the  plaintiff's  home  with  the  result  that  she  was 
frightened  and,  later,  had  a  miscarriage;^  and  where  the  de- 
fendant, the  landlord  of  plaintiff's  sister,  went  to  the  house  to 
collect  rent,  found  the  door  ajar,  opened  it,  walked  up  stairs, 
went  inside  the  bedroom  door,  saw  plaintiff  in  the  room,  asked 
what  she  was  doing,  waved  his  arms,  and  in  a  loud  and  ap- 
parently angry  voice  said:  "  I  forbid  you  moving.  If  you  at- 
tempt to  move  I  will  have  a  constable  here  in  five  minutes.  I 
refuse  to  take  possession  of  these  premises."  As  a  result  of  the 
plaintiff's  excitement  and  fright  St.  Vitus  dance  was  produced. 
The  opinion  contains  this  language :  Under  the  pleadings  mere 
words  and  gestures  are  sought  to  be  made  actionable  because 
of  the  nervous  temperament  of  the  plaintiff,  without  which 
such  words  and  gestures  would  not  be  actionable.  This  would 
introduce  and  incorporate  in  the  law  a  new  element  of  dam- 
age —  a  new  cause  of  action  —  by  which  a  recovery  might  be 
had  for  an  injury  resulting  to  one  of  a  peculiarly  nervous  tem- 
perament, while  no  injury  would  result  to  another  in  identi- 
cally the  same  position.  Of  such  a  cause  of  action  and  liability 
for  damage  a  dangerous  use  could  be  made.  ]S^o  such  recovery 
is  authorized  under  the  common  law  and  no  statute  gives  it/ 
A  different  view  has  been  taken  where  the  defendant,  know- 
ing that  one  of  the  plaintiffs  was  well  advanced  in  pregnancy, 
came  to  their  house  and  in  their  yard,  in  the  presence  of  such 
plaintiff,  assaulted  two  negroes  in  a  boisterous  and  violent 
manner,  using  profane  language,  the  assault  being  accompa- 
nied by  the  drawing  of  blood,  and  causing  the  fright  of  the 
female  plaintiff  which  was  followed  by  a  miscarriage  and  im- 
pairment of  health.  These  facts  gave  the  plaintiffs  a  cause  of 
action,  though  it  was  recognized  that  the  case  was  a  novel 
one.* 

On  many  questions  respecting  the  recovery  of  damages  for 
mental  suffering  or  nervous  shock  the  law  is  in  a  very  unsatis- 

ison,  etc.  R.  Co.  v.  McGinnis,46Kan.  2Braun  v.   Craven,   175  111.  401,  42 

109,  26  Pac.  Rep.  453.    But  see  §§  21  L.  R.  A.  199,  51  N.  E.  Rep.  657. 

et  seq.  s  Hill  v.  Kimball,  76  Tex.  210,  13  S. 

1  Nelson  v.  Crawford,  122  Mich.  466,  W.  Rep.  59,  7  L.  R.  A,  6ia 
81  N.  W.  Rep.  335,  80  Am.  St.  577. 


§  96.]  ELEMENTS    OF   DAMAGE.  281 

factory  state,  it  being  impossible  to  harmonize  the  decisions  or 
formulate  any  rule  based  on  them.  Many  of  the  objections  to 
recovery  are  devoid  of  real  weight,  assuming  that  the  suffering 
or  shock  is  the  natural  and  proximate  result  of  the  wrong  done, 
as  it  clearly  was  in  some  of  the  cases  noted  in  this  section  —  no- 
tably the  Michigan  case  and  the  Illinois  case.  The  objection 
that  an  action  for  such  a  purpose  is  without  precedent  might 
have  been  urged  to  defeat  many  causes  of  action  which  are 
now  recognized;  such  an  objection,  generally  acquiesced  in, 
would  have  prevented  the  development  of  the  law  and  denied 
protection  to  many  of  the  most  valued  rights  which  are  now 
protected.  Occasionally  a  court  assorts  that  the  recognition 
of  the  right  of  recovery  in  cases  of  this  class  would  crowd  cal- 
endars and  open  the  door  to  fraud.  It  may  not  be  asserted 
with  much  confidence  that  such  results  have  been  experienced 
in  jurisdictions  in  which  the  right  is  recognized.  But  if  the 
first  result  should  follow,  it  may  be  pertinent  to  inquire  what 
are  the  reasons  for  establishing  and  maintaining  the  judicial  es- 
tablishments? Are  they  not  intended  to  protect  the  rights  of 
citizens,  and  to  redress  their  wrongs?  And  citizens  of  all 
classes  have  the  right  to  resort  to  them  for  such  purposes. 
There  is  as  good  reason  for  denying  redress  to  a  citizen  with  a 
weak  body  which  has  been  tortiously  injured  as  there  is  in 
denying  it  to  one  with  a  weak  nervous  organization  whose 
rights  have  been  denied.  The  effects  of  physical  injury  on 
different  persons,  though  the  injury  may  be  the  same  so  far  as 
external  appearances  go,  vary  greatly.  But  no  court  has  re- 
fused redress  for  that  reason.  Mental  suffering  is  an  element 
of  damages  in  many  classes  of  actions,  and  it  has  not  been 
seriously  contended  that  the  common  sense  of  jurors  has  erred 
grievously,  if  at  all,  in  awarding  compensation  for  it.  The 
field  of  uncertainty  is  not  wider  in  cases  of  this  class  than  in 
some  others,  and  the  corrective  control  which  the  courts  exer- 
cise over  verdicts  can  be  relied  upon  to  prevent  the  fraud  con- 
cerning which  such  serious  apprehensions  are  seemingly  enter- 
tained in  some  tribunals. 

The  courts  are  almost  agreed  in  denying  redress  for  sym- 
pathetic mental  suffering.^     Thus  a  father  cannot  recover  for 

1  See  SS  21-34. 


282  COMPENSATION.  [§  96.. 

grief  and  anxiety  on  account  of  mere  physical  injuries  sustained 
by  a  child,'  nor  because  of  solicitude  for  his  own  and  his  child's 
personal  safety.*  Without  proof  of  substantial  harm,  incapacity 
to  pursue  his  ordinary  employment,  or  some  expense  incurred,  a 
seaman  thrown  from  a  boat  into  the  water  in  case  of  a  collision 
can  recover  no  damages  for  the  resulting  fright.*  As  long  ago- 
as  1808  Lord  Ellenborough  charged  a  jury  in  an  action  brought 
by  a  husband  to  recover  for  the  loss  of  the  comfort,  fellowship 
and  assistance  of  his  wife  and  the  grief,  vexation  and  anguish 
of  mind  he  had  undergone  by  reason  of  her  injuries  and  sub- 
sequent death  that  they  could  only  take  into  consideration  the 
bruises  which  he  had  himself  sustained,  and  the  loss  of  his- 
wife's  society,  and  the  distress  of  mind  he  had  suffered  on  her 
account  from  the  time  of  the  accident  till  the  moment  of  her 
dissolution.*  In  an  action  brought  by  a  husband  to  recover 
for  mental  suffering  resulting  from  surgical  malpractice  in 
the  performance  of  an  operation  upon  his  wife,  the  difficul- 
ties in  the  way  of  the  rule  suggested  were  considered  by 
Christiancy,  J.^  The  chief  cause  of  plaintiff's  distress  of  mind 
must  have  been  the  death  of  his  wife  in  which  the  injury  re- 
sulted rather  than  the  pain  she  suffered  during  the  operation, 
and  prior  to  her  death;  and  it  would  be  very  difficult  for  a 
jury  to  apportion  his  mental  agony  or  to  determine  how  much  of 
it  was  attributable  to  one  of  these  causes  and  how  much  to  the 
other.  If  the  plaintiff  has  a  right  of  action  on  account  of 
his  wife's  suffering,  why  may  not  another  of  her  relatives  who 
may  have  sustained  as  much  mental  agony  on  the  same  ac^ 
count  as  the  husband?  These  considerations,  it  is  said,  show 
the  propriety  and  good  sense  of  the  rule  which  restricts  the 
right  of  action  for  mental  suffering  to  the  person  who  has  re- 
ceived the  physical  injury.  Had  the  wife  survived,  this  right 
of  action  would  have  been  hers,  and  neither  the  husband  in 

^Flemington  v.  Smithers.  3  C.  &  zwyman  v.  Leavitt,  71   Me.  227; 

P.  (1826),  293;  Black  v.  Carrollton  R.  Keyes  v.  Minneapolis,  etc.  R  Co.,  36 

Co.,  10  La.  Ann.  33;  Pennsylvania  K.  Minn.  290,  30  N.  W.  Rep.  888;  Texas 

Co.  V.  Kelly,  31  Pa.  373,  73.  Am.  Dec.  Mexican  R  Co.  v.  Douglass,  69  Tex. 

745;   Cowden  v.  Wright,  34  Wend.  694,  7  S.  W.  Rep.  77. 

439,  35  Am.  Dec.  633.     Contra,  Trim-  3  The  Queen.  40  Fed.  Rep.  694. 

ble  V.  Spiller,  7  Mon.  (Ky.)  394. 18  Am.  *  Baker  v.  Bolton,  1  Camp.  493. 

Dec.  189.  SeeOwen  V.  Brockschmidt,  »  Hyatt  v.    Adams,    16  Mich.   180,. 

54  Mo.  285.  197. 


§  97.]  ELEMENTS   OF   DAMAGE.  283 

his  own  right,  nor  any  other  person,  could  have  sustained  an 
action  for  it;  her  death  does  not  transfer  it  to  him.  Damages 
for  such  sufifering  in  actions  for  malpractice  are  not  favored ; 
when  allowed  they  are  to  be  based  upon  a  consideration  by 
the  jury  of  all  the  facts  and  circumstances  and  not  upon  state- 
ments made  by  witnesses  as  to  their  amount.^ 

The  rule  in  England  and  in  most  of  the  American  courts  is 
that  only  compensation  for  the  pecuniary  loss  which  has  been 
sustained  by  the  death  of  a  husband,  father,  child  or  other  rel- 
ative can  be  recovered  against  the  wrong-doer.-  The  Scotch 
law  allows  a  recovery  for  wounded  feelings.'  In  some  states, 
owing  to  the  language  of  the  statutes,  other  than  pecuniary 
loss  may  be  recovered  for,  as  where  it  is  expressed  that  the 
jury  may  award  such  damages  "as  to  it  may  seem  fair  and 
just."  *  The  mental  and  physical  pain  of  the  deceased  is  not 
to  be  considered  by  the  jury  in  finding  the  injury  which  results 
from  his  death  to  the  family.^  But  it  is  otherwise  where  the 
right  of  action  of  the  person  who  dies  survives  to  his  repre- 
sentatives.® There  must,  however,  be  proof  that  mental  suf- 
fering was  endured  by  the  deceased.^ 

§  97.  Same  subject;  liability  of  telegraph  companies. 
During  the  period  between  1883  and  1893  there  was  a  marked 
development  of  judicial  sentiment  in  the  direction  of  holding 
telegraph  companies  liable  for  mental  suffering  caused  by  neg- 
ligent delay  in  delivering  messages  announcing  the  serious  ill- 
ness, death  or  burial  of  a  near  relative  of  the  sender  or  ad- 
dressee of  such  a  message.  Since  1893  the  trend  of  judicial 
sentiment  has  changed,  largely  because  the  highest  court  of 

1  Stone  V.  Evans,  32  Minn.  243,  20    id.  240,  18  Pac.  Rep.  269.     See  Munro 
N.  W.  Rep.  149.  v.  Dredging,  etc.  Co.,  84  Cal.  515,  525, 

2  Blake  v.  Midland  R.  Co..  18  Q.  B,     18  Am.  St.  248,  24  Pac.  Rep.  303. 

93;  Railroad  V.  Wy rick,  99  Tenn.  500,  s  Cotton  Press  Co.  v.  Bradley,  52 
511,  42  S.  W.  Rep.  434,  quoting  the  Tex.  587,  601;  Donaldson  v.  Missis- 
text.     See  ch.  37.  sippi  &  M.   R.  Co.,  18  Iowa,  280,  87 

sPaterson  v.  Wallace,  1  Macq.  748.  Am.  Dec.  391. 

*  Matthews  v.  Warner,  29  Gratt.  «  Nashville  &  C.  R  Co.  v.  Prince,  2 

570,  26  Am.  Rep.  396;  Baltimore  &  O.  Heisk.  580;  Same  v.  Smith,  6  id.  174; 

R  Co.  V.  Noell,  32  Gratt.  394;  Beeson  Collins  v.  East  Tennessee,  etc.  R.  Co., 

V.  Green  Mountain  Gold  Mining  Co.,  9  id.  841. 

57  Cal.  20  (ruled  by  a  divided  court);  ^  Kennedy  v.  Standard  Sugar  Re- 

McKeever  v.  Market  Street  R  Co.,  finery,  125  Mass.  90,  28  Am.  Rep.  214; 

59  id.  294;  Cieary  v.  City  R  Co.,  76  Moran  v.  Hollings,  125  Mass.  93. 


284  COMPENSATION.  [§  97. 

'New  York,  the  circuit  courts  of  appeals  of  the  United  States 
and  some  other  eminent  courts  have  denied  such  liability.    The 
courts  (with  the  exception  of  that  of  Indiana)  which  declared 
the  existence  of  the  liability  have  adhered  to  that  doctrine; 
but  most  of  those  which  have  considered  it  for  the  first  time 
in  the  last  ten  years  have  ranged  themselves  in  opposition  to 
it.     The  Iowa  court  is  an  exception.^     According  to  the  view 
of  the  courts  holding  in  accordance  with  the  latter,  if  a  mes- 
sage delivered  to  a  telegraph  companj'^  apprises  the   agent 
who  receives  it,  or  if  he  is  otherwise  informed,  that  it  is  of 
immediate  importance  to  the  party  to  whom  it  is  addressed 
and  relates  to  the  illness,  death  or  burial  of  some  near  mem- 
ber of  his  family,  the  negligent  failure  to  deliver  it  makes 
the  company  liable  to  him  for   such  mental  distress  as  he 
may  sustain  in  consequence,  or  to  the  sender  as  may  be  en- 
dured by  him  if  the  person  who  is  summoned  by  it  fails  to 
duly  arrive  by  reason  of  neglect  to  deliver  it  to  him.     A  hus- 
band may  recover  for  such  suffering  as  he  bears  as  the  result 
of  the  non-delivery  of  a  message  summoning  a  physician  to  at- 
tend his  sick  wife;^  and  there  may  be  a  recovery  for  the  in- 
creased physical  and  mental  suffering  the  wife  endures  on 
account  of  the  non-attendance  of  a  physician,^  or  the  absence 
of  her  husband;*  and  for  the  husband's  disappointment  and 
suffering  in  being  kept  away  from  the  bedside  of  his  sick  wife;  ^ 
for  a  sister's  grief  at  being  prevented  from  attending  a  brother 
in  his  last  illness  and  arranging  for  his  burial.^     Formerly,  in 
Indiana,  a  husband  who  telegraphed  his  brother-in-law  that 
his  wife  was  not  expected  to  live  could  recover  for  his  mental 
suffering  arising  from  the  fact  that  the  person  to  whom  the 
message  was  sent  failed  to  come.^     Other  cases  in  harmony 

1  Mentzer  v.  Western  U.  Tel.  Co.,  39  Fed.  Rep.  181;  Young  v.  Same,  107 
93  Iowa,  752,  62  N.  W.  Rep.  1,  57  Am.  N.  C.  370,  11  S.  E.  Rep.  1044,  9  L.  R. 
St.  294,  28  L.  R.  A.  72.  A.  669,  22  Am.  St.  883. 

2  Western  U.  Tel.  Co.  v.  Henderson,  ^  Wadsworth  v.  Western  U.  TeL 
89  Ala.  510,  18  Am.  St.  148,  7  So.  Rep.  Co.,  86  Tenn.  695,  8  Am.  St.  864,  8  S. 
419.  W.  Rep.  574. 

3  Western  U.  Tel.  Co.  v.  Cooper,  71  ^  Reese  v.  Western  U.  TeL  Co.,  123 
Tex.  507,  9  S.  W.  Rep.  598,  1  L.  R.  A.  Ind.  294,  24  N.  E.  Rep.  163,  7  L.  R.  A. 
728,  10  Am.  St.  772.  583;   overruled  in  Western  U.  Tel. 

4  Thompson  v.  Western  U.  Tel.  Co.,  Co.  v.  Ferguson,  157  Ind.  64,  60  N.  E. 
107  N.  C.  449,  12  S.  E.  Rep.  427.  Rep.  674,  1080.     See  §  977. 

sBeasley  v.  Western  U.  TeL  Ca, 


§  97.] 


ELEMENTS    OF   DAMAGE. 


285 


with  those  considered  are'  cited  in  the  note,'  as  also  some  which 
arc  opposed.2  If  anxiety  or  distress  exists  because  of  knowl- 
edge of  the  illness  of  a  relative,  its  continuance  as  the  result 
of  the  negligent  failure  to  deliver  a  message  which  would  re- 
move or  alleviate  it  is  not  an  element  of  damage.'  Neither  is 
mental  distress  which  has  its  origin  in  alarm  at  and  sympathy 
for  another's  sufferings.*  If  a  telegraph  company  undertakes 
to  transmit  money,  with  knowledge  that  a  failure  to  do  so 
with  promptness  will  cause  mental  distress,  it  is  liable  for  its 
neglect  to  be  prompt.* 

In  order  that  a  company  shall  be  liable  to  the  addressee  of 
a  message  for  mental  suffering  occasioned  by  negligent  failure 
to  transmit  or  deliver  the  announcement  of  the  illness  or  death 
of  the  person  who  may  be  named  therein,  it  must  be  shown 
that  the  message  disclosed,  or  that  the  operator  was  informed 
of,  the  relation  of  the  parties  or  the  importance  of  promptness 
in  its  delivery.^  It  is  enough  to  establish  such  liability  if  the 
language  of  the  message  is  reasonabl}'-  sufficient  to  put  the 


1  So  Relle  v.  Western  U.  Tel.  Co., 
55  Tex.  310,  40  Am.  Rep.  805;  Stuart 
V.  Same,  66  Tex.  580,  59  Am.  Rep.  633, 
18  S.  W.  Rep.  351;  Gulf,  etc.  R.  Co. 
V.  Levy,  59  Tex.  543,  46  Am.  Rep.  269; 
Western  U.  Tel.  Co.  v.  Wilson,  69 
Tex.  739;  Same  v.  Adams,  75  id.  531, 
16  Am.  St.  920,  12  S.  W.  Rep.  857.  6 
L.  R.  A.  844;  Same  v.  Feegles,  75  Tex. 
537,  12  S.  W.  Rep.  860;  Chapman  v. 
Western  U.  Tel.  Co.,  90  Ky.  265,  13  S. 
W.  Rep.  880;  Western  U.  Tel.  Co.  v. 
Broesche,  72  Tex.  654,  13  Am.  St.  843, 
10  S.  W.  Rep.  734.     See  ch.  22. 

2  West  V.  Western  U.  Tel.  Co.,  39 
Kan.  93,  17  Pac.  Rep.  807,  7  Am.  St. 
530;  Russell  v.  Same,  3  Dak.  315,  19 
N.  W.  Rep.  408.     See  ch.  22. 

3  Rovvell  V.  Western  U.  Tel.  Co.,  75 
Tex.  26,  12  S.  W.  Rep.  534. 

4  Western  U.  Tel.  Co.  v.  Cooper,  71 
Tex.  507,  9  S.  W.  Rep.  598,  1  L.  R  A. 
728,  10  Am.  St.  772. 

■'■>  Western  U.  Tel.  Co.  v.  Simpson, 
73  Tex.  422,  11  S.  W.  Rep.  385.  A 
telegram  was  received  at  G.,  Texas, 
by  the  agent  of  a  woman  who  sent 


it  from  L.,  California,  informing  him 
that  her  husband  had  died  at  L.,  and 
that  she  would  leave  there  the  next 
day,  and  requesting  him  to  send  her 
$200.  When  received  at  G.  the  mes- 
sage purported  to  have  been  sent 
from  S.  It  was  not  repeated.  The 
woman's  agent  expressed  to  the  com- 
pany's agent  his  belief  that  the  mes- 
sage was  sent  from  L.,  but  after 
being  assured  that  there  was  no  mis- 
take in  this  respect  applied  for  the 
transfer  of  the  money  to  S.,  which 
was  done,  without  any  effort  on  de- 
fendant's part  to  ascertain  whether 
an  error  had  been  made.  The  money 
did  not  reach  the  applicant.  The 
company  was  held  liable  for  her 
mental  suffering. 

6  Russell  V.  Western  U.  Tel.  Co.,  3 
Dak.  315,  19  N.  W.  Rep.  408;  Western 
U.  Tel.  Co.  V.  Brown,  71  Tex.  723,  3 
L.  R.  A.  766,  10  S.  W.  Rep.  323;  West- 
ern U.  Tel.  Co.  V.  Kirkpatrick,  76 
Tex.  217, 18  Am.  St.  37,  13  S.  W.  Rep. 
70. 


286  COMPENSATION.  [|   98. 

company  upon  inquiry  as  to  the  relationship,  and  inform  it 
that  its  object  is  to  afford  the  person  to  whom  it  is  addressed 
an  opportunity  to  attend  upon  his  relative  in  his  last  sickness, 
or  to  be  present  at  the  funeral  in  case  of  death.^  A  different 
view  is  taken  in  Indiana.  The  message  delivered  read  "  my 
tvife  is  very  ill,  not  expected  to  live."  In  an  action  by  the 
sender  to  recover  for  mental  suffering  it  was  ruled  that  the 
language  was  not  a  hinderance  thereto.  The  court  say:  It 
is  true  there  was  nothing  in  the  telegram  to  indicate  the  kin- 
ship that  existed  between  the  appellant  and  the  person  to 
whom  it  was  addressed;  nor  did  it  request  his  presence  at  the 
bedside  of  the  sick  person;  but  this  affords  no  excuse  to  the 
appellee  for  its  failure  to  deliver  the  telegram.  It  was  bound 
to  know  that  the  message  pertained  in  some  way  to  the  serious 
illness  of  the  appellant's  wife,  and  therefore  that  prompt  com- 
munication with  the  person  to  whom  the  message  was  ad- 
dressed was  much  desired,  and  was  bound  to  know  that  mental 
anguish  might  and  most  probably  would  come  to  some  person 
in  case  it  failed  to  act  promptly  in  transmitting  and  delivering 
the  dispatch;  and  therefore  such  a  result  was  contemplated 
when  the  message  was  delivered  to  its  agent.  Whether  such 
mental  suffering  would  be  caused  by  the  failure  of  a  brother- 
in-law  and  his  wife  to  go  at  once  to  the  bedside  of  a  dying  sis- 
ter-in-law or  from  the  failure  of  a  physician  to  reach  his  patient 
while  there  was  still  hope  that  something  might  be  done  to 
bring  relief,  and  possibly  a  restoration  to  health,  or  for  some 
other  cause,  is  unimportant.  It  was  not  the  particular  cause 
but  the  effect  which  might  be  produced  that  was  contemplated 
by  the  parties,  and  which  is  to  be  looked  to  in  determining  the 
question  of  liability.^ 

§  98.  Right  to  compensation  not  affected  by  motive.  So 
far  as  pecuniary  elements  of  damage  and  full  compensation 
for  injury  are  concerned,  either  in  actions  of  tort  or  for  breach 
of  contract,  the  right  of  recovery  is  wholly  independent  of  the 
motive  which  induced  the  act  or  omission  which  constitutes 

1  Western  U.  Tel.  Co.  v.  Moore,  76  844;  Same  v.  Feegles,  75  Tex.  537,  13 
Tex.  G6,  18  Am.  St.  25,  12  S.  W.  Rep.     S.  W.  Rep.  860. 

949;  Same  v.  Adams,  75  Tex.  531,  16  -  Reese  v.  Western  U.  Tel.  Co.,  123 
Am.  St.  920,  12  S.  W.  857,  6  L.  R.  A.     Ind.  294,  300,  24  N.  E.  Rep.  163,  7  L. 

R.  A.  58a 


§  99.]  ELEMENTS    OF   DAMAGE.  287 

the  cause  of  action.*  In  tort  the  motive  may  increase  the  in- 
jury and  give  a  right  to  greater  compensation;  but  in  actions 
upon  contract  this  can  seldom  occur,  because  contracts  are  not 
often  made  for  such  objects  that  a  breach  can  be  committed  in 
such  manner  as  to  involve  other  than  pecuniary  consequences.' 
In  cases  of  tort,  if  the  defendant's  motive  does  not  enhance  the 
actual  injury,  it  cannot  necessitate  the  allowance  of  larger 
damages  to  compensate  it;  though,  by  possibility,  it  may  afford 
cause  for  imposing  exemplary  damages. 

§  90.  Distinction  made  for  bad  motive ;  contracts.  Im- 
portant distinctions,  however,  are  made  against  parties  who 
break  their  contracts  as  well  as  against  wrong-doers,  where 
the  cause  of  action  originates  in  a  bad  motive.  On  executory 
contracts  for  the  sale  of  land  the  vendor  who  wilfully  breaks 
his  contract  or  is  unable  to  fulfill  for  causes  known  to  him 
when  he  entered  into  it  will  be  subject  to  damages  for  the  loss 
of  the  bargain; '  while  a  vendor  who,  in  good  faith  and  [IGO] 
without  fault,  finds  himself  unexpectedly  unable  to  fulfill  is 
only  liable  to  refund  the  consideration  with  interest  and  ex- 
penses.* The  general  rule  undoubtedly  is  that  in  actions  upon 
contracts  the  motives  which  induce  breaches  of  them  cannot 
be  considered  in  awarding  damages.  In  addition  to  the  cases 
above  stated  and  those  indicated  in  the  next  paragraph  of  this 
section,  as  coming  within  the  exception  to  this  rule,  actions 
for  breach  of  marriage  promise  may  be  added.*     There  is  a 

1  Krom  V.  Schoonmaker,  3  Barb,  nin,  21  Mich.  374,  4  Am.  Rep.  490; 
647;  Bridgewater  Gas  Co.  v.  Home  Foley  v.  McKeegan,  4Iowa.  1,  66  Am. 
Gas  Fuel  Co.,  7  C.  C.  A.  652,  59  Fed.  Dec.  107:  Engel  v.  Fitch,  9  K  &S.  85, 
Rep.  40;  Bromfield  v.  Jones,  4  B.  &  C.  10  id.  738.     See  §  581. 

380.     See  J<  43.  *  Flureau  v.   Thornhill,   2   W.  Bl. 

2  In  Endersv.  Skannal,  35 La.  Ann.  1078;  Walker  v.  Moore,  10  B.  &  C. 
1000,  it  is  ruled  that  if  a  breach  of  416;  Sikes  v.  Wild,  1  B.  &  S.  587,  4 
contract  is  made  in  a  way  and  ac-  id.  421;  Bain  v.  Fothergill,  L.  R.  6 
companied  by  acts  which  constitute  Ex,  59,  L.  R  7  H.  of  L.  158;  McNair 
an  offense  against  the  law,  the  dam-  v.  Compton.  35  Pa.  23;  Conger  v. 
ages  are  not  limited  to  the  actual  Weaver,  20  N.  Y.  140.  See  §  578, 
pecuniary  loss.     See  §  77.  ^Duche    v.   Wilson,  37  Hun,   519; 

sPumpelly  v.  Phelps,  40  N.  Y.  59;  Houston,   etc.  R.  Co.  v.  Shirley,   54 

Bush  V.  Cole,  28  id.  261,  84  Am.  Dec.  Tex.  125,  142,  148. 

343;  Drake  v.  Baker,  34  N.  J.  L.  358;  The  standard  writer  on  the  law  of 

Plummer  v.   Rigdon,  78  111.  222,  20  damages  in  England  says:     "With 

Am.  Rep.  261;  Stephenson  v,  Harri-  the  single  exception   of  actions  for 

son,  3  Litt  170;  Hammond  v.  Han-  breach  of  promise  of  marriage  I  am 


288  COMPENSATION.  [§  99. 

probability  that,  owing  to  the  complete  obliteration  of  the  dis- 
tinction formerly  existing  as  to  the  forms  of  actions,  some  mis- 
understanding may  arise  on  this  question.  The  rule  prevails 
in  some  states  that  where  the  injuries  complained  of  grew  out 
of  a  contract,  though  a  tort  was  connected  with  it,  if  the  claims 
for  both  wrongs  are  so  related  that  they  may  be  conveniently 
and  appropriately  tried  together,  this  may  be  done.^  An  action 
so  tried  cannot  be  said,  with  any  regard  to  legal  accuracy,  to 
be  an  action  upon  contract.  It  is  an  action  brought  upon  the 
theory  that  legal  rights  growing  out  of  a  contract  have  been 
violated  or  legal  duties  resting  thereon  neglected.  As  applied 
to  a  carrier,  the  contract  it  makes  with  a  passenger  gives  him 
the  right  to  be  carried  safely  and  put  down  at  the  place  he  has 
designated;  the  failure  to  do  either  is  a  tort.  The  carrier  is 
engaged  in  an  employment  which  devolves  a  duty  upon  him ; 
an  action  on  the  case  will  lie  for  a  breach  of  that  duty,  al- 
though it  may  consist  in  doing  something  contrary  to  an  agree- 
ment made  in  the  course  of  such  employment  by  the  party 
upon  whom  the  duty  is  cast.^  A  distinction  may  very  properly 
be  made  as  to  the  measure  of  damages  for  the  breach  of  a  con- 
tract where  the  manner  of  the  party  in  the  wrong  is  offensive 
or  such  as  to  cause  reasonable  apprehension  of  danger  to  the 
other.' 

A  quantum  meruit  claim  for  services  which  were  rendered 
in  part  performance  of  a  special  contract  has  been  made  in  some 
jurisdictions  to  depend  on  the  motive  of  the  servant  or  con- 
tractor in  his  abandonment  of  the  contract;  and  compensation 
for  such  performance  has  been  allowed  only  to  the  laborer  or 
contractor  who  has  acted  in  good  faith ;  has  broken  his  con- 
not  aware  of  any  cases  in  which  it  id.  542,  46  Am.  Rep.  269;  New  Or- 
has  been  held  in  England  that  the  leans,  etc.  R.  Co.  v.  Hurst,  36  Miss, 
motives  or  conduct  of  a  party  break-  660;  Wadsworth  v.  Western  U.  Tel. 
ing  a  contract,  or  any  injurious  cir-  Co.,  86Tenn.  695,  6  Am.  St.  864,  8  S. 
cumstance  not  flowing  fn-m  the  W.  Rep.  574:  Mentzer  v.  Western  U. 
breach  itself,  could  be  considered  in  Tel.  Co.,  93  Iowa,  752,  62  N.  W.  Rep. 
damages  where  the  action  is  on  the  1,  57  Am.  St.  294,  28  L.  R.  A.  72. 
contract."  Mayne's  Dam.  (6th  ed.)  2jarvis,  C.  J.,  in  Courtenay  v. 
p.  43,  Earle,    10  C.  B.  73,  83,  interpreting 

1  Houston,  etc.  R  Co.  v.  Shirley,  54     Brown  v.  Boorman,  11  CI.  &  F.  1. 
Tex.  125,  148;  Ball  v.  Britton,  58  id.         ^Enders   v.  Skannal,  35  La.  Ann. 
57;  G.,  G  &  S.  F.  R.  Ca  v.  Levy,  59     1000. 


§  100.]  ELEMENTS    OF    DAMAGE.  2S0 

tract  through  inability  or  mistake;  and  has  been  denied  to  the 
party  who  has  wilfully  and  selfishly  abandoned  it.'  Other 
cases  may  be  cited  where  a  more  liberal  scope  is  allowed  in 
estimating  damages  for  a  fraudulent  or  wanton  violation  of 
contract  than  is  ordinarily  given  in  the  absence  of  the  element 
of  fraud.^ 

§  100.  Motive  in  tort  actions.  The  motive  with  which  a 
wrong  is  done  in  some  cases  affects  the  rule  by  which  compen- 
sation is  measured  or  losses  estimated.  Where  there  is  [101] 
fraud  or  other  intentional  wrong  compensatory  damages  are 
given  with  a  more  liberal  hand  b}'^  juries  and  their  verdicts  in 
such  cases  are  less  closely  scanned  by  courts  than  in  cases 
where  that  element  is  absent.  There  is  a  tendency,  too,  to  be 
less  strict  in  the  exclusion  of  remote  and  uncertain  damages, 
though  for  this  there  is  doubtful  warrant.'  Where  the  damaj^es 
are  certain,  as  for  the  taking  or  destruction  of  property  having 
a  well-known  and  provable  value,  the  rule  of  compensation  is 
generally  the  same,  whether  the  loss  is  by  tort  or  by  breach 
of  contract  and  whether  the  wrong  was  wilful  or  not.  But 
there  is  a  more  liberal  allowance  of  damages  where  the  tort  is 
an  aggressive  one,  and  the  entire  damages  or  some  part  of 
them  are  not  capable  of  measurement  by  some  standard  of 

1  Yeats  V.  Ballentine,   56  Mo.  530;  2  W.   Va.  104;  Gleason  v.  Smith,  9 

Keliy  V,  Bradford,  33  Vt.  35;  Austin  Cush.  484,  57  Am.  Dec.  62;  Tliorntoa 

V.   Austin,    47    Vt.    311;  Britton   v.  v.  Place.  1  M.  &  R.  218;  Newman  v. 

Turner,  6  N.  H.  495;  Sinclair  v.  Tall-  McGregor,  5  Ohio,  349,  24   Am.  Dec. 

madge,  35  Barb.   602;    Hay  ward   v.  293;  Carroll  v.  Welch,  26  Tex.   147; 

Leonard,  7  Pick.  181:  Atkins  v.  Barn-  Hillyard  v.  Crabtree,  11  Tex.  264,  62 

stable.  97  Mass.  428;  Snow  v.  Ware,  Am.  Dec.  475;  Dermott  v.  Jones,  23 

18  Met.  42;  McKinney  v.  Springer,  3  How.  220;  Norris  v.  School  District, 

Ind.  59;  Porter  v.  Woods,  3  Humph.  12  Me.  293,  28  Am.  Dec.  182. 
56,   39   Am.   Dec.  153;  McDonald  v.        2  Dewint  v.  Wiltse,  9  Wend.  325; 

Montague,   30    Vt.    357;    Cullen    v.  Jeffrey  v.  Bigelow,  13  id.  518,  28  Am. 

Sears,    112    Mass,     299;    Cardell    v.  Dec.    476;    Chitty    on    Conts.    684; 

Bridge,  9  Allen.  355;  Walker  v.  Or-  Sondes  v.  Fletcher,  5  B.  &   Aid.  835; 

ange,  16  Gray,  193;   Patnote  v.  San-  Rose  v.  Beattie,  2  Nott  &  McC.  538; 

ders,   41    Vt.   66,   98   Am.    Dec.  564;  Nurse  v.  Barns,  T.  Raym.  77;  Stuarfc 

Veazie  V.  Bangor,  51  Me.  509;  Laton  v.  Wilkins,  1  Doug.  18;  Williamson 

V.   King,  19  N.  H.  280;  Bertrand  v.  v.   Allison,   2  East,  446;  Ferrand  v. 

Byrd,  5  Ark.  651;  Wilson  v.  Wagar.  Bouchell,  Harp.  83;  Muilett  v.  Mason, 

26  Mich.  452;  Horn  v.  Batchelder,  41  L.  R.  1  C.  P.  559;  Smith  v.  Thomp- 

N.  H.  86;  Tait  v.  Sherman,  10  Iowa,  son,  8  C.  B.  44.     See  §  77. 
60;  Baltimore  &  O.  R  Co.  t.  Lafferty,        » See  §  43. 
Vou  1  —  19 


290  COMPENSATION.  [§    100. 

value  or  definite  rule.^  This  is  justified  not  only  on  the 
ground  that  the  wrong  was  wilful  or  malicious,  but  on  certain 
considerations  which  emphasize  the  distinction  between  un- 
certain damages  caused  by  torts  and  by  breaches  of  contracts 
generally.  Contracts  are  made  only  by  the  mutual  consent 
of  the  respective  parties;  and  each  party  for  a  consideration 
thereby  consents  that  the  other  shall  have  certain  rights  as 
against  him  which  he  would  not  otherwise  possess.  In  enter- 
ing into  the  contract  the  parties  are  supposed  to  understand 
its  legal  effect,  and  consequently  the  limitations  which  the  law 
for  the  sake  of  certainty  has  fixed  for  the  recovery  of  dam- 
ages for  its  breach.  If  not  satisfied  with  the  risk  which  these 
rules  impose  the  parties  may  decline  to  contract  or  may  fix 
their  own  rule  of  damages,  when  in  their  nature  the  amount 
must  be  uncertain.  Hence  when  suit  is  brought  upon  such 
contract  and  it  is  found  that  the  entire  damages  actually  sus- 
tained cannot  be  recovered  without  a  violation  of  such  rules, 
the  deficiency  is  a  loss  the  risk  of  which  the  party  voluntarily 
assumed  on  entering  into  the  contract  for  the  chance  of  bene- 
fit or  advantage  which  it  would  have  given  him  in  case  of 
performance.  His  position  is  one  in  which  he  has  voluntarily 
placed  himself  and  in  which,  but  for  his  own  consent,  he 
could  not  have  been  placed  by  the  wrongful  act  of  the  oppo- 

*  A  husband  who  properly  demeans  ing  person  was  pure,  and  the  appear- 
himself  is  entitled  to  the  society  and  ances  seemed  to  indicate  necessity 
assistance  of  his  wife  against  all  the  for  interference,  there  can  be  no  re* 
world.  Whoever  deprives  him  tliereof  covery,  though  nooccasion  for  inter- 
is  liable  to  an  action.  In  estimating  ference  really  existed.  Much  will 
damages  each  case  must  be  deter-  be  forgiven  the  parents  of  a  wife 
mined  by  the  circumstances  attend-  who  honestly  interfere  in  her  behalf, 
ing  it,  and  the  motive  of  the  inter-  though  the  interference  was  wholly 
vening  person  must  be  ever  kept  in  unnecessary  and  may  have  been  det- 
view.  The  cases  may  properly  be  rimental  to  her  interest  and  happi- 
divided  into  two  classes:  One,  where  ness  as  well  as  that  of  her  husband; 
a  villain  interferes  for  the  purpose  of  still,  where  the  motive  is  not  protec- 
seduction,  or  the  sole  ground  of  in-  tion  of  the  wife,  but  hatred  and 
terference  is  malice;  the  other,  where  ill-will  of  the  husband,  it  is  no  an- 
f riends,  usually  parents,  interfere  for  swer  to  his  action  for  such  interfer- 
the  protection  of  the  wife  and  the  ence  that  the  offenders  were  his 
offsprii.g,  if  any.  In  the  first  class,  wife's  parents.  Holtz  v.  Dick,  42 
the  husband,  if  without  fault,  is  al-  Ohio  St.  23,  51  Am.  Rep.  791,  per 
ways  entitled  to  damages:  in  the  Okey,  J. 
latter,  if  the  motive  of  the  interven- 


§  100.]  elem2;nts  of  damage.  291 

site  party  alone.  Again,  in  a  majority  of  cases  upon  contract 
there  is  little  dilficulty  from  the  nature  of  the  subject  in  find- 
ing a  rule  by  which  substantial  compensation  may  be  readily 
estimated;  and  it  is  only  in  those  cases  where  this  cannot  be 
done  and  where,  from  the  nature  of  the  stipuhitions  or  the  sub- 
ject-matter, the  actual  damages  resulting  from  a  breach  are 
more  or  less  uncertain  in  their  nature  or  dillicult  to  be  [1G-] 
shown  with  accuracy  by  the  evidence  under  any  definite  rule, 
that  there  can  be  any  great  failure  of  justice  by  adhering  to 
such  rule  as  will  most  nearly  approximate  to  the  desired  result. 
And  it  is  precisely  in  these  classes  of  cases  that  the  parties 
have  it  in  their  power  to  protect  themselves  against  any  loss 
to  arise  from  such  uncertainty  by  estimating  their  own  dam- 
ages in  the  contract  itself,  and  providing  for  themselves  the 
rules  by  which  the  amount  shall  be  measured  in  case  of  a 
breach;  and  if  they  neglect  this  they  may  be  presumed  to  have 
assented  to  such  damages  as  may  be  measured  by  the  rules 
which  the  law,  for  the  sake  of  certainty,  has  adopted.  None 
of  these  considerations  have  any  bearing  in  an  action  purely 
of  tort.  The  injured  party  has  consented  to  enter  into  no  re- 
lation to  the  wrong-doer  by  which  any  hazard  of  loss  should 
be  incurred;  nor  has  he  received  any  consideration  or  chance 
of  benefit  or  advantage  for  the  assumption  of  such  hazard; 
nor  has  the  wrong-doer  given  any  consideration  or  assumed 
any  risk  in  consequence  of  any  act  or  consent  of  his.  The  in- 
jured party  has  had  no  opportunity  to  protect  himself  by  con- 
tract against  any  uncertainty  in  the  estimate  of  damages;  no 
act  of  his  has  contributed  to  the  injury;  he  has  yielded  noth- 
ing by  consent;  and,  least  of  all,  has  he  consented  that  the 
wrong-doer  might  take  or  injure  his  property  or  deprive  him 
of  his  right  for  such  sum  as,  by  the  strict  rules  which  the  law 
has  established  for  the  measurement  of  damages  in  actions 
upon  contract,  he  may  be  able  to  show  with  certainty  he  has 
sustained  by  such  taking  or  injury.  Especially  would  it  be 
unjust  to  presume  such  consent  and  to  hold  him  to  the  recov- 
ery of  such  damages  only  as  may  be  measured  with  certainty 
by  fixed  and  definite  rules  when  the  case  is  one  which,  from 
its  ver}'^  nature,  affords  no  elements  of  certainty  by  which  the 
loss  he  has  actually  suffered  can  be  shown  with  accuracy  by 
any  evidence  of  which  the  case  is  susceptible.     Nor  is  he  to 


292  COMPENSATION.  [§  101. 

blame  because  the  case  happens  to  be  one  of  this  character, 
lie  has  had  no  choice,  no  selection.  The  nature  of  the  case  is 
sucli  as  the  wrong-doer  has  chosen  to  make  it;  and  upon  every 
consideration  of  justice  he  is  the  party  who  should  be  made 
to  sustain  all  the  risk  of  loss  which  may  arise  from  the  uncer- 
tainty pertaining  to  the  nature  of  the  case  and  the  difficulty 
[163]  of  accurately  estimating  the  results  of  his  own  wrongful 
act.' 

§101.  How  motive  aifects  conseiiuences  of  confusion  of 
goods.  In  case  of  a  wrongful  confusion  of  goods,  that  is,  where 
one  fraudulentl}'^  or  wrongfully  intermixes  his  money,  corn  or 
hay  with  that  of  another  man,  without  his  approbation  or 
knowledge,  or  casts  gold  in  like  manner  into  another's  melting 
pot  or  crucible,  the  law,  to  guard  against  fraud,  allowed  no 
remedy  in  such  case  according  to  the  older  authorities,  but 
gave  the  entire  property  without  any  account  to  him  whose 
original  domain  was  invaded.^  There  is  a  tendency  in  the  later 
adjudications,  however,  to  confine  the  forfeiture  to  cases  where 
otherwise  the  innocent  owner  of  property  so  mixed  cannot  be 
adequately  protected.  It  accords  with  the  preceding  views  to 
charge  the  party  whose  fraudulent  or  tortious  act  caused  the 
confusion  with  the  duty  of  separating  and  identifying  his  own 
and  with  any  loss  resulting  from  his  inability  to  do  so.'  And 
greater  loss  cannot  properly  be  charged  to  him  for  the  purpose 
of  compensation.  A  person  is  not  damnified  by  mixing  his 
property  in  a  mass,  if  from  it  he  can  withdraw  what  will  be 
substantially  and  to  all  intents  and  purposes  identical  with  it; 
and  where  a  man  can  obtain  all  that  he  is  entitled  to,  in  order 
to  be  in  full  enjoyment  of  his  own,  the  law  should  not  bestow 
[164]  on  him  the  property  of  another.^     A  reasonable  rule, 

1  Per  Christiancy,  J.,  in  Allison  v.  433;  Claflin  v.  Continental  Jersey 
Chandler,  11  Mich.  552;  Sharon  v.  Works,  85  Ga.  27,  11  S.  E.  Rep.  721; 
Mosher,  17  Barb.  518;  Guille  v.  Swan,  First  Nat.  Bank  v.  Schween,  127  III. 
19  Johns.  381,  10  Am.  Dec.  234;  Cats  573,  11  Am.  St.  174,  20  N.  E.  Rep.  681; 
V.  Gate,  50  N.  H.  144,  9  Am.  Rep.  179.  Franklin  v.  Gumersell,  9  Mo.  App.  84 

2  2  Black.  Com.  404;  Warde  v.  Eyre,  SHolloway  Seed  Co.  v.  City  Nat. 
2  Bulst.  323;  Ryder  v.  Hathaway,  21  Bank.  92  Tex.  187,  47  S.  W.  Rep.  95. 
Pick.  298;  Willard  v.  Rice,  11  Met.  <  Per  Campbell,  J.,  in  Stephenson  v. 
493,  45  Am.  Dec.  296;  Hesseltine  v.  Little,  supra:  Hart  v.  Ten  Eyck,  2 
Stockwell,  30  Me.  237,  50  Am.  Dec.  Johns.  Ch.  62;  Roth  v.  Wells,  29  N. 
637;  Stephenson  v.  Little,  10  Mich.  Y.  486;  Nowlen  v.  Colt,  6  Hill,  461, 


§  101.] 


ELEMENTS   OF    DAMAGE. 


293 


which  has  much  authority  to  support  it,  is  that  one  who  has 
confused  his  own  property  with  that  of  other  persons  shall  lose 
it  when  there  is  a  concurrence  of  these  two  things:  first,  that 
he  has  fraudulently  caused  the  confusion;  and  second,  that  the 
rights  of  the  other  party  after  the  confusion  are  not  capable 
otherwise  of  complete  protection.^  But  the  principle  of  for- 
feiture, except  when  necessary  to  save  the  rights  of  the  inno- 
cent owner,  if  there  has  been  a  fraudulent  admixture,  cannot 
be  said  to  be  eliminated  from  our  jurisprudence.^    It  is  a  doc- 


41  Am.  Dec.  756;  Samson  v.  Rose,  65 
N.  Y.  411;  Brackenridge  V.  Holland, 
2  Blackf.  377,  20  Am.  Dec.  123;  King- 
gold  V.  Ringgold,  1  Har.  &  Gill,  11, 
18  Am,  Dec.  250;  Bryant  v.  Ware,  30 
Me.  295;  Stearns  v.  Raymond,  26 
Wis.  74;  Single  v.  Barnard,  29  id. 
463;  Scliulenburg  v.  Harriman,  2 
Dill.  398,  21  Wall.  44;  The  Distilled 
Spirits.  11  Wall.  356;  Robinson  v. 
Holt,  39  N.  H.  557,  75  Am.  Dec.  233; 
Stuart  V.  Phelps,  39  Iowa,  14;  Moore 
V.  Bowman,  47  N.  H.  494;  Goodenow 
V.  Snyder,  8  G.  Greene,  599;  Wood  v. 
Fales.  24  Pa.  246,  64  Am.  Dec.  655; 
Wooley  V.  Campbell,  37  N.  J.  L.  163; 
Bond  V.  Ward,  7  Mass.  123,  5  Am. 
Dec.  23;  Smith  v.  Sanborn,  6  Gray, 
134;  Armstrong  v.  McAlpin,  18  Oliio 
St.  184;  Holbrook  v.  Hyde,  1  Vt.  286; 
Treat  v.  Barber,  7  Conn.  274;  Tufts 
V.  McClintock,  28  Me.  424,  48  Am. 
Dec.  501;  Colwill  v.  Reeves,  2  Camp. 
575;  Albee  v.  Webster,  16  N.  H.  362; 
Weil  V.  Silverstone,  6  Bush,  698; 
Wellington  v.  Sedgwick,  12  Cal.  469; 
Shumway  v.  Rutter,  8  Pick.  443,  19 
Am.  Dec.  340;  Ames  v.  Mississippi 
Boom  Co.,  8  Minn.  467;  Bartlett  v. 
Hamilton,  46  Me.  435:  Leonard  v. 
Belknap,  47  Vt.  602;  Wyly  v.  Bur- 
nett, 43  Ga.  438;  Griffith  v.  Bogardus, 
14  Cal.  410;  Frey  v.  Deraarest,  16  N. 
J.  Eq.  236;  Elmer  v.  Loper,  25  id. 
475;  Alley  v.  Adams,  44  Ala  609; 
Adams  v.  Wildes,  107  Mass.  123; 
Cochran  v.  Flint,  57  N.  H.  514;  Gray 
V.  Parker,  38  Mo.  160;  Fowler  v.  Hoff- 


man, 31  Mich.  215;  Fellows  v.Mitchel, 
1  P.  Wms.  81;  Taylor  v.  Plumer,  3 
M.  &  S.  562;  2  Kent's  Com.  365;  Reed 
V.  King,  11  Ky.  L.  Rep.  615,  12  S.  W. 
Rep.  772;  Stone  v.  Quaal,36  Minn.  46, 
29  N.  W,  Rep.  326;  Osborn  v.  Cargill 
Elevator  Co.,  62  Minn.  400,  64  N.  W. 
Rep.  1135;  Blodgett  v.  Seals,  78  Miss. 
522,  29  So.  Rep.  852;  Clark  v.  William 
Munroe  Co.,  127  Mich.  300,  86  N.  W. 
Rep.  816. 

lid.;  Wright  v.  Skinner.  34  Fla. 
453,  16  So.  Rep.  335,  citing  the  text; 
Claflin  V.  Beaver,  55  Fed.  Rep.  576. 

2  Osborne  v.  Cargill  Elevator  Co., 
62  Minn.  400,  64  N.  W.  Rep.  1135;  Hal- 
loway  Seed  Co.  v.  City  Nat.  Bank,  93 
Tex.  187,  47  S.  W.  Rep.  95;  Ryder  v. 
Hathaway,  21  Pick.  298;  The  Idaho, 
93  U.  S.  575;  Jenkins  v.  Steanka,  19 
Wis.  126,  18  Am.  Dec.  675;  Root  v. 
Bonnema.  22  Wis.  539;  Ste|iheuson  v. 
Little,  10  Mich.  433;  Johnson  v.  Bal- 
lon, 25  Mich.  460;  Willard  v.  Rice.  11 
Met.  493,45  Am.  Dec.  226;  Lupton  v. 
White,  15  Ves.  442;  Wingate  v. 
Smith,  20  Me.  287;  Dole  v.  Olmstead, 
36  111.  150,  85  Am.  Dec.  397;  Loomis 
V.  Greer,  7  Me.  386;  McDowell  v.  Ris- 
sell,  37  Pa.  164;  Beach  v.  Schmultz, 
20  111.  185;  Jewett  v.  Dringer,  30  N. 
J.  Eq.  291;  Wooley  v.  Campbell,  37 
N,  J.  L.  163;  Claflin  v.  Continental 
Jersey  Works,  85  Ga.  27, 11  S.  E.  Rep. 
721;  First  Nat.  Bank  v.  Schween,  127 
111.  573,  11  Am.  St.  174,  20  N.  E.  Rep. 
681;  Franklin  v.  Gumersell,  9  Mo. 
A  pp.  84. 


^Oi  COMrENSATION.  [§  102. 

trine  to  prevent  fraud.^  The  general  rule  which  favors  the  in- 
nocent when  there  has  been  a  confusion  of  property  so  that  it 
cannot  be  separated  according  to  ownership  should  not  be  ap- 
plied to  the  prejudice  of  the  rights  of  third  parties  if  full 
protection  can  be  given  to  the  innocent  person  whose  goods 
have  been  thus  wrongfuU}'-  used.^ 

§  102.  Where  property  sued  for  improved  by  Tvrong-doer. 
In  another  class  of  cases,  closely  analogous  to  those  relating 
to  confusion  of  goods,  where  a  tortious  taker  of  property  has 
by  his  labor  enhanced  its  value,  the  owner's  title  not  being 
divested,  the  latter  may  retake  the  same,  subject  to  certain 
limitations,  in  its  improved  condition.^  He  is  precluded  from 
[1G5]  exercising  this  right  when  property  so  taken  has  lost  its 
identity.  But  the  change  which  will  be  deemed  to  destroy 
identity  where  the  wrong-doer  took  the  property  in  good  faith, 
supposing  it  to  be  his  own,  or  through  some  other  mistake  or 
inadvertence,  will  not  so  destroy  it  as  to  determine  the  owner's 
title  and  put  him  to  his  action  for  damages,  if  the  taking  was 
an  intentional  wrong.  While  the  authorities  are  in  great  con- 
fusion on  this  subject,  there  is  a  manifest  discrimination  against 
the  wilful  wrong-doer.  By  the  civil  law  and  the  common  law 
alike  the  owner  of  the  original  materials  is  precluded  from  fol- 
lowing and  reclaiming  the  property  after  it  has  undergone  a 
transmutation  which  converts  it  into  an  article  substantially 
different,''  as  by  making  wine  out  of  another's  grapes,  oil  from 
his  olives,  or  bread  from  his  wheat;  but  the  product  belongs 
to  the  new  operator,  who  is  only  to  make  satisfaction  to  the 
former  proprietor  for  the  materials  converted.^  And  a  very 
large  increase  in  the  value  of  the  property  by  labor  has  been 

1  Wooley  V.  Campbell,  37  N.  J.  L.  Cal.  574,  76  Am.  Dec.  551 ;  Moody  v. 
163.  Whitney,   34  Me.   563;   Chandler  v. 

2  National  Park  Bank  v.  Goddard,  Edson,  9  Johns.  362;  Riddle  v.  Driver, 
9  N.  Y.  Misc.  626,  30  N.  Y.  Supp.  417.  12  Ala.  590;  Hyde  v.  Cookson,  21 
See  Hall  V.  Hagardine-McKittrick  Barb.  92;  Dunn  v.  Oneal,  1  Sneed,  106, 
Dry  Goods  Co.,  23  Tex.  Civ.  App.  149,  60  Am.  Dec.  140;  Silsbury  v.  McCoon, 
55  S.  W.  Rep.  747.  3  N.  Y.  379,  53  Am.  Dec.  753. 

3  Final  v.    Backus,    18  Mich.  218;        <  2  Bl.  Com.  404. 

Brown  v.  Sax,  7  Cow.  95;  Bennett  v.  ^jfj, ;  Wether  bee  v.  Green,  22  Mich. 

Thompson,   13  Ired.   146;    Smith   v.  311,   7   Am.    Rep.    653;    Forsyth    v. 

Gonder,  22  Ga.  353;  Curtis  v.  Groat,  Wells,  41  Pa.   291,  SO  Am.  Dec.  617; 

6  Johns.    168;   Halleck  v.  Mixer,  16  Swift  v.  Barnum,  23  Conn.  523. 


§  102.] 


ELEMENTS   OF   DAMAGE. 


29: 


held  to  have  the  same  effect  in  favor  of  such  an  involuntary 
wronf^-doer.'  The  law  allows  liim  in  such  cases  to  make  title 
by  his  own  wrong,  it  not  being-  wilful,  to  prevent  his  suffering 
the  loss  of  his  labor,  and  not  because  of  the  supposed  impossi- 
bility of  tracing  the  original  materials  into  the  more  valuable 
property  made  therol'roui.  The  authorities,  however,  are  so 
much  in  conflict  that  no  test  can  be  deduced  from  them  by 
by  which  it  can  be  determined  what  change  will  suffice  to 
destroy  the  identity  of  property  so  as  to  prevent  the  owner 
from  retaking  it.  It  is  not  enough  that  trees  are  converted 
into  saw-logs  or  timber,'  into  rails  or  posts,^  into  railroad  [160] 
ties,  staves,  fire  wood,*  or  shingles;^  that  saw-logs  are  made  into 
boards,^  fire  wood,''  or  coal.^ 


•  Wetherbee  v.  Green,  supra. 

2PieiTepont  v.  Barnard,  5  Barb. 
364;  Synies  v.  Oliver,  13  Mich.  9; 
Grant  v.  Smith,  26  id.  201;  Gates  v. 
Rifle  Boom  Co.,  70  id.  309,  38  N.  W. 
Rep.  245;  Arpin  v.  Burch,  68  Wis.  619, 
32  N.  W.  Rep.  681. 

3  Snyder  v.  Vaux,  2  Rawle,  423,  21 
Am.  Dec.  466;  Millar  v.  Humphries, 
2  A.  K.  Marsh.  446. 

4  Smith  V.  Gonder,  22  Ga.  353; 
Heard  v.  James,  49  Miss.  236;  Brewer 
V.  Fleming,  51  Pa.  102;  Moody  v. 
Whitney,  34  Me.  563. 

5  Betts  V.  Lee,  5  Johns.  348;  Chand- 
ler V.  Edson,  9  id.  362. 

<>  Brown  v.  Sax,  7  Cow.  95;  Baker 
V.  Wheeler,  8  Wend.  505;  Davis  v. 
Easley,  13  111.  192. 

"'  Eastman  v,  Harris,  4  La.  Ann.  193. 

8  Riddle  v.  Driver,  12  Ala,  590;  Cur- 
tis V.  Groat,  6  Johns.  168. 

In  Silsbury  v.  McCoon.  3  N.  Y.  386, 
53  Am.  Dec.  753,  it  is  said:  "In  one 
case  (5  Hen.  7,  fol.  15)  it  is  said  that  the 
owner  may  reclaim  the  goods  so  long 
as  they  may  be  known,  or,  in  other 
words,  ascertained  by  inspection. 
But  this,  in  many  cases,  is  by  no 
means  the  best  evidence  of  identity; 
and  the  examples  put  by  way  of  il- 
lustration serve  rather  to  disprove 
than  to  establish  the  rule.  The  court 


say  that  if  grain  be  made  into  malt 
it  cannot  be  reclaimed  by  the  owner 
because  it  cannot  be  known.  But  if 
cloth  be  made  into  a  coat,  a  tree  into 
squared  timber,  or  iron  into  a  tool,  it 
may.  Now,  as  to  the  cases  of  the 
coat  and  the  timber,  they  may  or  may 
not  be  capable  of  identification  by 
the  senses  merely;  and  the  rule  is 
entirely  uncertain  in  its  application; 
and  as  to  the  iron  tool,  it  certainly 
cannot  be  identified  as  made  of  the 
original  material,  without  other  evi- 
dence. This  illustration,  therefore, 
contradicts  the  rule.  In  another  case 
(Moore's  Rep.  20)  trees  were  made 
into  timber,  and  it  was  adjudged 
that  the  owner  of  the  trees  might  re- 
claim the  timber, 'because  the  greater 
part  of  the  substance  remained.'  But 
if  this  were  the  true  criterion  it 
would  embrace  the  cases  of  wheat 
made  into  bread,  milk  into  cheese, 
grain  into  malt,  and  others  which  are 
put  into  the  books  as  examples  of  a 
change  of  identity.  Other  writers 
say  that  when  the  thing  issochanged 
that  it  cannot  be  reduced  from  its 
new  form  to  its  former  state  its  iden- 
tity is  gone.  But  this  would  include 
many  cases  in  which  it  has  been  said 
by  the  courts  that  the  identity  is  not 
gone;  as  the  cases  of  leatlier  made 


206 


COMPENSATION. 


[§  103. 


[167]  §  103.  Same  subject.  There  is  not  the  same  difficulty 
under  the  authorities  in  determining  when  the  identity  of  the 
property  is  lost  where  the  tortious  taking  and  conversion 
were  fraudulent.     In  such  a  case  it  is  well  settled  in  New  Tork 


into  a  garment,  logs  rcade  into  lum- 
ber or  boards,  cloth  into  a  coat,  etc. 
There  is  therefore  no  definite  settled 
rule  on  this  question.  .  .  .  There 
is  no  satisfactory  reason  why  the 
wrongful  conversion  of  the  original 
materials  into  an  article  of  a  differ- 
ent name  or  a  different  species  should 
work  a  transfer  of  the  title  from  the 
true  owner  to  the  trespasser,  pro- 
vided the  real  identity  of  the  thing 
can  be  traced  by  evidence.  The  dif- 
ficulty of  providing  the  identity  is  not 
a  good  reason.  It  relates  merely  to 
the  convenience  of  the  remedy,  and 
not  at  all  to  the  right.  There  is  no 
more  difficulty  or  uncertainty  in 
proving  that  the  whisky  in  question 
was  made  of  Wood's  corn  than  there 
would  have  been  in  proving  that  the 
plaintiff  had  made  a  cup  of  his  gold, 
or  a  tool  of  his  iron;  and  yet,  in  those 
instances,  according  to  the  English 
cases,  the  proof  would  have  been  un- 
objectionable. In  all  cases  where  the 
new  product  cannot  be  identified  by 
mere  inspection  the  original  mate- 
rials must  be  traced  by  the  testimony 
of  witnesses  from  hand  to  hand 
through  the  process  of  transforma- 
tion." 

Cooley,  J.,  in  Wetherbee  v.  Green, 
23  Mich.  311,  7  Am.  Rep.  6o3,  said  of 
making  out  the  identity  by  the  senses, 
that  it  is  obviously  a  verj'  unsatis- 
factory test,  and  in  many  cases  would 
wholly  defeat  the  purpose  which  the 
law  has  in  view  in  recognizing  a 
change  of  title  in  any  of  these  cases. 
That  purpose  is  not  to  establish  any 
arbitrary  distinctions,  based  upon 
mere  physical  reasons,  but  to  adjust 
the  redress  afforded  to  the  one  party, 
and  the  penalty  inflicted  upon  the 
other,  as  near  as  circumstances  will 


permit,  to  the  rules  of  substantial 
justice.  It  may  often  happen  that 
no  difficulty  may  be  experienced  in 
determining  the  identity  of  a  piece 
of  timber  which  has  been  taken  and 
built  into  a  house;  but  no  one  dis- 
putes that  the  right  of  the  original 
owner  is  gone  in  such  a  case.  A  par- 
ticular piece  of  wood  might  perhaps 
be  traced  without  trouble  into  a 
church  organ  or  other  equally  val- 
uable article:  but  no  one  would  de- 
fend a  rule  of  law  which,  because  the 
identity  could  be  determined  by  the 
senses,  would  permit  the  owner  of 
the  wood  to  appropriate  a  musical 
instrument,  a  hundred  or  a  thou^nd 
times  the  value  of  the  original  ma- 
terials, when  the  party  who,  under 
like  circumstances,  has  doubled  the 
value  of  another  man's  corn  by  con- 
verting it  into  malt  is  permitted  to 
retain  it  and  held  liable  for  the  orij- 
inal  value  only.  Such  distinctions  in 
the  law  would  be  without  reason  and 
could  not  be  tolerated.  When  the 
right  to  the  improved  article  is  the 
point  m  issue,  the  question,  how 
much  the  property  or  labor  of  each 
has  contributed  to  make  it  what  it 
is,  must  always  be  one  of  first  im- 
portance. The  owner  of  a  beam  built 
into  the  house  of  another  loses  his 
property  in  it  because  the  beam  is 
insignificant  in  value  or  importance 
as  compared  to  that  to  which  it  has 
become  attached,  and  the  musical 
instrument  belongs  to  the  maker 
rather  than  to  the  man  whose  timber 
was  used  in  making  it, —  not  because 
the  timber  cannot  be  identified,  but 
because  in  bringing  it  to  its  present 
condition  the  value  of  the  labor  has 
swallowed  up  and  rendered  insignifi- 
cant the  value  of  the  original  mate- 


§  100.] 


ELEMENTS    OF    DAMAGE. 


297 


that  the  wrong-doer  is  not  permitted  to  acquire  property  in 
the  goods  of  another  by  any  change  wrought  in  them  by  bis 
labor  or  skill,  however  great  the  change  may  be,  provided  it 
can  be  proven  that  the  improved  article  was  made  from  [168] 
the  original  material.^  The  action  was  trover  in  which  this 
doctrine  was  first  lield,  and  the  value  of  whisky  was  recov- 
ered by  the  owner  of  the  corn  from  which  it  was  made.  There 
is  a  general  inclination  elsewhere  to  find  some  middle  ground 
upon  which  the  rights  of  the  owner  may  be  maintained,  and 
yet  moderate  and  adjust  the  consequences  of  even  a  wilful 
trespass  more  nearly  to  the  standard  of  compensation,  espe- 
cially where  there  is  not  an  actual  taking  of  the  property  and 
the  owner  by  choice  or  otherwise  seeks  to  recover  the  value 
in  damages.'^     And  if  an  actual  retaking  is  impossible  or  [109] 


rials.  The  labor,  in  the  case  of  the 
musical  instrument,  is  just  as  much 
the  principal  thing  as  the  house  is  in 
the  other  case  instanced;  the  timber 
a  Impropriated  is  in  each  case  compar- 
atively unimportant.  No  test  which 
satisfies  the  reason  of  the  law  can  be 
applied  in  the  adjustment  of  the 
question  of  title  to  chattels  by  ac- 
cession, unless  it  keeps  in  view  the 
circumstance  of  relative  values. 
When  we  bear  in  mind  the  fact  that 
what  the  law  aims  at  is  the  accom- 
plishment of  substantial  equity,  we 
shall  readily  perceive  that  the  fact 
of  the  value  of  the  materials  having 
been  increased  a  hundred  fold  is  of 
more  importance  in  the  adjustment 
tlian  any  chemical  change  or  me- 
chanical transformation  which,  how- 
ever radical,  neither  is  expensive  to 
the  party  making  it  nor  adds  mate- 
rially to  the  value."  See  Silsbury  v. 
McCoon.  4  Denio,  332;  Herdic  v. 
Young,  55  Pa.  176,  93  Am.  Dec.  739; 
Single  V.  Schneider,  30  Wis.  570. 

'  Silsbury  v.  McCoon,  sttpra;  Baker 
V.  Hart,  52  Hun,  363,  5  N.  Y.  Supp. 
345;  Guckenheimer  v.  Angevine,  81 
N.  Y.  394.  See  Silsbury  v.  McCoon, 
(>  Hill,  425,  41  Am.  Dec.  753,  4  Denio, 
•332;  Hyde  v.  Cookson,  21  Barb.  92. 


2  In  Single  v.  Schneider,  24  Wis. 
301,  Paine,  J.,  said:  "There  is  proof 
tending  to  show  a  mistake  as  to  a 
part  (of  the  timber  tortiousiy  cut  by 
defendants  on  the  plaintiff's  land). 
.  .  .  They  are  not  to  be  regarded, 
therefore,  as  wilful  trespassers.  Upon 
these  facts  it  seems  contrary  to  the 
dictates  of  natural  justice  that  the 
plaintiff  should  be  allowed  to  wait 
quietly  until  the  defendants  had 
manufactured  tlie  logs  into  lumber, 
enhancing  their  value  four  or  five 
fold,  and  then  recover  against  them 
that  entire  value.  True,  it  is  gener- 
ally i-ecognized  that  a  wrong-doer 
cannot  by  the  change  of  another's 
property  change  the  title.  The 
owner  may  pursue  it  and  reclaim  it 
specifically  by  whatever  remedy  the 
law  gives  him  for  that  purpose.  If 
he  gets  it,  it  is  his.  But  the  appar- 
ent injustice  of  allowing  one  to  avail 
himself  of  the  labor  and  money  of 
another,  in  cases  similar  to  this,  has 
led  to  a  modification  of  this  strin- 
gent rule  of  ownership,  wherever  the 
question  is  resolved  into  one  of  mere 
comjiensation  in  money  for  what- 
ever injury  the  party  may  have 
br.lfered."  This  case  came  before  the 
court  again  (30  Wis.   570),  when  it 


29S 


COMrENSATION, 


[§  103. 


does  not  take  place,  and  the  question  is  one  of  mere  compeK' 
sation  for  the  property,  the  law  is  not  quite  settled  that  the 
improved  value  may  be  recovered  even  of  the  party  who  in- 
tentionally converted  it.^  In  such  actions  the  question  whether 
the  property  has  so  changed  as  to  be  no  longer  capable  of 


appeared  and  was  found  by  the  jury 
that  a  part  of  the  logs  sued  for  in  the 
action,    which    was  replevin,   were 
cut    wilfully,    and    Cole,    J.,    said: 
"The  counsel  for  the  defendant  con- 
tends that,  so  far  as  the  measure  of 
damages  is  concerned,  it  is  quite  im- 
material whether  the  logs  were  cut 
intentionally    or   through   mistake; 
that  the  damages  given  in  law   as 
compensation  for  an  injuiy  should 
be  precisely  commensurate  with  the 
injury,  neither  more  nor  less;   and 
that  the  plaintiff  is  not  entitled  to 
recover  the  value  of  the  property  in 
its  improved  state  under  the  circum- 
stances of  this  case.     He  concedes 
that  if  there  was  anything  tending 
to  show  that  the  trespass  was  wan- 
ton or  malicious,  committed  under 
circumstances  of  insult  or  aggrava- 
tion, then,  upon  the  authorities,  ex- 
emplai-y  damages  might  be  allowed 
in  the  discretion  of  the  jury,  which 
might  exceed  or  fall  below  the  value 
of    the   property  enhanced   by  the 
labor  of  the    defendants.     But    he 
claims  that  when  a  person,  though 
intentionally,    cuts  pine  logs  upon 
the  wild,  unoccupied  land  of  another, 
to  say  as  a  matter  of  right  the  owner 
shall  recover  the  enhanced  value  of 
the    property     manufactured     into 
lumber  or  into  the  most  expensive 
furniture  is  a  rule  contrary  to  the 
principles  of  natural  justice,  and  not 
in  accordance  with  the  doctrine  of 
the  common  law.     We  are  inclined 
to  adopt  this  view  of  the  matter,  al- 
though we  are  aware  that  by  so  doing 
we  lay  down  a  rule  in  conflict  with 
some  adjudications  which  may  be 
found.    But  it  seems  to  us  that  if  the 


owner  is  entirely  indemnified  for  the 
injury  he  has  sustained,  it  is  quite 
immaterial  whether  the  logs  were 
cut  by  mistake  or  intentionally,  un- 
less in  the  latter  case  the  trespass 
was  of  such  a  character  as  to  make 
the  doctrine  of  exemplary  damages 
applicable.  This  was  the  view  ex- 
pressed by  Mr.  Justice  Paine  in  Wey- 
mouth V.  Chicago  &  N.  R.  Co.,  17 
Wis.  .550-555,  84  Am.  Dec.  763,  and  it 
seems  to  us  that  it  is  consonant  with 
sound  principle  and  natural  justice. 
It  is  true  that  was  an  action  of  trover 
and  this  is  an  action  of  replevin. 
But  here  the  defendants  gave  the 
undertaking  under  the  statute  and 
retained  possession  of  tlie  property. 
The  judgment  was  in  the  alternative 
for  the  delivery  of  the  property  to  the 
plaintiff,  in  case  delivery  could  be 
had,  or  for  its  value.  The  plaintiff 
does  not  really  expect  to  recover  the 
specific  property,  and  therefore  there 
is  no  valid  reason  for  a  distinction 
between  this  case  and  that  of  trover, 
as  regards  the  rule  of  damages;  it 
should  be  the  same  in  both  cases." 
He  restates  with  approbation  the 
views  of  Bronson,  C.  J.,  in  Silsbury 
V.  McCoon,  4  Denio,  833.  Herdic  v. 
Young.  55  Pa.  176,  93  Am.  Dec.  739. 

lid.;  Moody  v.  Whitney,  34  Me. 
563;  Reid  v.  Fairbanks,  14  C.  B.  729; 
Cushing  V.  Longfellow,  26  Me.  306., 

If  the  owner  brings  trespass  or 
trover  instead  of  replevin  he  elects- 
to  take  damages  according  to  the 
measure  awarded  in  such  actions  — 
a  just  and  fair  compensation  for 
his  property  as  it  was  before  the 
ti'espass.  Gates  v.  Rifle  Boom  Co.,. 
70  Mich.  309,  38  N.  W.  Rep.  24.5. 


§  103.] 


ELEMENTS    OF    DAMAGE. 


299 


identification  is  not  important.  The  wrong-doer  who  has  taken 
and  converted  another's  property  through  mistake  is  charge- 
able with  its  value  at  the  time  of  conversion;  and  the  wilful 
wrong-doer  by  that  standard,  or  the  value  at  some  intermedi- 
ate point,  or  the  final  value  of  the  improved  article,  according 
to  the  views  of  the  particular  court.^  The  liability  of  the  in- 
nocent purchaser  of  property  from  a  wilful  trespasser  whose 
labor  has  improved  it  is  the  value  of  the  property  when  it  was 
taken  from  the  original  owner.  The  defendant  in  such  a  case 
is  not  the  proper  subject  of  punishment;  the  plaintiff's  loss  is 
no  greater  than  it  would  have  been  if  the  tresj)asser  had  been 
free  from  intentional  wrong;  nor  is  the  defendant's  culpability 
increased  thereby .^  To  allow  the  owner  of  the  original  mate- 
rials to  recover  the  value  increased  by  the  subsequent  [170] 
labor  of  the  wrong-doer  is  to  antagonize  two  fundamental 
rights:  the  right  of  property,  and  the  right  to  due  compensa- 
tion for  injury.     The  law  gives  its  sanction  to  the  former  by 


1  ajartin  v.  Porter.  5  M.  &  W.  351; 
MorgMii  V.  Powell,  3  Q.  B.  278;  Llynvi 
Co.  V.  Brogden,  L.  R.  11  Eq.  188;  Maye 
T.  Tappan,  23  Cal.  306;  GoUer  v.  Fett, 
30  Cal.  481 :  Nesbitt  v.  St.  Paul  L.  Co., 
21  Minn.  491;  Foote  v.  Merrill,  54  N. 
H.  490.  20  Am.  Rep.  151;  Adams  v. 
Blodgett,  47  N.  H.  219; Dresser  Manuf. 
Co.  V.  Waterston,  3  Met.  9;  Stock- 
bridge  Iron  Co.  V.  Cone  Iron  W^orks, 
103  Mass.  80;  Winchester  v.  Craig,  33 
Mich.  205;  Bennett  v.  Thompson,  13 
Ired.  14fi:  Smitii  v.  Gonder,  22  Ga. 
353;  Wood  v.  More  wood,  3  Q.  B.  440. 
note;  Hyde  v.  Cookson,  21  Barb.  92; 
Heard  v.  James.  49  Miss.  289;  Riddle 
V.  Driver.  12  Ala.  590;  Greeley  v.  Stil- 
son,  27  Mich.  153.  See  Isle  Royale 
M.  C.  Co.  V.  Horton,  37  Mich.  332. 

2  Railroad  Co.  v.  Hutchins,  37  Ohio 
St.  282,  32  id.  571. 

And  if  he  purchases  part  only  of 
the  property  converted  his  liability 
is  limited  to  the  value  of  such  part. 
Moody  V.  Whitney,  34  Me.  563. 

Where  minerals  are  mined  fraud- 
ulently the  trespasser  is  liable  for 
their  value  after  they  are  severed 


from  the  earth,  without  any  deduc- 
tion for  the  expense  of  mining. 
Martin  v.  Porter,  5  M.  &  W.  351; 
Barton  Coal  Co.  v.  Cox,  39  Md.  1,  17 
Am.  Rep.  525;  Coleman's  Appeal,  62 
Pa.  252;  Ege  v.  Kille,  84  id.  333:  the 
last  two  cases  are  distinguished  and 
limited  in  Fulmer's  Appeal,  128  id. 
24,  15  Am.  St.  662,  18  Atl.  Rep.  493. 
If  the  mining  is  done  inadvertently 
or  under  a  boi^a  fide  belief  of  right 
the  damages  are  the  fair  value  of 
the  mineral  as  if  tiie  mine  had  been 
purchased.  Wood  v.  Morewood,  3 
Q.  B.  440,  note;  Hilton  v.  Woods.  L. 
R.  4  Eq.  433;  Forsyth  v.  Wells,  41  Pa. 
291.  80  Am.  Dec.  617.  In  an  action 
between  tenants  in  common,  plaint- 
iff being  out  of,  and  defendant  in, 
possession,  the  damages  for  working 
an  opened  and  developed  mine  are 
the  fair  marketable  value  of  the 
mineral  in  place  —  the  royalty  due 
for  the  privilege  of  removing  and 
manufacturing  it  in  view  of  all  the 
special  circumstances.  Fulmer's  Ap- 
peal, supra;  Neel's  Appeal,  3  Penny. 
(Pa.)  66. 


300  COMPENSATION.  [§   103. 

allowing  the  owner  to  retake  his  property  by  his  own  act  or 
by  the  legal  process  of  replevin  if  it  still  exists  and  can  be 
found.  Certain  changes  made  in  it  or  its  annexation  to  some- 
thing else  which  the  law  regards  as  the  principal,  as  to  certain 
wrong-doers  at  least,  have  been  accepted  as  putting  an  end  to 
the  owner's  right  to  retake  the  property  though  it  may  in  fact 
exist,  or  what  was  obtained  from  or  for  it  is  still  in  the  hands 
of  the  wrong-doer  and  ascertainable  by  testimony.  There  is  no 
more  necessity  for  severe  consequences  to  discourage  trespass 
or  tortious  conversion  of  propert}'  which  the  wrong-doer  im- 
proves than  where  he  destroys  it  or  retains  it  in  the  same  con- 
dition. The  owner  is  entitled  to  no  greater  measure  of  repa- 
ration in  the  one  case  than  in  the  other.  The  wrong-doer  is  no 
more  culpable  when  he  improves  the  property  than  when  he 
does  not.  Therefore,  since  there  is  a  recognized  though  in- 
definite limit  to  the  owner's  right  to  reclaim  his  property  with 
any  accession,  and  this  limit  is  short  of  the  ultimate  point  to 
which  testimony  would  enable  him  to  trace  it,  there  is  no 
more  violation  of  the  fundamental  right  of  property  by  fixing 
that  limit  at  the  point  of  the  first  change  than  at  any  subse- 
quent one.  But  when  the  redress  which  is  given  to  the  owner 
in  his  suit  is  the  value  or  damages  to  compensate  him  for  the 
wrong  of  depriving  him  of  his  property,  the  question  is  not 
one  of  allowing  him  to  retake  it,  but  solely  of  compensation 
for  the  loss  of  it.  What  is  due  compensation  in  such  a  case  is 
to  be  ascertained  on  the  same  principles  as  in  all  other  cases: 
the  injured  party  is  to  be  made  good  for  the  loss  he  has  sus- 
tained. If  his  corn  has  been  taken  he  is  to  be  compensated 
for  corn;  he  is  no  more  entitled  to  have  its  value  estimated  by 
the  amount  of  whisky  which  has  been,  than  by  the  amount  of 
whisky  that  can  be,  made  from  it,  with  no  deduction  for  the 
manufacture,  or  than  the  amount  the  defendant  has  subse- 
[171]  quently  sold  it  for  in  consequence  of  the  general  appre- 
ciation of  the  commodity.^ 

1  Railroad  Co.  v.  Hutchins,  37  Ohio  judgment.     He  says:  "The  question 

St.  282,  294  is  not,  as  it  lias  been  sometimes  art- 

The  language  of  Bronson,  C.  J.,  in  fully  put,  whether  the  common  law 

the  reverred  case  in  New  York  (Sils-  will  allow  the  owner  to  be  unjustly 

bury  V.  McCoon,  4  Denio,  336,  337 1,  is  dej^rived  of  his  property,  or  will  give 

replete   with  good  sense  and  sound  encouragement    to    a    wilful    tres- 


f 


§  104.] 


ELEMENTS    OF   DAMAGE. 


301 


§  lOi.  Distinetious  in   the   matter   of   proof.     In   [172] 

cases  of  tort  the  principles  governing  the  measurement  oi 
compensation  are  not,  as  a  general  thing,  different  from  those 
which  apply  in  actions  upon  contract  if  the  tort  be  not  wilful ; 
there  are,  as  we  have  just  seen,  some  exceptions;  and  in  cer- 
tain cases  within  the  influence  of  considerations  mcntionetl  in 
a  preceding  section,^  where  the  injury  is  of  such  a  nature  or 
committed  under  such  circumstances  that  the  damaires,  or 
some  part  of  them,  cannot  be  ascertained  by  any  definite  or 
certain  proof,  the  investigation  is  conducted  by  such  rules  in 
respect  to  the  quantity,  quality  and  burden  of  proof  that  the 
injured  party  may  suffer  no  irreparable  loss  from  the  stealth, 
secrecy  or  complexity  of  the  wrong.  The  purpose  of  the  law 
is  thus  facilitated.  Lord  Brougham  interrogatively  expressed 
it:^  "When  did  a  court  of  justice,  whether  administered  ac- 


passer.  It  will  do  neither.  But  in 
protecting  the  owner  and  punishing 
the  wrong-doer,  our  law  gives  such 
rules  as  are  capable  of  practical  ap- 
plication, and  are  best  calculated  to 
render  exact  justice  to  both  parties. 
Tiie  proper  inquiry  is,  in  what  man- 
ner, and  to  what  extent,  should  the 
trespasser  be  punished;  and  what 
should  be  the  kind  and  measure  of 
redress  to  the  injured  party.  A 
trespasser  who  takes  iron  ore  and 
converts  it  into  watch  springs  should 
not  be  hanged;  nor  should  he  lose 
the  whole  of  the  new  product. 
Either  punishment  would  be  too 
great.  Nor  should  the  owner  of  the 
ore  have  the  watch  springs;  for  it 
would  be  more  than  a  just  measure 
of  redress.  Our  law  has,  therefore, 
wisely  provided  other  remedies  and 
punishments.  The  owner  may  retake 
his  ore,  either  with  or  without  pro- 
cess, so  long  as  its  identity  remains; 
and  may  also  recover  damages  for 
the  tortious  taking.  Or,  without  re- 
possessing himself  of  the  property, 
he  may  have  an  action  of  trespass  in 
which  the  jury  will  not  fail  to  give 
the  proper  damages.  But  the  law 
will   not  allow  the  owner  to  wa:t 


until  the  ore  has  been  converted  into 
different  species  of  property  and  then 
seize  the  new  product,  either  with  or 
without  process.  Nor  is  the  value 
of  the  new  product  the  measure  of 
damages,  if  he  bring  an  action  of 
trespass  or  trover.  Although  there 
will  not  be  many  cases  where  the 
difference  between  the  value  of  the 
rude  material  and  the  new  product 
will  be  so  striking  as  in  the  case 
which  has  been  mentioned,  yet,  in 
almost  every  instance  where  the 
chattel  has  been  converted  into  a 
different  species  of  property,  the 
value  of  tiie  new  product  will  be 
more  than  the  trespasser  ought  to 
pay  or  the  owner  of  the  chattel  ought 
to  receive.  .  .  .  As  an  original  ques- 
tion. 1  think  the  owner  should  either 
reclaim  the  property  before  the  new 
possessor  has  greatly  increased  its 
value,  either  by  bestowing  his  labor 
and  skill  upon  it.  or  by  joining  it  to 
other  materials  of  his  own;  or  else 
that  he  should  be  restricted  to  a 
remedy  by  action  for  the  damages 
which  he  ha<  sustained." 

i§100. 

2  In  Docker  v.  Somes,  2  Myl.  &  K. 
674, 


302  COMPENSATION.  [§  105. 

cording  to  the  rules  of  equity  or  law,  ever  listen  to  a  wrong- 
doer's argument  to  stay  the  arm  of  justice  grounded  on  the 
steps  he  himself  had  successfully  taken  to  prevent  his  iniquity 
from  being  traced?  Rather,  let  me  ask,  when  did  any  wrong- 
doer ever  yet  possess  the  hardihood  to  plead  in  aid  of  his  es- 
cape from  justice  the  extreme  difficulties  he  had  contrived  to 
throw  in  the  way  of  pursuit  and  detection,  saying,  you  had 
better  not  make  the  attempt,  for  you  will  find  I  have  made  the 
search  very  troublesome.  The  answer  is,  'the  court  will  try.'  " 
The  intrinsic  nature  of  many  wrongs  precludes  any  estimate 
by  witnesses  of  damages  upon  the  items  which  a  jury  may 
consider,  such  as  bodily  or  mental  pain,  disfigurement  or  im- 
paired faculties;  but  the  jury  in  many  cases  involving  ele- 
ments of  this  nature  may  be  aided  by  proof  of  extrinsic  facts 
showing  the  status  of  the  injured  part3^  Either  a  tort  or  a 
breach  of  contract  which  destroys  or  injures  anything  of  a 
lawful  nature  belonging  to  another  is  a  wrong  and  injury  for 
which,  in  some  reasonable  and  practicable  manner,  the  law 
will  enable  the  injured  party  to  measure  and  recover  adequate 
compensation.  An}'-  such  act  which  directly  and  injuriously 
affects  an  established  business,  as  by  destruction  of  the  build- 
[173]  ing  in  which  it  is  conducted,  obstructing  the  approaches 
necessary  to  it,  fraudulently  diverting  custom  where  there 
was  a  duty  to  maintain  the  good  will,  by  enticing  away  serv- 
ants, or  by  slander  or  the  breach  of  any  agreement  of  which 
the  profits  of  a  business  are  the  consideration  or  inducement, 
may  require  the  estimate  of  a  very  uncertain  loss;  but  the 
party  whose  misconduct  or  default  has  necessitated  the  in- 
quir}''  cannot  object  to  it  on  the  ground  of  the  uncertainty, 
though  a  court  will,  in  such  a  case,  proceed  with  caution  and 
will  not  award  damages  upon  mere  conjecture.^ 

§  105.  Yaliie  of  property.  The  value  of  property  consti- 
tutes the  measure  or  an  element  of  damages  in  a  great  variety 
of  cases  both  of  tort  and  of  contract,  and  where  there  are  no 
such  aggravations  as  call  for  or  justify  exemplary  damages,  in 
actions  in  which  such  damages  are  recoverable,  the  value  is 
ascertained  and  adopted  as  the  measure  of  compensation  for 
being  deprived  of  the  property  the  same  in  actions  of  tort  as 

1  Shoemaker  V.  Acker,  IIG  Cal.  239,  48  Pac.  Rep.  63. 


§  l^'^-] 


ELEMENTS    OF    DAMAGE. 


303 


in  those  upon  contract.  In  both  cases  the  value  is  the  legal 
and  fixed  measure  of  damages,  and  there  is  no  discretion  with 
the  jury.  It  is  so  between  vendor  and  vendee  on  the  failure 
of  either  to  fulfill  a  contract  of  sale  and  purchase;  between 
emploj'er  and  employee  on  a  contract  for  the  manufacture  of 
specific  articles;  where  there  is  a  departure  from  instructions 
by  an  agent  or  a  loss  thr;mgh  his  negligence  or  misconduct, 
or  that  of  a  bailee  or  trustee,  as  well  as  where  there  is  a 
tortious  taking  or  conversion  by  one  standing  in  no  contract 
relation  to  the  owner.  And,  moreover,  the  value  is  fixed  in 
each  instance  on  similar  considerations  at  the  time  when,  by 
the  defendant's  fault,  the  loss  culminates.^    And  a  party  [174] 


1  Watson  V.  Loughran,  112  Ga.  837, 
38  S.  E.  Rep.  82;  Western  Union  Cold 
Storage  Ck).  v.  Ermeling,  73  111.  App. 
394;  Sanderson  v.  Read.  75  id.  190, 
quoting  the  text;  Bank  of  Montgom- 
ery V.  Reese,  26  Pa.  148;  Owen  v. 
Routh,  14  C.  B.  327:  Day  v.  Perkins, 
3  Sandf.  Ch.  359;  Shaw  v.  Holland,  15 
M.  &  W.  136;  Rand  v.  White  Mts.  R, 
Co.,  40  N.  H.  79;  Piukerton  v.  Man- 
chester &  L.  R.  Co..  42  N.  H.  424:  Bull 
V.  Douglass,  4  Munf.  303,  6  Am.  Dec. 
518:  Enders  v.  Board  of  Public  Works, 
1  Gratt.  364;  Dana  v.  Fiedler,  12  N. 
Y.  48,  62  Am.  Dec.  130;  Clement  & 
H.  Manuf.  Co.  v.  Meserole.  107  Mass. 
362;'Danforth  v.  Walker,  37  Vt.  239; 
Girard  v.  Taggart,  5  S.  &  R,  19,  5  S. 
&  R.  539,  9  Am.  Dec.  327;  Ganson  v. 
Madigan,  13  Wis.  67;  Hale  v.  Trout, 
35  Cal.  229;  Springer  v.  Berry,  47  Me. 
330;  Dustan  v.  Mc Andrew,  44  N.  Y. 
72;  Marshall  v.  Piles,  3  Bush,  249; 
Camp  V.  Hamlin,  55  Ga.  259;  Boze- 
man  v.  Rose.  40  Ala.  212;  Grand 
Tower  Co.  v.  Phillips,  23  Wall.  471; 
Underhill  v.  Galf,  48  111.  198;  Bick- 
nall  V.  Waterman,  5  R.  I.  43;  West  v. 
Pritchard,  19  Conn.  212;  Gregg  v. 
Fitzhugh.  36  Tex,  127;  Bush  v. 
Holmes,  53  Ma  417;  Rider  v.  Kelley, 
•SI  Vt.  268.  76  Am.  Dec.  176;  Kribs  v. 
Jones, 44  Md.  396;  Moorehead  v.  Hyde, 
38  Iowa,  382;  WJiitesett  v.  Forehand, 


79  N.  C.  230;  Bell  v.  Cunningham,  3 
Pet.  69:  Farwell  v.  Price,  30  Mo.  587; 
Schmertz  v.  Dwyer,  53  Pa.  335;  Hein- 
nemann  v.  Heard,  50  N.  Y.  27;  Han- 
cock V.  Gomez,  id.  668;  Parsons  v. 
Martin,  11  Gray.  Ill:  Scott  v.  Rogers, 

31  N.  Y.  076;  Stearin  e,  etc.  Co.  v. 
Heintzmann,  17  C.  B,  (N.  S.)  56; 
Hutchings  v.  Ladd,  16  Mich.  494; 
Suydam  v.  Jenkins,  3  Sandf.  641; 
Kennedy  v.  Whitwell,  4  Pick.  466; 
Adams  v.  Sullivan,  100  Ind.  8. 

In  Ingram  v.  Rankin,  47  Wis.  406, 

32  Am.  Rep.  762,  2  N.  W.  Rep.  755, 
the  court  say:  "The  rule  fixing  the 
measure  of  damages  in  actions  for 
breaches  of  contract  for  the  delivery 
of  chattels,  and  in  all  actions  for  the 
wrongful  and  unlawful  taking  of 
chattels,  whether  such  as  would 
formerly  have  been  denominated 
trespass  de  bonis  or  trover,  at  the 
value  of  the  chattels  at  the  time 
when  delivery  ought  to  have  been 
made,  or  at  the  taking  or  conversion, 
with  interest,  is  certainly  founded 
upon  principle.  It  harmonizes  with 
the  rule  which  restricts  the  plaintiff 
to  compensation  for  his  loss,  and  is 
as  ]ust  and  equitable  as  any  other 
general  rule  which  tiie  courts  have 
been  able  to  prescribe,  and  lias 
greatly  the  advantage  of  certainty 
over  all  others." 


304  COMPENSATION.  [§  105. 

who  is  entitled  to  recover  and  must  accept  its  value  in  place 
of  the  property  itself  should  always  be  allowed  interest  on 
that  value  from  the  date  at  which  the  property  was  lost  or 
destroyed  or  converted.  Whether  he  recovers  the  value  for 
the  failure  of  a  vendor  or  bailee  to  deliver,  or  by  reason  of 
the  destruction,  asportation  or  conversion  of  the  property  by 
a  wrong-doer,  interest  is  as  necessary  to  a  complete  indemnity 
as  the  value  itself.^  The  injured  party  ought  to  be  put  in  the 
same  condition,  so  far  as  money  can  do  it,  in  which  he  would 
have  been  if  the  contract  had  been  fulfilled  or  the  tort  had 
not  been  committed,  or  the  loss  had  been  instantly  repaired 
when  compensation  was  due.^ 

1  Watson  V.  Loughran,  112  Ga.  837,  v.  Pennsylvania  Central  R.  Co.,  49  N. 

88  S.  E,  Rep.  82;  Sanderson  v.  Read,  Y.  303;  Hamerv.  Hathaway,  38  Cal. 

75  111.  App.  190,  quoting  the  text;  117;  Arpin  v.  Burch,  68  Wis.  619,  32 

Chapman  v.  Chicago,  etc.  R  Co.,  26  N.  W.  Rep.  681. 

Wis.  295,  7  Am.  Rep.  81 ;  McCormick  2  Suydam  v.  Jenkins,  3  Sandf.  620. 


ENTIRETY    OF   DAMAGES.  305 


CHAPTER  lY. 

ENTIRETY  OF  CAUSES  OF  ACTION  AND  DAMAGES. 

Section  1. 
general  principles. 

§  106.  Cause  of  action  not  divisibla 

107.  Present  and  future  damages. 

108.  What  is  an  entire  demand? 

109.  Entire  demand  may  be  severed. 

110.  Contracts  to  do  several  tilings  successively  or  one  thing  continuously. 

111.  Items  of  account. 

112.  Continuing  obligations. 

113.  Damages  accruing  subsequent  to  the  action. 
114-116.  Damage  to  real  property.) 

117.  Contracts  of  indemnity. 

118.  Damage  to  property  and  injury  to  person  by  same  act. 

119.  What  is  not  a  double  remedy. 

120.  Prospective  damages. 

121.  Certainty  of  proof  of  future  damages. 

123.  Action  for  enticing  away  apprentice,  servant  or  son. 

123.  Future  damages  for  personal  injuries. 

124  Only  present  worth  of  future  damages  given. 

125.  Continuous  breach  of  contract  or  infraction  of  rights  not  an  entirety. 

126.  Continuance  of  wrong  not  presumed. 

127.  Necessity  of  successive  actions. 

Section  2. 

PARTIES  TO  sue  AND  BE  SUED, 

128.  Damages  to  parties  jointly  injured  entire. 

129.  Actions  under  statutes. 

130.  Must  be  recovered  by  person  in  whom  legal  interest  vested. 
181.  Not  joint  when  contract  apportions  legal  interest. 

132.  Implied  assumpsit  follows  the  consideration. 

133.  Effect  of  release  by  or  death  of  one  of  several  entitled  to  entire  dam- 

ages. 

134.  Misjoinder  of  plaintiffs,  when  a  fatal  objection. 

135.  Joinder  of  defendants;  effect  of  non-joinder  and  misjoinder. 

136.  How  joint  liability  extinguished  or  severed, 

137.  Principles  on  which  joint  right  or  liability  for  tort  determined. 

138.  Tortious  act  not  an  entirety  as  to  parties  injured. 

139.  General  and  special  owners. 

140-142.  Joint  and  several  liability  for  torts. 
Vol.  I  —  20 


306 


ENTIKETY    OF    DAMAGES. 


[§  106. 


Section  1. 


GENERAL    PKINCIPLES. 

[175]  §  106.  Cause  of  action  not  divisible.  A  cause  of  ac- 
tion and  the  damages  recoverable  therefor  are  an  entirety. 
The  party  injured  must  be  plaintiff,  and  must  demand  all  the 
damages  he  has  suffered  or  which  he  will  suffer  from  the  in- 
jury, grievance  or  cause  of  action  of  which  he  complains.  He 
cannot  split  a  cause  of  action  and  bring  successive  suits  for 
parts  because  he  may  not  be  able  at  first  to  prove  all  the  items 
of  the  demand,  or  because  all  the  damages  have  not  been  suf- 
fered. If  he  attempt  to  do  so  a  recovery  in  the  first  suit, 
though  for  less  than  his  whole  demand,  will  be  a  bar  to  a  sec- 
ond action.^     The  failure  of  a  party  to  recover  because  he  has 


Pierce  v.  Tennessee  Coal,  Iron  & 
R  Co.,  173  U.  S.  1,  19  Sup.  Ct.  Rep. 
335;  Trabing  v.  California  Naviga- 
tion &  Imp.  Co.,  121  Cal.  137,  53  Pac. 
Rep.  644;  Sloane  v.  Southern  Cali- 
fornia R.  Co.,  Ill  Cal.  685,  44  Pac. 
Rep.  320, 33  Lu  R.  A.  193;  Kapischki  v. 
Kocli,  180  111.  44,  54  N.  E.  Rep.  179; 
Teel  V.  Miles,  51  Neb.  542,  71  N.  W. 
Rep.  296;  Wadleigh  v.  Buckingham, 
80  Wis,  230,49  N.  W.  Rep.  745;  Wells 
V.  National  L.  Ass'n,  39  C.  C.  A.  476, 
99  Fed.  Rep.  222;  Alie  v,  Nadeau,  93 
Me.  282,  44  At!.  Rep.  891,  74  Am.  St. 
346;  Reynolds  v.  Jones,  63  Ark.  259, 
38  S.  W.  Rep.  151;  Thisler  v.  Miller, 
53  Kan.  515,  42  Am.  St.  302,  36  Pac, 
Rep.  1060;  Cockley  v.  Brucker,  54 
Ohio  St.  214,  44  N.  E.  Rep.  590;  Porter 
V.  Mack,  50  W.  Va.  581.  592,  40  S.  E. 
Rep.  459;  North  British  &  Mercantile 
Ins.  Co.  V,  Cohn,  17  Ohio  Ct.  Ct, 
185;  State  v.  Morrison,  60  Miss.  74; 
Walton  V.  Ruggles,  180  Mass.  24,  61 
N,  E.  Rep.  267;  Deering  v.  Johnson, 
86  Minn.  172,  90  N.  W.  Rep.  363; 
Macdougall  v.  Knight,  25  Q.  B.  Div. 
1;  Commerce  Exchange  Nat,  Bank 
V,  Blye.  123  N.  Y.  132,  25  N.  E.  Rep. 
208;  Bracken  v.  Atlantic  Trust  Co., 
167  N.  Y.  510,  60  N,  E.  Rep.  772;  Baird 
V.  United  States,  96  U.  S.  430;  Zirker 


V.  Hughes,  77  Cal,  235,  19  Pac.  Rep. 
235;  Colvin  v.  Corwin,  15  Wend.  557; 
Wagner  v.  Jacoby,  26  Mo,  532;  Smith 
V.  Jones,  15  Johns.  229;  Butler  v. 
Wright, -2  Wend.  369;  Cornell  v. 
Cook,  7  Cow.  310:  Ross  v.  Weber,  26 
111.  221:  Logan  v.  Caffrey,30  Pa.  196; 
Mason  v.  Alabama  Iron  Co.,  73  Ala. 
270;  Howard  College  v.  Turner,  71 
id.  429,  46  Am.  Rep.  326;  Richardson 
V.  Eagle  Machine  Works,  78  Ind.  422, 
41  Am,  Rep.  584;  Nortli  Vernon  v. 
Voegler,  103  Ind.  314,  2  N.  E.  Rep. 
821,  quoting  the  text;  Wichita  &  W. 
R.  Co.  V.  Beebe,  39  Kan.  465,  18  Pac. 
Rep.  502. 

A  statute  providing  that  "succes- 
sive actions  may  be  maintained  upon 
the  conti'act  or  transaction  when- 
ever, after  the  former  action,  a  new 
cause  of  action  has  arisen  thereon," 
does  not  apply  to  actions  for  addi- 
tional damages  happening  or  dis- 
covered because  of  some  particular 
breach  of  a  contract.  Russell  v.  Polk 
County  Abstract  Co.,  87  Iowa,  233, 
54  N.  W.  Rep.  212,  43  Am.  St,  381, 

Various  tests  have  been  suggested 
for  determining  whether  the  judg- 
ment recovered  in  one  action  is  a  bar 
to  a  subsequent  action.  "  The  princi- 
pal  consideration   is  whether   it  be 


§  IOC] 


GENEEAL   PKINCIPLES. 


301 


mistaken  his  remedy  does  not  preclude  him  from  asserting  his 
rights  in  a  proper  proceeding.  Thus,  the  failure  of  a  mortgagee 
of  chattels  to  recover  them  by  replevin  from  an  officer  by 
whom  they  were  seized  under  execution,  because  the  law  pro- 
vided a  different  remedy,  does  not  bar  a  proper  proceeding.' 
Nor  is  a  judgment  for  the  defendant  in  replevin,  because  of 
the  statute  of  limitations,  a  bar  to  an  action  in  trover  not  af- 
fected by  that  statute.'^  Where  a  sheriff  recovers  the  value  of 
goods  taken  from  him  in  replevin,  because  it  was  not  the 
proper  remedy,  the  owner  may  recover  their  value  in  trover.' 
If  one  fails  to  replevy  a  chattel  because  the  defendant  is  only 
a  tenant  in  common  that  does  not  affect  his  title.''  A  judg- 
ment against  the  plaintiff  in  replevin,  rendered  because  he 
failed  to  prove  a  demand,  does  not  bar  a  subsequent  action  of 
that  kind.^  The  principle  forbidding  the  splitting  of  causes  of 
action  does  not  prevent  one  whose  property  is  taken  by  a  sin- 
gle trespass  from  maintaining  replevin  for  so  much  of  it  as 
was  his,  and  trover  for  the  remainder,  of  which  he  was  a  joint 
owner.* 


precisely  the  same  cause  of  action 
in  both,  appearing  by  proper  aver- 
ments in  a  plea,  or  by  proper  facts 
stated  in  a  special  verdict  or  a  spe- 
cial case.  And  one  great  criterion 
of  this  identity  is  that  the  same  evi- 
dence will  maintain  both  actions." 
Kitchen  v.  Campbell,  3  W.  Bl.  837; 
Martin  v.  Kennedy.  3  B.  &  P.  69,  71; 
Brunsden  v.  Humphrey,  14:  Q.  B. 
Div.  141. 

"The  question  is  not  whether  the 
sum  demanded  might  have  been  re- 
covered in  the  former  action, the  only 
inquiry  is  whether  tiie  same  cause 
of  action  lias  been  litigated  and  con- 
sidered in  the  former  action."  Sed- 
don  V.  Tutop,  6  T.  R.  607. 

'•  Though  a  declaration  contain 
counts  under  which  the  plaintiff's 
whole  claim  might  have  been  recov- 
ered, yet  if  no  attempt  was  made  to 
give  evidence  upon  some  of  the 
claims,  they  might  be  recovered  in 
another  action."  Thorpe  v.  Cooper, 
5  Bing.  129. 


"  It  is  evident,  therefore,  that  the 
application  of  the  rule  depends,  not 
upon  any  technical  consideration  of 
the  identity  of  the  forms  of  action, 
but  upon  matter  of  substanca" 
Brunsden  v.  Humphrey,  14  Q.  B. 
Div.  141. 

"  It  is  not  a  test  of  the  right  of  a 
plaintiff  to  maintain  separate  actions 
that  all  the  claims  miglit  have  been 
prosecuted  in  a  single  action.'"  Perry 
V.  Dickerson,  85  N.  Y.  345.  350,  39 
Am.  Rep.  663. 

If  different  allegations  are  required 
in  the  pleading  and  different  evi- 
dence on  the  hearing,  the  cause  of 
action  is  not  split.  Stark  v.  Starr,  94 
U.  S.  477,  485. 

1  Conn  V.  Bernheimer,  67  Miss.  498, 
7  So.  Rep.  345. 

2  Johnson  v.  White,  31  Miss.  584. 
8  Kittredge  v.  Holt,  58  N.  H.  191. 

4  Gaar  v.  Hurd,  93  111.  315. 

5  Roberts  v.  Norris,  67  Ind.  386. 

6  Huffman  v.  Knight,  36  Ore.  581, 
60  Pac.  Rep.  307. 


308  ENTIRETY    OF   DAMAGES.  [§  107. 

§  107.  Present  and  fntnre  damages.  If  one  party  to  a 
contract  prevents  the  other  from  performing  and  thereby  earn- 
ing wages  or  realizing  profits,  the  latter  in  an  action  brought 
[176]  at  once  after  the  breach  may  recover  damages  which 
will  compensate  him  for  his  loss.^  Although  by  performance 
the  benefits  of  the  contract  would  accrue  at  a  future  time,  yet, 
upon  a  breach  by  which  such  future  advantages  will  be  pre- 
vented, the  injured  party  maj'^  immediateh''  thereafter  recover 
damages  equivalent  to  the  loss,  so  far  as  he  can  prove  it.  And 
to  facilitate  the  proof  the  court  will  not  oblige  him  to  antici- 
pate the  future  state  of  the  market,  but  will  give  the  plaintiff 
the  benefit  of  market  rates  at  the  time  of  the  breach.  Thus, 
in  the  leading  case  in  New  York  ^  it  was  argued  that  inasmuch 
as  the  furnishing  of  the  marble  would  run  through  a  period  of 
five  years,  of  which  only  about  one  year  and  a  half  had  ex- 
pired at  the  time  of  the  breach,  the  benefits  which  the  con- 
tractor might  have  realized  from  the  execution  of  the  contract 
must  be  speculative  and  conjectural,  the  court  and  jury  having 
no  certain  data  upon  which  to  make  the  estimate.  The  court 
say:  "Where  the  contract  .  .  .  is  broken  before  the  ar- 
rival of  the  time  for  full  performance,  and  the  opposite  party 
elects  to  consider  it  in  that  light,  the  market  price  on  the  day 
of  the  breach  is  to  govern  in  the  assessment  of  damages.  In 
other  words,  the  damages  are  to  be  settled  and  ascertained 
according  to  the  existing  state  of  the  market  at  the  time 
the  cause  of  action  arose  and  not  at  the  time  fixed  for  full 
performance."  ^  But  the  parties  are  entitled  to  the  benefit 
of  any  facts  transpiring  subsequently  to  the  bringing  of  the 

1  Standard   Oil   Co.  v.  Denton,  24  v.  Hemenway,  64Me.  373;  Richnaond 

Ky.  L.  Rep.  906,  70  S.  W.  Rep.  282,  v.  Dubuque,  etc.  R.  Co.,  40  Iowa,  264; 

quoting  text,  Tippin  v.  Ward,  5  Ore.  450;  Howard 

^  Masterton  v.  Mayor,  7  Hill,  61,  71.  v.  Daly,  61  N.  Y.  363,  19  Am.  Rep. 

3  Wolcott  V.  Mount,  36  N.  J.  L.  262,  285;  Gifford  v.  Waters,  67  N.  Y.  80; 

13  Am.  Rep.  438;  McAndrews  v.  Tip-  Crabtree  v.  Hagenbaugh,  25  111.  233, 

pett,  39  N.  J.  L.  105;  Burrell  v.  New  79  Am.    Dec.    324;    James   v.  Allen 

York  &  S.  Solar  Salt  Co.,  14  Mich.  County,  44  Ohio  St.  226,  6  N.  E.  Rep. 

34;  Roper  v.  Johnson,  K   R   8  C.  P.  246;  Eastern  Tennessee,  etc.  R.  Co. 

167;  Frost  v.  Knight.  L.  R.  5  Ex.  325;  v.  Siaub,  7  Lea,  397;  Litchenstein  v. 

Sutherland  v.  Wyer,  67  Me.  64;  Du-  Brooks,  75  Tex.   196,  12  S.  W.  Rep. 

gan  V.  Anderson,  36  Md.  567,  11  Am,  975;  Kahn  v.  Kahn,  24  Neb.  209.  'lO 

Rep.  509;  Schell  v.  Plumb,  55  N.  Y.  N.   W.    Rep.    135.      See    McEvoy  v. 

592;  Sibley  v.  Rider,  54  Me.  463;  Fales  Bock,  37  Minn.  402,  34  N.  W.  Rep.  740. 


§  108.]  GENERAL    PEINCIPLES.  309 

action  which  show  more  clearly  the  gains  prevented  by  the 
breach  of  contract  complained  of,  or  the  damages  sustained 
from  such  a  cause  of  action,  or  any  other,  the  injurious  effects 
of  which  extend  into  the  future.  This  point  will  receive  fur- 
ther elucidation  when  we  come  to  speak  of  prospective  damages. 
§  108.  AVhat  is  an  entire  demand  ?  The  reader's  attention 
is  now  directed  to  what  constitutes  an  entire  demand  or  cause 
of  action.  Whether  a  contract  be  single  and  entire  or  [177] 
apportionable,  if  there  is  a  total  abandonment  or  breach  by 
one  party  the  other  has  a  single  cause  of  action  upon  the  en- 
tire contract  if  he  think  proper  to  act  upon  the  breach  as  a 
total  one;  the  better  opinion  is  that  he  is  obliged  to  do  so.  A 
party  has  a  right  to  break  his  contract  on  condition  of  being 
liable  for  the  damages  which  will  accrue  therefrom  at  the 
time  he  elects  to  do  so.  And  it  is  the  duty  of  the  other  party 
Avhen  notified  thereof  to  exert  himself  to  make  the  damaires 
as  light  as  possible.^  What  default  a  party  may  treat  as  a 
total  breach  of  a  contract  is  not  always  an  easy  question,  and 
its  solution  should  be  looked  for  in  works  upon  contracts  rather 
than  damages,  for  it  depends  upon  interpretation.  Like  most 
other  questions  of  construction  it  rests  upon  the  intention  of 
the  parties  and  must  be  discovered  in  each  case  by  considering 
the  language  and  the  subject-matter  of  the  contract.^  If  it  is 
single  and  entire,  or  to  the  extent  that  it  is  so,  it  can  be  the 
subject  of  but  one  action  against  the  defaulting  party  and  the 
plaintiff  must  have  performed  all  precedent  conditions  to 
place  the  other  in  default.*     After  the  renunciation  of  a  con- 

^Kalkhofl  V.  Nelson,  60  Minn.  284,  and  entire  the  contract  is  so  though 

Q2  N.  W.  Rep.  332;  Parker  v.   Rus-  the  subject  of  it  consists  of  two  or 

sell,  133  Mass.  74;  Dillon  v.  Anderson,  more  distinct  and  independent  items. 

43  N.  Y.  231;  Hartland  v.  General  Cockley  v.  Brucker,  54  Ohio  St.  214, 

Exchange  Bank,  14  L.  T.  (N.  S.)  863;  44  N.  R  Rep.  590;    Miner  v.  Bradley, 

Willoughby  v.  Thomas,  24  Gratt  522.  22  Pick.  457;  Fish  v.  FoUey,  6  Hill,  54. 

2Pars.  on  Cont.  517.  Ud..  pp.  517-527;  Shinn  v.  Bodine, 

Demands     resting    on    contracts  60  Pa.  182,  100  Am.  Dec.  5C0;  With- 

with  separate    parties,   though  the  ers  v.   Reynolds.  2   B.   &   Ad.   882; 

party  liable  for  part  of  them  has  as-  Shaw  v.  Turnpike  Co.,  2  P.  &  W.  454; 

j^umed  liability  for  the  others,    are  Davis  v.  Maxwell,  12  Met  286;  Harris 

not    entire.      Gottlieb   v.    Fred.   W.  v.  Ligget,  1    W.  &    S.  301;  Hopf  v. 

Wolf  Co.,  75  Md.   126,  23  Atl.  Rep.  Meyers,  42  Barb.  270;  Crips  v.  Tal- 

198.  vande,  4  McCord,  20;  Herriter  v.  Por- 

\V/ien  the  consideration  is  single  ter,  23  Cal.  385;  Brown  v.  Smith,  13 


310 


ENTIRETY    OF    DAMAGES. 


[§  109- 


tinuing  agreement  by  one  of  the  parties  the  other  may  con- 
sider himself  absolved  from  its  obligations  and  may  sue  for 
damages;  his  recovery  will  be  based  on  what  he  would  have 
lost  by  the  continued  breach  down  to  such  time  as  the  con- 
tract would  be  fully  performed,  less  any  benefit  resulting  to 
the  other  party  b}''  advantages  the  plaintiff  may  reasonably 
enjoy  by  reason  of  his  release  from  performance.  The  latter 
may  defer  his  action  for  the  breach  until  the  expiration  of  the 
time  for  the  full  performance  of  the  contract.' 

g  109.  Entire  demand  may  be  severed.  A  contract  origi- 
nally entire  may  be  severed  afterwards  by  the  parties  so  as  ta 
[178]  give  a  right  of  action  for  a  part  performance.^  This 
was  the  case  where  there  was  an  entire  contract  for  the  deliv- 
ery of  logs,  and  on  delivery  of  a  part  the  purchaser  paid  there- 
for partly  in  money  and  gave  notes  for  the  residue  delivered. 


Cush.  366;  Messiok  v.  Dawson,  2 
Harr.  50;  Folsom  v.  Clemence,  119 
Mass.  473;  Brannenburg  v.  Indian- 
apolis, etc.  R.  Co.,  13  Ind.  103,  74  Am. 
Dec.  250;  Hutchinson  v.  Wetniorv^,  2 
Cal.  310,  56  Am.  Dec.  327;  Camp  v. 
Morgan,  21  111.  255;  Morgan  v.  Mc- 
Kee,  77Pa.  228;  Cassel berry  v.  For- 
quer,  27  111.  170;  Larkin  v.  Buck,  11 
Ohio  St.  561;  Hall  v.  Clagett,  2  Md. 
Ch.  151;  White  v.  Brown,  2  Jones, 
403;  Wagner  v.  Jacoby,  26  Mo.  532; 
Walter  v.  Richardson,  11  Rich.  466; 
Quigley  v.  De  Haas,  82  Pa.  267; 
Sweeny  v.  Daugherty,  23  Iowa,  291; 
Stevens  v.  Lockwood,  13  Wend.  644; 
Blakeney  v.  Ferguson,  18  Ark.  347; 
Pinney  v.  Barnes,  17  Conn.  420;  Far- 
rington  v.  Payne,  15  Johns.  432; 
Phillips  V.  Berick,  16  Jolins,  136,  8 
Am.  Dec.  299;  Cunningham  v.  Jones, 
20  N.  Y.  486;  James  v.  Lawrence,  7 
Harr.  &  J.  73;  Shaflfer  v.  Lee,  8  Barb. 
412:  Campbell  v.  Hatchett,  55  Ala. 
548;  Parker  V.  Russell,  133  Mass.  74; 
Norris  v.  Harris,  15  Cal.  226,  256,  76 
Am.  Dec.  480;  McGrath  v.  Cannon, 
55  Minn.  457,  57  N.  W.  Rep.  150;  Rey- 
nolds V.  Jones,  63  Ark.  259,  38  S.  W. 
Rep.  151. 


1  Roehm  v.  Horst,  178  U.  S.  1,  20  Sup. 
Ct.  Rep.  780  (1899),  following  the 
rule  of  Hochster  v.  De  la  Tour,  2  El. 
&  Bl.  678.  Contra,  Clark  v.  National 
Benefit  &  Casualty  Co,  67  Fed.  Rep. 
222  (1895);  Daniels  v.  Newton,  44 
Mass.  530,  19  Am,  Rep.  384.  The 
argument  in  the  latter  case  is  said  to 
have  been  well  and  sufficiently  an- 
swered by  Judge  Lowell  in  Dingley 
V.  Oler,  11  Fed.  Rep.  372,  where  the 
question  is  examined  and  cases  cited. 
To  the  same  effect  as  Roehm  v.  Horst, 
supra,  are  several  cases  in  the  fed- 
eral courts  earlier  than  the  decision 
therein :  Dingley  v.  Oler,  supra;  Foss- 
Schneider  Brewing  Co.  v.  Bullock,  8 
C.  C.  A.  14.59  Fed.  Rep.  83;  Edward 
Hines  Lumber  Co.  v.  Alley,  19  C.  C. 
A.  599,  73  Fed.  Rep.  603;  Horst  v. 
Roehm,  84  Fed.  Rep.  565.  Speirs  v. 
Union  Drop  Forge  Co..  180  Mass.  87, 
91,  61  N.  E.  Rep.  825,  is  in  harmony 
with  Roehm  v.  Horst. 

2  0'Beirne  v.  Lloyd,  43  N.  Y.  251; 
Lee  V.  Kendall,  56  Hun,  610,  11  N.  Y. 
Supp.  131;  Fourth  Nat,  Bank  v.  Noo- 
nan,  88  Mo.  372:  Ryallv.  Prince,  82 
Ala.  264.  2  So.  Rep.  319. 


§  110.]  GENEEAL   PKIN0IPLE8.  311 

It  was  held  that  the  notes  could  be  collected  notwithstanding 
any  default  in  the  deliver}^  of  other  logs  to  fulfill  the  contract, 
but  subject  to  recoupment  of  the  damages  for  such  breach.^ 
Under  an  agreement  that  if  the  creditor  would  forbear  suinir 
upon  the  whole  of  his  demand  and  sue  upon  a  part  of  it  only, 
and  in  case  of  a  recovery  upon  that  part  the  debtor  would  pay 
the  balance,  it  was  held  that  such  agreement  was  a  waiver  of 
the  rule  in  his  favor  concerning  the  division  of  actions,  and 
that  the  recovery  upon  the  part  sued  upon  was  not  a  bar  to  an 
action  upon  the  balance  of  the  claim.^  So  a  quantum  meruit 
claim  may  arise  for  a  part  performance  on  account  of  the  ben- 
efit derived  from  it.'  A  city  splits  up  a  demand  against  it  by 
drawing  warrants  on  account  of  it  in  different  amounts,  and 
cannot  defend  an  action  on  one  of  them  on  the  ground  that  it 
had  previously  been  sued  on  another.^  "  In  such  cases  the 
rights  of  the  plaintiff  as  assignee  serve  as  the  consideration  for 
the  new  contract,  which  becomes  the  ground  of  the  action. 
The  action  is  on  the  defendant's  promise  to  the  plaintiff,  and 
not  upon  the  assignment  or  upon  any  right  growing  out  of  it."* 
While  a  general  assignment  for  the  benefit  of  creditors  does 
not  usually  effect  a  rescission  or  termination  of  an  executory 
contract  of  the  assignor,^  it  may  be  otherwise  where  the  sub- 
ject-matter of  the  contract  establishes  a  relation  of  confidence 
between  the  parties,  and  the  exercise  of  peculiar  skill  or  knowl- 
edge is  required.  In  such  a  case  the  plaintiff  should  not  be 
compensated  for  what  he  cannot  perform.'' 

§  110.  Contracts  to  do  several  things  successively  or  one 
thing  continuously.  A  contract  to  do  several  things  at  dif- 
ferent times  is  divisible  in  its  nature,  and  an  action  will  lie 

1  Fessler  v.  Love,  43  Pa.  313.  *  Little  v.  Portland,  supra;  Getch- 

'-i Mills    V.   Garrison,    3    Keyes,  40;  ell  v.  Maney,  69  Me.  442;  James    v. 

Mandeville  v.  Welch,  5  Wheat.  277,  Newton,  143  Mass.  36G,  56  Am.  Rep. 

288;  Secor  v.  Sturgis,  16  N.  Y.  548.  692,  8  N.  E.  Rep.  122. 

See  Bliss  v.  New  York  Central,  etc  ''New  England  Iron  Co.  v.  Gilbert 

R,  Co..  160  Mass.  447,  36  N.  E.  Rep.  65.  E.  R.  Co.,  91  N.  Y.  153;  Vandegrift  v. 

» See  §90.  Cowles  Engineering   Co.,  161  N.  Y. 

<  Little  V.  Portland,  26  Ore.  235,  37  435,  55  N.  R  Rep.  941,  48  L.  R  A. 

Pacs.  Rep.  911;  Grain  v.  Aldrich,  38  685. 

Cal.  514,  99  Am.   Dec.  423;  National  "'  United  Press  v.  Abell  Co.,  79  App. 

Exchange  Bank  v.  McLoon,  73  Ma  Div.  550,  80  N.  Y.  Supp.  454,  461. 
498,  40  Am.  Rep.  38a 


312 


ENTIRETY   OF   DAMAGES. 


[§  110. 


upon  each  default.^  The  defendant,  being  the  keeper  of  an  office 
for  procuring  crews  of  vessels,  in  consideration  of  the  plaintiff's 
agreement  to  furnish  such  supplies  and  advances  as  might  be 
necessary  in  the  business,  promised  to  pay  the  latter  a  certain 
sum  for  each  man  shipped  and  to  repay  the  advances;  the  de- 
fendant's undertaking  was  several.^  But  when  a  party  has  dis- 
tinct demands  or  existing  causes  of  action  growing  out  of  the 
same  contract  or  resting  in  matter  of  account,  which  may  be 
joined  and  sued  for  in  the  same  action,  they  must  be  joined ;  they 
constitute  an  entire  cause  of  action  or  demand;  and  if  they  be 
split  up  and  a  suit  brought  for  a  part  only,  and  subsequently  a 
second  suit  for  the  residue,  the  first  action,  if  determined  on  the 
merits,  will  be  a  bar.^  This  is  not  to  be  carried  so  far  as  to  bar 
an  action  on  the  contract  because  judgment  has  been  obtained 
against  the  party  who  failed  to  perform  for  a  tort  resulting 
from  the  breach.  Claims  for  a  wrongful  dismissal  from  em- 
ployment and  to  recover  wages  earned  prior  thereto  are  sep- 
arate and  distinct  causes  of  action.  The  right  to  wages  is  the 
result  of  the  contract;  the  right  to  damages  grows  out  of  the 
wrongful  termination  of  it.  The  amount  due  under  the  con- 
tract was  definite  or  ascertainable  at  the  time  of  its  breach,  and 
was  then  payable;  the  damages  were  incapable  of  exact  ascer- 
tainment until  the  period  covered  by  the  contract  expired,  as 
they  might  be  mitigated  by  the  acts  of  the  plaintiff.'*  But  if 
a  servant  performs  no  laborafter  his  discharge  he  can  maintain 
but  one  action  for  the  breach  of  the  contract.*  "Where  an  em- 
ployee who  was  permanently  disabled  in  the  service  of  his  em- 


1  Badger  v.  Titcomb,  15  Pick,  409; 
Easier  v.  Nichols,  8  lud.  260;  Terry 
V.  Beatrice  Starch  Co.,  43  Neb.  866, 
63  N.  W.  Rep.  255;  Coleman  v.  Hud- 
son, 2  Sneed,  465. 

'^  Badger  v.  Titcomb,  supra. 

3  Bendernagle  v.  Cocks,  19  Wend. 
207;  James  v.  Lawrence,  7  Harr.  & 
J.  73;  Atwood  v.  Norton,  27  Barb. 
638;  Cassel berry  v.  Forquer,  27  111. 
170;  Geiser  Threshing  Machine  Co.  v. 
Farmer,  37  Minn.  438,  8  N.  W.  Rep. 
141;  Bowe  v.  Minnesota  Milk  Co.,  44 
Minn.  460.  47  N.  W.  Rep.  151;  Hodge 
V.  Shaw,  85  Iowa.  137.  52  N.  W.  Rep. 


8,  29  Am.  St.  290;  Gilbert  v.  Boak 
Fish  Co.,  86  Minn.  365.  90  N.  W.  Rep. 
767;  Olmstead  v.  Bach.  78  Md.  132, 
37  Atl.  Rep.  501,  33  L.  R.  A. 74, 44  Am. 
St.  373.  Compare  Williams  v.  Luck- 
ett,  77  Miss.  394,  26  So.  Rep.  967. 

*  Perry  v.  Dickerson,  85  N.  Y.  345, 
39  Am.  Rep.  663. 

5  Waldron  v.  Hendrickson,  40  App. 
Div.  7,  57  N.  Y.  Supp.  561;  Barnes  v. 
Coal  Co.,  101  Tenn.  354,  47  S.  W.  Rep. 
498;  Olmstead  v.  Bach,  78  Md.  142, 
44  Am.  St.  273,  27  Atl.  Rep.  501, 
23  L.  R.  A.  74;  Wright  v.  Turner,  1 
Stew.  29,  18  Am.  Dec.  35. 


§  110.]  GENERAL   PRINCIPLES.  313 

ployer  compromised  his  claim  for  damages  in  consideration  of 
an  agreement  that  he  should  receive  certain  wages  monthly 
and  be  furnished  with  specified  supplies  so  long  as  his  ability 
to  work  should  continue,  and  the  plaintiff,  on  his  part,  was  to 
do  for  the  defendant  such  work  as  he  was  able  to  do  and  re- 
lease the  defendant  from  liability  for  damages,  and  the  defend- 
ant denied  its  obligation  to  pay  the  stipulated  wages  and  en- 
tirely abandoned  the  contract,  the  plaintiff  was  entitled  to  con- 
sider the  contract  as  entirely  broken,  and  recover  all  that  was 
due  him  when  the  action  was  brought  and  all  that  mio-lit  be- 
come  due  under  it,  which  would  be  its  value  to  him  at  the  time 
of  the  breach.^  A  contract  to  issue  or  procure  the  issuance  of 
an  annual  railroad  pass  to  be  renewed  from  year  to  year  during 
the  pleasure  of  the  promisee  is  divisible.^ 

In  an  action  on  a  lease  which  contained  distinct  cove-  [179] 
nants  to  pay  for  manure  and  for  work  and  labor,  the  defend- 
ant pleaded  in  abatement  that  a  prior  action  brought  for  the 
breach  of  certain  of  the  covenants  was  still  pending.  The  plaint- 
iff replied  that  the  covenants  upon  which  that  suit  was  brought 
were  distinct  and  different  from  those  involved  in  the  pending 
action.  The  defendant's  demurrer  to  this  replication  was  sus- 
tained and  he  obtained  judgment.^  It  is  observed  of  this  ruling 
tliat  if  it  is  subject  to  any  criticism  it  is  because  of  its  applica- 
tion to  the  facts  involved.  It  may  be  inferred  from  the  opin- 
ion of  Judge  Cowen  that  all  the  covenants  in  the  lease  were  for 
the  payment  of  different  amounts  of  money  by  the  lessee  to 
the  lessor;  and  he  seemed  to  regard  it  like  the  case  of  a  con- 
tract to  pay  money  in  instalments,  and  in  this  way  reached 
the  conclusion  that  the  different  breaches  constituted  a  sino:le 
■cause  of  action.*  But  it  is  now  established  in  JSTew  York  that 
the  breach  of  an  agreement  to  pay  money  in  instalments  is  not 

1  Pierce  v.  Tennessee  Coal,  Iron  &  207.   See  Badger  v.  Titcomb,  15  Pick. 

R  Co.,  173  U.  S  1,   19  Sup.   Ct.   Rep.  409;  Mcintosh  v.  Lawn,  47  Barb.  550. 

335;  Eastern  Tennessee,  etc.  R.  Co.  V.  The   recovery  of  past-due  instal- 

Staub.  7  Lea,  397.  ments  of  rent  which  accrued  under 

2Kans;is,  etc.   R    Co.   v.  Curry,  6  a  lease  for  a  term  at  a  fixed  monthly 

Kan.    App.   561,   51   Pac.   Rep.    576;  rental  does  not  bar  another  action 

Curry  v.  Kansas,  etc.  R.  Co.,  58  Kan.  for  instalments  which  became  due 

•6,  48  Pac.  Rep.  579.  subsequently.     Barnes  v.  Coal   Co., 

3  Bendernagle  v.  Cocks,  19  Wend.  101  Tenn.  354,  47  S.  W.  Rep.  498. 

•*  Perry  v.  Dickerson,  supra. 


314  ENTIRETY    OF    DAMAGES.  [§  110. 

a  breach  of  the  entire  contract,  and  will  not  permit  a  recovery 
of  all  the  damages  in  advance.^  "  There  seems  to  be  a  distinc- 
tion, whether  well  grounded  in  principle  or  not,  between  a  con- 
tract for  the  payment  of  money  in  future  instalments  and  a 
contract  for  the  delivery  of  goods  in  future  instalments ^  as 
well  as  a  contract  for  future  employment  and  service.'"*  A 
contract  which,  for  an  entire  consideration,  stipulates  for  the 
performance  of  several  acts  for  the  benefit  of  the  same  person 
at  the  same  time  is  entire.* 

[180]  The  principle  is  settled  beyond  dispute  that  a  judg- 
ment concludes  the  rights  of  the  parties  in  respect  to  the  cause 
of  action  stated  in  the  pleadings  on  which  it  is  rendered, 
whether  the  suit  embraces  the  whole  or  only  a  part  of  the 
demand  constituting  the  cause  of  action.  It  results  from  this 
principle,  and  the  rule  is  fully  established,  that  an  entire  claim 
[181]  arising  either  upon  a  contract  or  from  a  wrong  cannot 
be  divided  and  made  the  subject  of  several  suits  ;^  and  if  sev- 
eral suits  be  brought  for  different  parts  of  such  a  claim  the 
pendency  of  the  first  may  be  pleaded  in  abatement  of  the 
others,  and  a  judgment  upon  the  merits  of  either  will  be  avail- 
able as  a  bar  in  the  others.  But  it  is  entire  claims  only  which 
[182]  cannot  be  divided  within  this  rule:  those  which  are  single 
and  indivisible  in  their  nature.  The  cause  of  action  in  the  dif- 
ferent suits  must  be  the  same.  The  rule  does  not  prevent,  nor 
is  there  any  principle  which  precludes,  the  prosecution  of  sev- 
eral actions  upon  distinct  causes  of  action.  The  holder  of  a 
[183]  number  of  promissory  notes  may  maintain  an  action  on 
each;  a  party  upon  whose  person  or  property  successive  and 
distinct  trespasses  have  been  committed  may  bring  a  separate 
suit  for  every  trespass,  and  all  demands  of  whatever  nature  aris- 
ing out  of  independent  transactions  may  be  sued  upon  sepa- 
rately.    It  makes  no  difference  that  the  causes  of  action  might 

1  Wharton  v.  Winch,  140  N.  Y.  287,  390,  54  N.  Y.  Supp.  773  (contract  for 
35  N.  E.  Rep.  589;  McCready  v.  Lin-  publication  of  advertisement  in  des- 
denborn,  173  N.  Y.  400,  408,  65  N.  E.  ignated  newspapers  at  stated  inter- 
Rep.  208.  vals  for  a  gross  sum);  Indianapolis, 

2  Nichols  V,  Scranton  Steel  Co.,  137  etc.  R.  Co.  v.  Koons,  105  Ind.  507,  5 
N.  Y.  471,  33  N.  E.  Rep.  561.  N.  E.  Rep.  549. 

3  Howard  v.  Daly,  61  N.  Y.  362,19  » Standard  Oil  Co.  v.  Denton,  24 
Am.  Rep.  285.  Ky.  L.  Rep.   966,  7  S.  W.  Rep.  283,.. 

*  Ailing  V.  Trevor,  25  N.  Y.  Misc.     quoting  the  text. 


§  no.] 


GENERAL   PRINCIPLES. 


315 


be  united  in  a  single  suit;  the  right  of  the  party  in  whose  favor 
they  exist  to  separate  suits  is  not  affected  by  that  circumstance.' 
The  true  distinction  between  demands  or  rights  of  action  which 
are  single  and  entire,  and  those  which  are  several  and  distinct, 
is  that  the  former  immediately  arise  out  of  one  and  the  same 
act  or  contract,  and  the  latter  out  of  different  acts  or  contracts.- 
Perhaps  as  simple  and  safe  a  test  as  the  subject  admits  of 
by  which  to  determine  whether  the  case  belongs  to  one  class 
or  the  other  is  by  inquiring  whether  it  rests  upon  one  or  sev- 
eral acts  or  agreements.  In  the  case  of  torts  each  trespass, 
conversion  or  fraud  gives  a  cause  of  action,  and  but  a  single 


iSecor  V.  Sturgis,  16  N.  Y.  554, 
overruling  Colvinv.Corwin,  15  Wend. 
557,  and  disapproving  the  reasoning 
in  Guernsey  v.  Carver,  8  id.  492.  See 
Perry  v.  Dickerson,  85  N.  Y.  345.  39 
Am.  Rep.  663. 

2  Thisler  v.  Miller,  53  Kan.  515.  36 
Pac.  liep.  1060. 

Where  the  grade  of  a  street  has 
been  established  and  the  plaintiff 
has  made  improvements  upon  prop- 
erty abutting  thereon  in  conformity 
with  such  grade,  and  subsequently 
the  city  provides  by  ordinance  for 
changing  the  grade,  and  in  fact  alters 
it  from  curb  to  curb,  and  afterwards 
adapts  the  sidewalk  to  the  grade 
as  finally  established,  an  action  for 
changing  the  sidewalk  cannot  be 
maintained  after  a  recovery  has  been 
had  for  cutting  down  the  grade  from 
curb  to  curb.  Hempstead  v.  Des 
Moines,  63  Iowa,  36,  18  N.  W.  Rep. 
676;  Stickford  v.  St.  Louis,  7  Mo. 
App.  217  (injury  to  fee  of  one  lot  and 
to  leasehold  interest  with  rent  of  ad- 
joining lot). 

If  goods  are  sold  on  credit  at  vari- 
ous times  each  sale  is  separate  and 
distinct,  and  an  independent  cause 
of  action  arises  on  the  expiration  of 
the  agreed  period  of  credit  and  as 
the  several  amounts  become  due. 
Zimmerman  v.  Erhard,  83  N.  Y.  74, 
38  Am.  Rep.  396. 

Where  property  is  purchased  in 


several  quantities  at  different  times 
in  the  execution  of  a  conspiracj-,  tlie 
damage  done  to  tiie  vendor  is  the 
gist  of  tiie  action,  and  the  cause  of 
it  is  not  single  and  entire;  each  pur- 
chase is  a  distinct  and  .several  fraud 
for  which  a  separate  action  lies.  Lee 
V.  Kendall,  56  Hun,  610,  11  N.  Y. 
Supp.  131. 

Where  a  train  was  in  motion  and 
a  mare  and  colt  veere  running  on  the 
track  in  front  of  it,  and  the  colt  was 
struck  and  killed,  and  the  train  after 
running  on  five  hundred  feet  struck 
and  killed  the  mare,  the  killings  were 
sepai-ate  and  independent  acts; 
causes  of  action  based  upon  tl.em 
were  necessarily  composed  of  differ- 
ent elements,  because,  while  the  kill- 
ing of  the  colt  might  have  been  pre- 
vented by  the  prompt  exercise  of 
ordinary  care,  the  last  killing  was 
the  result  of  gross  negligence.  Mis- 
souri Pacific  R.  Co.  V.  Scammon,  41 
Kan.  521,  21  Pac.  Rep.  590.  See 
Bricker  v.  Missouri  Pacific  R.  Co.,  83 
Mo.  391;  Pucket  v.  St.  Louis,  etc.  R. 
Co.,  25  Mo.  App.  650. 

The  seizure  on  the  same  day  and 
under  the  same  writ  of  two  distinct 
lots  of  animals  in  different  places, 
though  they  are  owned  by  the  same 
person,  constitutes  distinct  tres- 
passes. Millikin  v.  Sinoot,  71  Tex. 
759,  10  Am.  St.  814,  12  S.  W.  Rep.  59. 


316 


ENTIRETY    OF   DAMAGES. 


[§  110. 


[184]  one;Mn  respect  to  contracts,  express  or  implied,  each 
affords  one  and  only  one  cause  of  action.^  The  case  of  a  con- 
tract containing  several  stipulations  to  be  performed  at  dif- 
ferent times  is  no  exception;  although  an  action  may  be  main- 
tained upon  each  stipuhition  as  it  is  broken  before  the  time 
for  the  performance  of  the  others,  the  ground  of  action  is  the 
stipulation  which  is  in  the  nature  of  a  several  contract.^     The 


1  Munro  v.  Pacific  Coast  Dredging 
&  R.  Co.,  84  Cal.  515,  24  Pac.  Rep.  303, 
18  Am.  St.  248;  Lee  v.  Kendall,  56 
Hun,  610,11  N.  Y.  Supp.  131;  Secor 
V.  Sturgis,  16  N.  Y.  554;  Binicker  v. 
Hannibal,  etc.  R.  Co.,  83  Mo.  660; 
Steiglider  v.  Missouri  Pacific  R.  Co., 
38  Mo.  App.  511;  Knowlton  v.  New 
York.  etc.  R.  Co.,  147  Mass.  606,  18  N. 
E.  Rep.  580,  1  L.  R.  A.  625;  Brannen- 
burg  V.  Indianapolis,  etc.  R.  Co.,  13 
Ind.  103,  74  Am.  Dec.  250;  Hicenbo- 
them  V.  Lowenbein,  6  Robert.  557; 
Marble  v.  Keyes,  9  Gray,  221;  East- 
man V.  Cooper,  15  Pick.  276;  Bennett 
V.  Hood,  1  Allen,  47,  79  Am.  Dec.  705; 
Traok  v.  Hartford,  etc.  R.  Co.,  2  Allen, 
331;  Doty  v.  Brown,  4  N.  Y.  71. 

But  one  cause  of  action  arises  from 
the  conversion  of  various  chattels  at 
the  same  time;  after  judgment  for 
the  plaintiff  for  some  of  those  con- 
verted an  action  cannot  be  main- 
tained for  the  others,  although  he 
was  unable  to  include  them  in  the 
first  action  because  of  the  defend- 
ant's fraudulent  conduct  (McCaffrey 
V.  Carter,  125  Mass.  330);  or  because 
of  the  accidental  failure  to  sue  for 
them  in  the  first  action.  Folsom  v. 
Clemence,  119  Mass.  473;  Herriter  v. 
Porter,  23  Cal.  385;  Farrington  v. 
Payne,  15  Johns.  432;  Funk  v.  Funk, 
35  Mo.  App.  246.  See  Bowker  Fer- 
tilizer Co.  V.  Cox,  106  N.  Y.  555,  13 
N.  E.  Rep.  94.3.  This  is  the  rule,  al- 
though  part  of  the  property  taken 
was  held  by  the  plaintiff  as  a  trustee 
and  part  in  his  own  right.  O'Neal 
V.  Brown.  21  Ala.  482.  A  tenant  who 
sues  for  damage  to  his  crops  may  re- 


cover for  the  whole  injury  done. 
Texas  &  P.  R.  Co.  v.  Bayliss,  62  Tex. 
570.  Injuries  done  to  distinct  pieces 
of  property  owned  by  the  same  per- 
son, by  a  single  act,  must  be  sued 
for  together.  Beronio  v.  Southern 
Pacific  R.  Co.,  86  Cal.  415,  21  Am.  St. 
57,  24  Pac.  Rep.  1093. 

If  the  plaintiff  has  interests  in  pos- 
session and  reversion  he  may  recover 
in  tiie  same  action  for  an  injury  af- 
fectmg  both.  Irving  v.  Media,  10 
Pa.  Super.  Ct.  132,  aflSrmed  without 
opinion,  104  Pa.  648. 

2  Shires  v.  O'Connor,  4  Pa.  Super. 
Ct.  465:  Huyett  &  Smith  Manuf.  Co. 
V.  Chicago  Edison  Co.,  167  111.  233,  59 
Am.  St.  272,  47  N.  E.  Rep.  384;  Sam- 
uel V.  Fidelity  &  Casualty  Co.,  76 
Hun,  308,  27  N.  Y.  Supp.  741. 

^Alkire  Grocer  Co.  v.  Tagart,  60 
Mo.  App.  389;  Gentles  v.  Finck,  23 
N.  Y.  Misc.  153,  50  N.  Y.  Supp.  726; 
Secor  V.  Sturgis,  16  N.  Y.  554;  Ryall 
V.  Prince,  82  Ala.  264,  2  So.  Rep.  319; 
Wilkinson  v.  Black,  80  Ala.  329; 
Strauss  v.  Meerteif,  64  id.  299:  Wil- 
cox V.  Plummer,  4  Pet.  172;  Moore  v. 
Juvenal,  92  Pa.  484;  Reformed,  etc. 
Church  V.  Brown,  54  Barb.  191; 
Campbell  v.  Hatchett,  55  Ala.  548; 
O'Beirne  v.  Lloyd,  43  N.  Y.  248;  Pin- 
ney  v.  Barnes,  17  Conn.  420;  Rudder 
v.  Price,  1  H.  Black.  550:  Cobb  v.  L 
C.  R.,  38  Iowa.  601;  Clayes  v.  White, 
83  111.  540;  Blakeney  v.  Ferguson, 
18  Ark.  347;  Kendall  v.  Stokes,  3 
How.  87. 

In  Mcintosh  v.  Lown,  49  Barb.  550, 
it  was  held  that  the  lease  in  question 
contained   seven  distinct  and  inde- 


§  111.]  GENEKAL    PEINCIPLE8.  317 

same  rule  governs  in  torts  arising  from  contracts  and  those 
which  have  their  origin  in  ollicial  misfeasance.  The  cause  of 
action  arises  when  the  breach  of  duty  occurred,  not  on  the  dis- 
covery of  the  effects  thereof.^ 

§  111.  Items  of  account.  Where  there  is  an  account  for 
goods  sold  or  labor  performed,  where  money  has  been  lent  to 
or  paid  for  the  use  of  a  party  at  different  times,  or  several 
items  of  claim  springing  in  any  way  from  contract,  whether 
one  or  separate  rights  of  action  exist  will,  in  each  case,  depend 
on  whether  the  case  is  covered  by  one  or  by  several  or  sep- 
arate contracts.  The  several  items  may  have  their  origin  in 
one  contract,  as  an  agreement  to  sell  and  deliver  goods,  per- 
form work,  or  advance  money ;  and  usuali}^,  in  case  of  a  run- 
ning account,  it  may  be  fairly  implied  that  it  is  in  pursuance 
of  an  agreement  that  an  account  may  be  opened  and  continued 
either  for  a  definite  period  or  at  the  pleasure  of  one  or  both  of 
the  parties.  But  there  must  be  either  an  express  contract  or 
the  circumstances  must  be  such  as  to  raise  an  implied  contract 
embracing  all  the  items  to  make  them,  where  they  arise  [185] 
at  different  times,  a  single  or  entire  demand  or  cause  of  action.^ 

pendent  covenants,  the  tbird  of  which  torney  are  usually  rendered  pursuant 

was  to  keep  the  buildings  and  fences  to  some  general  contract,  and  what- 

in  repair,  and  the  seventh  to  build,  ever  is  due  therefor  at  the  termina- 

during  the  continuance  of  the  lease,  tion  of  the  service  or  employment 

one  hundred  and  twenty-five  rods  of  must   be    recovered   in  one  action, 

fence.     It  was  held  that  a  former  ac-  Hughes  v.  Dundee  Mortgage  Trust 

tion  by  the  lessor  upon  the  covenant  Investment  Co.,  26  Fed.  Rep.  831. 

for  not  building  the  fence  was  not  ^  Owen  v.  Western  Saving  Fund, 

a  bar    to    an   action    subsequently  97  Pa.  47,  o9  Am.  Rep.  794. 

brought  upon  the  covenant  to  repair;  ^Secor   v.   Sturgis.    16  N.  Y.  554; 

that  the  two  covenants  were  distinct  Borngesser  v.  Harrison,  13  Wis.  544; 

and  had   no  connection  with  each  Walter  v.  Richardson,  11  Rich.  466; 

other,  except  that  they  were  con-  Magruder  v.  Randolph,  77  N.  C.  79; 

tained  in  the  same  instrument;  that  American  Button-hole  &  S.  M.  Co.  v. 

the  former  action  must  have  been  to  Thornton,   28  Minn.   418,    10  N.  W. 

recover  for  the  same  identical  cause  Rep.  425;  Oliver  v.  Holt,  11  Ala.  574, 

of  action,  or  for  some  part  thereof,  as  46  Am.    Dec.  228;  Buck  v.  Wilson, 

tiie  plaintilf  seeks  to  recover  in  the  113  Pa.  423,  6  Atl.  Rep.  97;  Wren   v. 

second  in  order  to  be  a  bar.     See  Winter,  6  Ohio  Dec.  176. 

Warner    v.  Bacon,  8   Gray,  497,  69  The  Pennsylvania  case  cited  holds 

Am.  Dec.  253;  Clark  v.  Baker,  5  Met.  that  if  several  notes  are  given  for 

452.  the  amount  of  an  entire   book  ac- 

The   services    of  a    regularly  ap-  count,    without  being  taken   as  an 

pointed  or  permanently  employed  at-  extinguishment  of  the   debt  or   as 


318  ENTIEETY    OF    DAMAGES.  [§   111, 

The  very  fact  that  there  is  a  running  account  imports  that  the 
parties  have  not  been  accustomed  to  treat  every  separate  mat- 
ter of  charge  as  a  distinct  debt,  but  on  the  contrary  to  enter 
it  in  the  account  to  become  a  part  thereof  and  going  to  make 
up  the  debt  which  consists  of  the  entire  balance  due.^  A  cred- 
itor cannot  bring  an  action  for  an  amount  admittedly  due  upon 
an  account  resulting  from  a  single  contract,  the  whole  debt 
being  mature,  enforce  payment  of  that  amount,  and  maintain 
a  second  action  for  a  sum  alleged  to  be  due  on  the  same  ac- 
count in  excess  of  that  first  sued  for;  the  fact  that  the  peti- 
tion in  the  first  case  recited  that  the  right  to  bring  such  sec- 
ond action  was  reserved  was  immaterial.^  If  bills  are  payable 
a,t  the  end  of  every  month  an  action,  brought  after  two  months, 
to  recover  the  sum  due  at  the  end  of  the  first  month,  does  not 
bar  an  action  to  recover  the  amount  due  at  the  end  of  the  sec- 
ond month.'  The  business  of  ship  carpenters  was  carried  on 
in  one  part  of  a  building  under  the  direction  of  two  of  the 
partners  in  a  firm,  and  the  business  of  ship  chandlers  in  an- 
other part  of  the  same  building  under  the  direction  of  the  third 
partner.  Separate  books  of  account  were  kept  by  difi'erent 
clerks  in  the  two  branches  of  business,  and  the  partners  con- 
fined themselves  respective!}^  to  the  management  of  one  of  the 
branches  without  personally  taking  part  in  the  other.  Work 
was  done  and  materials  furnished  from  the  carpentry  branch 
in  the  repairing  and  equipping  of  a  brig,  upon  the  order  of 
her  captain,  to  the  amount  of  $139,  and  immediatel}'^  there- 
after goods  and  articles  of  ship  chandlery  to  the  value  of  $521 
were  furnished  to  the  same  brig,  on  the  order  of  the  same 
<;aptain,  at  different  times  through  a  period  of  a  month.     The 

consideration    for  an   extension   of  '  Memmer  v.  Carey,  30  Minn.  458, 

time,  that  a  suit  brought  upon  the  15  N.   W.    Rep.   877;   Borngesser  v. 

account  after  some  of  the  notes  be-  Harrison,  12  Wis.  544;  Avery  v.  Fitch, 

came  due,  in  which  judgment  for  4  Conn.  362;  Lane  v.  Cook,  3  Day, 

the  amount  of  those  due  was  given,  255.     See  note  to  §  110. 

bars  a  subsequent    suit    upon    the  2  Atlanta   Elevator  Co.  v.  Fulton 

same  account  for  the  amount  of  the  Bag  &  Cotton  Mills.  106  Ga.  427,  32 

notes  wliich  became  due  after  the  S.    E.    Rep.    541;    Bolen   Coal  Co.  v. 

suit  was  brought.     Contra,  Badger  Whittaker  Brick  Co.,  52  Kan.  747,  35 

V.  Titcomb.  15  Pick.  409,  26  Am.  Dec.  Pac.  Rep.  810. 

(511;   Cummington    v.  Wareham     8  3  Beck  v,  Devereaux,  9  Neb.  109.  2 

Cash.  590.  N.  W.  Rep.  365. 


§  112.]  GENERAL    PRINCIPLES.  319 

two  accounts  did  not  constitute  an  entire  claim. ^  In  an  action 
for  money  had  and  received  it  appeared  that  the  defendant,  as 
-steward  of  the  plaintifl",  had,  between  April  and  November, 
1822,  received  large  sums  of  money  for  timber  sold,  and  in 
December,  1821,  4GZ.  for  rents.  In  a  former  action  a  judg- 
ment had  been  taken  by  default  for  all  that  the  plaintiff's 
agent  thought  the  defendant  could  pay,  but  afterwards  it 
was  ascertained  for  the  first  time  that  the  steward  had 
received  the  said  amount  for  rents.  All  the  sums  which 
the  plaintiff  knew  the  defendant  had  received  at  the  time 
when  he  commenced  the  former  action  were  considered  as 
included  in  and  constituting  one  entire  cause  of  action,  and 
the  recovery  was  confined  in  the  last  action  to  the  46Z.,  [186] 
though  the  defendant's  actual  receipts  for  timber  were  very 
much  greater  than  the  default  judgment.- 

"Where  the  captain  of  a  steamboat  hired  a  barge  and  exe- 
cuted to  the  owner  a  contract  to  pay  $10  per  day  until  returned 
in  good  order  as  received,  but  fixed  no  time  when  it  should  be 
returned  or  the  money  paid,  it  was  held  that  the  barge  was  to 
be  returned  in  a  reasonable  time  considering  the  circumstances 
of  the  service  for  which  it  was  hired,  the  stipulated  rent  or 
hire  would  then  be  payable,  the  contract  was  entire  and  not 
divisible,  and  an  action  brought  thereon  after  the  expiration 
of  such  reasonable  time  for  the  amount  then  due  for  the  hire 
of  the  barge  at  the  rate  specified  in  the  contract  was  a  bar  to 
a  subsequent  action  on  the  same  contract  for  hire  accruing 
after  the  period  embraced  in  the  judgment  recovered  in  the 
former  action.'  "  If  the  barge  were  not  returned  upon  demand 
in  a  reasonable  time  it  would  be  a  breach  of  the  contract  for 
the  return.  The  right  of  the  party  in  such  a  case  is  not  to  ex- 
act the  $10  a  day  perpetually,  but  to  charge  at  that  rate  for  a 
reasonable  time,  and  then  to  collect  the  value  of  the  barge, 
and  by  suing  .  .  (in  the  former  action)  .  .  he  in  effect 
averred  that  the  reasonable  time  had  expired  and  the  whole 
became  due."* 

§  112.  Continuing  obligations.     Where  the  defendant  had 
■covenanted,  in   1822,  that  the  plaintiff  should   have   a   con- 

•Secor  V.  Sturgis,  16  N.  Y.  554.  3  stein  v.  Steamboat  Prairie  Rose, 

2  Bagot  V.  Williams,  3  B.  &  C.  235;     17  Ohio  St.  472,  93  Am.  Dec.  631. 
Hisley  v.  Squire,  53  Barb.  280.  <  See  Bradley  v.  Washington,  etc 

Co.,  9  Pet  107. 


320  ENTIRETY    OF    DAMAGES.  [§  112. 

tinual  supply  of  water  for  a  mill  from  his  dam,  and  totally 
failed  to  perform  after  1826,  and  in  1835  the  plaintiff  brought 
an  action  for  the  breach  and  recovered  damages  sustained  by 
him  up  to  that  time,  it  was  held  a  bar  to  a  second  action  aris- 
ing from  a  subsequent  failure  to  perform.^  "It  is  true  the  cov- 
enant stipulated  for  a  continued  supply  of  water  to  the  plaint- 
iff's mill,  and  in  this  respect  it  may  be  appropriately  styled  a 
continuing  contract.  Yet,  like  any  other  entire  contract,  a  total 
breach  put  an  end  to  it,  and  gave  the  plaintiff  the  right  to  sue 
[187]  for  an  equivalent  in  damages.  He  obtained  that  equiv- 
alent, or  should  have  obtained  it,  in  the  former  suit."  The 
principle  has  been  applied  to  an  action  to  recover  rent  under  a 
lease  for  a  term  of  years  where  a  suit  was  brought  to  recover 
the  rent  for  one  month  which  was  due  when  another  suit  was 
instituted  ;^  and  to  an  action  to  recover  the  expense  of  support- 
ing a  non-resident  pauper,  such  expense  accruing  after  the  re- 
covery in  a  former  suit  of  the  amount  due  when  the  trial  was 
had.*  An  agreement  by  one  party  to  support  another  during 
life  is  a  similar  continuing,  entire  contract,*  if  it  is  uncondi- 
tional.'^ A  separate  action  may  be  maintained  whenever  there 
is  a  new  cause  of  action,  whether  it  arises  at  the  same  time  as 
another  cause  or  at  a  different  time;  but  it  must  exist  and  be 
complete  before  the  action  is  brought."  "Where  the  contract  is 
indefinite  as  to  time  and  negative  in  its  character  successive 
actions  may  be  brought  for  its  violation,  as  where  one  who  has 
sold  his  interest  in  a  business  violates  bis  contract  not  to  re- 
engage in  business  in  that  place.'' 

1  Fish  V.  Folley,  6  Hill,  54  See  Pa.  114;  Carpenter  v.  Carpenter,  66 
Amerman  v.  Deane,  133  N.  Y.  355,  Hun,  177;  Sbover  v.  Myrick.  4  Ind. 
28  Am.  St.  584.  30  N.  E.  Rep.  741.  App.  7,  30  N.   E.  Rep.  207.     See  Fer- 

2  Burritt  v.   Belfy,  47  Conn.   323;  guson  v.  Ferguson,  2  N.  Y.  360. 
Reynolds  v.  Jones,  63  Ark.  259,  38  S.  &  Fay  v.  Guynon,  131  Mass.  31. 

W.  Rep.  151.    See  §  110,  particularly  «  Howell  v.  Young,  5  B.  &  C.  267; 

the  late  New  York  cases  cited.  Warner  v.  Bacon,  8  Gray,  397,  G9  Am. 

3  Marlborough  v.  Sisson,  31  Conn.  Dec.  253;  Prince  v.  Moulton,  1  Ld. 
383.  SeePinney  V.  Barnes,  17  id.  420.  Raym.  248;  Harbin   v.  Green,  Hob. 

*  Parker  v.  Russell,  133  Mass.   74;  189;    Coggeshall    v.     Coggeshall,    2 

Amos  V.  Oakley,  131  id.  413;   Schell  Strobb.  51.     See  State  Bank  v.  Fox, 

V.   Plumb,  55  N.   Y.   592;   Sibley  v.  3  Blatchf.  431. 

Rider,  54  Me.  466;    Fales  v.  Hemen-  i  Just  v.  Greve,  13  111.  App.  302- 

way,  64  Me.  373;  Miller  v.  Wilson,  24  Pierce  v.  Woodward,  6  Pick.  206. 


§  113.]  GENERAL    P1.INCIPLES.  321 

§  113.  Damages  accruing  subsequent  to  the  action.    It  is 

not  essential,  however,  that  all  the  injurious  effects  of  the  act 
which  constitutes  the  cause  of  action  should  have  been  devel- 
oped and  suffered  before  suit;  it  is  immaterial  to  the  right  to 
recover  for  them  when  the  effects  manifest  themselves  with 
reference  to  the  time  of  bringing  the  suit.  Eut  it  is  practi- 
cally material  to  the  plaintiff  that  the  effects  be  so  manifest, 
before  and  at  the  time  of  the  trial,  as  to  be  susceptible  of  proof. 
The  actual  effects  down  to  the  time  of  the  trial  are  provable; 
and  whether  those  which  may  ensue  later  may  be  taken  into  ac- 
count will  depend  on  whether  they  are  imminent  and  suffi- 
ciently certain.^  Interest  which  is  the  accessory  of  the  prin- 
cipal does  not  stop  at  the  commencement  of  the  action,  but 
may  always  be  computed  down  to  the  verdict.^  But  whether 
continuing  damages  may  be  computed  after  the  commence- 
ment of  the  suit  will  depend  on  whether  they,  proceed  from 
the  act  complained  of  in  that  suit  as  the  cause  of  action,  or 
from  some  later  act  constituting  a  fresh  cause  of  action.'  [188] 
A  judgment  creditor  in  lieu  of  her  judgment  agreed  to  accept 
the  bond  of  another  conditioned  for  her  maintenance  during 
life,  or  to  pay  her  if  she  preferred  it  $150  per  annum;  the 
bond  to  be  secured  by  a  mortgage  on  the  land  of  the  obligor. 
The  defendant  was  employed  to  prepare  the  instrument  and 
to  have  the  mortgage  entered  of  record;  he  withheld  it  from 

1  Bryson  v.  McCone,  121  Cal.   153,  Am.  Rep.  451  (violation  of  contract 

53  Pac.  Rep.  637;  Samuel  v.  Fidelity  to  pass  plaintiff  and  his  family  dur- 

&  Casualty  Co.,  76  Hun,  308,  27  N.  ing    their    lives    over    defendant's 

Y.  Supp.  741;  Salzgeber  v.  Miclvel,  37  road). 

Ore.  216,  60  Pac.  Rep.  1009;  Conlon  2  Robinson  v.  Bland.  2  Burr.  1077; 
V.  McGraw,  66  Mich.  194,  33  N.  W,  Hovey  v.  Newton,  11  Pick.  421;  Dun- 
Rep.  388:  Coles  v.  Thompson,  7  Tex.  can  v.  Markeley,  Harp.  276. 
Civ.  App.  666,  21  S.  W.  Rep.  46;  Cook  3  Eastern  Tennessee,  etc.  R.  Co.  v. 
V.  Redman,  45  Mo.  App.  397,  citing  Staub,  7  Lea,  397;  Pierce  v.  Tennes- 
the  text:  Galveston,  etc.  R.  Co.  v.  see  Coal,  Iron  &  R.  Co.,  173  U.  S.  1, 
Borsky,  2  Tex.  Civ.  App.  545,  21  S.  W.  19  Sup.  Ct.  Rep.  335;  Haskell  County 
Rep.  1011;  Filer  v.  New  York  Cen-  Bank  v.  Bank  of  Santa  Fe,  51  Kan. 
tral  R.  Co.,  49  N.  Y.  42;  Hayden  v.  39,  32  Pac.  Rep.  624;  Troy  v.  Cheshire 
Albee,  20  Minn.  159;  Hagan  v.  Riley,  R.  Co.,  23  N.  H.  102;  Hicks  v.  Her- 
13  Gray,  515;  Spear  v.  Stacy,  26  Vt.  ring,  16  Cal.  566;  Phillips  v.  Terry.  3 
61;  Fort  v.  Union  Pacific  R.  Co.,  2  Keyes,313;Cosgriff  v.  Miller,  — Wyo. 
Dill.  259;  Mobile  &  M.  R.  Co.  v.  Gil-  — ",  68  Pac.  Rep.  206,  216,  quoting  the 
mer,  85  Ala.  422,  5  So.  Rep.  138;  Erie  text. 
&  P.  R.  Co.  V.  Douthet,  88  Pa.  243,  32 
Vol.  1  —  21 


322 


ENTIRETY    OF    DAMAGES. 


[§  113. 


record  until  the  property  became  otherwise  incumbered  by 
claims  to  an  amount  beyond  its  value  and  the  debtor  in- 
solvent. It  was  held  in  an  action  on  the  case  that  the  injured 
party  could  recover  all  that  she  had  lost  or  was  likely  to 
lose  by  the  default;  all  that  the  mortgage  if  duly  recorded 
would  have  been  worth  to  her.^     Where  the  defendant  under- 


1  Miller  v.  Wilson,  24  Pa.  114 
Black,  C.  J.,  said:  ''The  argument 
is  made  that  the  plaintiff  has  not  yet 
suffered  any  loss  from  the  defend- 
ant's violation  of  duty,  and  that  she 
can  recover  from  Miller  only  in  case 
Carson  (the  obligor  in  the  bond) 
makes  default,  because  the  mortgage 
being  but  a  security  for  the  bond 
there  is  nothing  due  on  the  former 
until  the  condition  of  the  latter  is 
broken.  But  we  hold  it  clear  law 
that  Miller  did  not  merely  substitute 
his  personal  responsibility  in  place  of 
the  mortgage;  that  he  did  not  be- 
come Carson's  surety  in  the  bond; 
but  that  he  subjected  himself  to  an 
immediate  action  in  which  the 
plaintiff  may  recover  compensation 
for  all  she  has  lost  and  all  she  is 
likely  to  lose  through  his  miscon- 
duct." (See  Walton  v.  Ruggles,  180 
Mass.  24,  61  N.  E.  Rep.  267;  Paro  v. 
St.  Martin,  180  Mass.  29,  61  N.  E. 
Rep.  268.) 

"On  a  contract  to  pay  money  at 
stipulated  periods  there  may  be  as 
many  suits  as  there  are  instalments; 
for  every  failure  to  pay  is  a  fresh 
breach  of  the  contract,  and  there  can 
be  no  recovery  except  for  what  is  due 
at  the  tiiue  of  suit  brought.  But  on 
a  tort,  or  on  a  duty  or  promise  which 
has  already  been  violated  as  grossly 
as  it  ever  can  be,  there  is  but  one 
action,  and  in  that  the  injured  party 
must  have  full  justice.  When,  in 
the  language  of  Chief  Justice  Best  (2 
Bing.  229),  the  thing  has  but  one 
neck,  and  that  is  cut  ofif  by  the  act  of 
tlie  defendant,  it  would  be  mischiev- 
ous to  drive  the  plaintiff  to  a  second, 


third  or  fourth  action  as  the  sticces- 
sive  consequences  of  the  wrong  m^y 
arise.  It  is  not  true,  even  as  a  gen- 
eral rule,  that  courts  will  not  antici- 
pate a  loss  in  futuro.  If  a  man  de- 
stroys my  orchard  I  may  demand  full 
reparation  at  once,  and  I  am  not  com- 
pelled to  sue  every  year  for  each  crop 
of  fruit  I  lose.  In  slander  the  dam- 
ages are  swelled  by  all  the  sufferings 
which  the  want  of  a  good  name  may 
occasion  subsequently.  In  an  action 
for  batter}-  the  plaintiff  shall  recover 
for  all  the  injuries  likely  to  result 
from  the  wounds  inflicted  by  his  ad- 
versary (1  Ld.  Raym.  339).  He  who 
sues  for  the  loss  of  an  office  or  em- 
ployment is  entitled  to  a  verdict  at 
once  for  the  whole  value  of  it  with- 
out waiting  until  the  profits  would 
have  reached  his  pocket  (2  Bing, 
229).  But  we  need  not  resort  to  analo- 
gies. A  case  directly  in  point  is  that 
of  Howell  V.  Young,  5  B.  &  C.  259. 
There  an  attorney  was  employed  to 
ascertain  whether  certain  mortgages 
were  a  sufficient  security  for  a  loan 
of  £3.000,  and  falsely  informed  his 
client  that  they  were.  It  was  held 
that  in  an  action  againi-t  the  attor- 
ney the  client  might  recover  for  all 
the  probable  loss  he  was  likely  to  sus- 
tain from  the  invalidity  of  the  secu- 
rity. The  right  of  action  in  such  cases 
accrues  at  the  time  when  the  con- 
tract or  duty  of  the  defendant  is  vio- 
lated, and  if  suit  be  not  brought 
within  six  years  afterwards  the  stat- 
ute of  limitations  is  a  flat  bar,  no 
matter  when  the  consequential  loss 
may  have  happened. 

'•  The  defendant  has  deprived  the 


§  113.] 


GENERAL    PRINCIPLES. 


323 


took  with  the  plaintiff  to  be  suret}'^  for  another  if  the  [IS^] 
plaintiff  would  let  to  hira  a  specified  house  at  a  rent  stated, 
and  wotdd  execute  an  agreement  to  that  effect,  but  did  not,  it 
was  held  that  the  defendant's  undertaking  was  entire,  not  to 
pay  the  rent  as  it  became  due  from  time  to  time,  but  to  execute 
an  obligation  to  do  so,  and  that  only  one  action  could  [190] 
be  brouiiht  on  his  contract.^ 


plaintiff  of  what  she  relied  on  for  a 
living;  and  this  judgment  is  less 
than  it  ought  to  be  if  it  does  not 
place  her  in  as  good  a  condition, 
present  and  prospective,  as  he 
would  have  left  her  in  by  doing  his 
duty.  It  is  vain  to  say  she  has  suf- 
fered no  real  loss.  A  debt  worth  to 
her  $1,800  has  been  converted  into  a 
thing  of  no  value.  The  defendant 
found  her  in  possession  of  what  her 
frugal  habits  taught  her  to  think 
sufficient;  he  left  her  'as  poor  as 
winter.'  If  he  had  taken  the  sum 
out  of  her  pocket  in  money,  she 
must,  according  to  his  reasoning,  suf- 
fer the  extremity  of  the  consequences 
before  she  has  a  right  of  action;  and 
therefore  she  can  bring  no  suit  until 
she  starves.  But  human  nature  will 
not  endure  such  logic.  The  law  is 
made  for  practical  uses.  It  listens 
to  no  metaphysical  subtleties;  and 
will  not  consent  on  any  terms  to  call 
that  right  which  every  sound  heart 
feels  to  be  wrong.  The  value  of 
wealth,  beyond  what  is  barely  neces- 
sary for  the  present  hour,  consists 
in  the  consciousness  of  liaving  it, 
and  the  comfortable  security  it  af- 
fords the  possessor  against  fviture 
want.  A  cautious  providence  for 
the  uime  of  need,  which  may  come 
hereafter,  is  one  of  the  attributes 
which  distinguish  the  race  of  man 
from  the  lower  animals.  The  fear  of 
becoming  de^stitute  is  a  sentiment  as 
universal  as  it  is  necessary  for  the 
well-being  of  the  world.  When  that 
fear  is  grounded  on  the  absence  of 
any  accumulation  which  may  serve 


as  a  support,  it  is  poverty, —  a  real, 
substantial,  and  sore  evil,  from 
which  every  well  constituted  person 
who  feels  will  seek  relie'f  by  the  ut- 
most exertion  of  mind  and  body. 
Here  was  a  woman  who  consented 
to  give  up  all  she  had  in  considera- 
tion that  $150  per  annum  for  the 
term  of  her  life  should  be  secured  to 
her  beyond  the  reach  of  accidents 
by  a  mortgage.  That  mortgage  was 
everything  in  the  world  that  lay  be- 
tween her  and  the  poor-house.  By 
withholding  it  from  the  record  the 
defendant  left  her  to  meet  the  ad- 
versities of  life  unarmed,  naked,  de- 
fenseless, and  '  steeped  in  poverty  to 
the  very  lips.'  Her  counsel  would 
send  her  to  Carson  for  support  —  to 
Carson  who  has  no  means  of  keeping 
the  wolf  from  his  own  dooi*.  Why 
did  they  not  tell  her  that  she  might 
possibly  be  fed  and  clothed  by  public 
charity  ?  She  must  be  made  whole 
now  or  never  —  in  this  action  or  in 
none.  That  can  be  done  by  allowing 
her  to  recover  all  that  the  security 
she  lost  was  worth  —  what  a  prudent 
person  in  her  circumstances  would 
be  willing  to  give  it  up  for — the  dif- 
ference in  value  between  her  debt 
made  absolutely  safe  by  a  mortgage, 
and  the  same  debt  with  no  security 
except  the  personal  responsibility  of 
an  insolvent  man.  How  much  is 
that  ?  The  court  fairly  and  carefully 
put  this  question  to  the  jury,  and 
their  verdict  is  the  answer." 

1  Waterbury  v.  Graham,  4  Sandf. 
215. 


324  ENTIEETY    OF    DAMAGES.  [§  114. 

"Where  a  personal  injury  is  committed  by  a  single  tortious 
act,  that  act  is  a  cause  of  action,  and  all  the  consequences  for 
which  compensation  may  be  recovered  are  an  entirety;  recov- 
ery therefor  may  be  had  once  for  all  in  one  action,  and  only 
in  one,  which  may  be  brought  any  time  after  the  act  is  com- 
mitted.^ So  of  any  act  done  or  default  made  which  is  a 
breach  of  any  stipulation  in  a  contract;  it  is  a  single  and  en- 
tire cause  of  action,  embracing  all  ensuing  consequences  for 
which  compensation  is  allowed;  and  however  multifarious 
may  be  the  stipulations  in  it  any  act  which  amounts  to  a 
total  breach  constitutes  but  a  single  cause  of  action;^  unless 
perhaps  where  the  stipulations  are  so  distinct  and  relate  to 
subjects  so  disconnected  as  to  have  no  relation  or  unity  but 
such  as  results  from  being  made  at  the  same  time  or  contained 
in  one  instrument.'  Kor  can  an  entire  claim  be  severed  by 
partial  assignments  so  as  to  become  the  foundation  of  several 
suits  instead  of  one  unless  the  debtor  consents  thereto.* 

§  114.  Damage  to  real  property.  Actions  for  single  and 
continuing  nuisances  and  acts  which  are  wrongful  only  when 
they  result  in  damage  may  be  successively  brought;  the  dam- 
ages recoverable  are  ordinarily  confined  to  those  which  accrued 
prior  to  the  time  each  action  was  begun.^     In  an  action  for 

1  Bower  v.  The  Water  Witch,  19  76  id.  488;  Chicago  &  A.  R.  Co.  v. 
How.  Pr.  241;  Curtis  v.   Rochester,     Maher,  91  III.  312. 

etc.  R    Co.,  18  N.   Y.  584;  Drew  v.  5  Blunt  v.  McCormick,  3  Denio,  283; 

Sixth  Avenue  R  Co.,  26  N.  Y.  49;  Fet-  Cumberland  &  O,  Canal  Co.  v.  Hitch- 

ter  V.  Beale,  1  Salk.  11;   Hochster  v.  ings,  65  Me.  140:  Thayer  v.  Brooks.  17 

De  la  Tour,  2  El.  &  B.  678;  Miller  v.  Ohio,  489;  Loweth  v.  Smith,  12  M.  & 

Wilson,  24  Pa.  114;  Veghte  v.  Hoag-  W.  582;  Beach  v.  Crain,  2  N.  Y.  86; 

land,  29  N.  J.  L.  125;  Thompson  v.  St.  Louis,  etc.  R.  Co.  v.  Biggs,  52  Ark. 

Ellsworth,  39  Mich.   719;    Dailey  v.  240,12  S.  W.  Rep.  331,  6  L.  R.  A.  804; 

Dismal  Swamp  C.  Co.,  2  Ired.  222;  Cobb  v.  Smith,  38  Wis.  21;  Hazeltine 

Chicago  &  E.  R.  Co.  v.  Kern.  9  Ind.  v.  Case,  46  id.  301,  32  Am.  Rep.  715; 

App.  505,  36  N.  E.  Rep.  381.    See  ch.  Burnett  v.  Nicholson,  86  N.  C.  99; 

36.  McConnel  v.  Kibbe,  29  111.  482,  33  id. 

2  Jacobs  V.  Davis,  34  Md.  204;  Wa-  175,  85  Am.  Dec.  265;  Holmes  v.  Wil- 
terbury  v.  Graham,  4  Sandf.  215;  son,  10  A.  &  E.  503;  Kinnaird  v. 
Bancroft  v.  Winspear,  44  Barb.  209;  Standard  Oil  Co.,  89  Ky.  468,  25  Am. 
Spear  v.  Stacy,  26  Vt.  61.  St.  545,  7  L.  R.  A.  451,  12  S.  W.  Rep. 

3  Mcintosh  v.  Lown,  47  Barb.  550.     937;  Illinois  Central   R,  Co.  v.  Wil- 
*  Chicago,  etc.  R.  Co.  V.  Nichols,  57    bourn,  74  Miss.    284,  21  So.  Rep.   1; 

111.464;  Fourth  Nat.  Bank  v.  Noo-     Lamm  v.  Chicago,  etc.  R.  Co.,  45  Minn, 
nan,  88  Mo.  372;  Loomis  v.  Robinson,     71,  47  N.  W.  Rep.  455,  10  L.  R.  A.  268. 


§    114.]  GENEBAL   PEINCIPLES.  325 

damages  occasioned  by  flooding  land  a  recover}'  was  allowed 
for  killing  growing  trees  though  they  did  not  in  fact  die  until 
after  the  action  was  commenced.^  In  an  equity  suit  to  obtain 
damages  for  acts  done  and  to  restrain  their  continuance,  if  a 
temporary  injunction  is  disregarded  a  supplemental  bill  will 
lie  to  recover  damages  accruing  after  the  bringing  of  the  orig- 
inal bill.2  In  Minnesota  the  abatement  of  a  nuisance  and  re- 
covery of  damages  predicated  thereon  and  incident  thereto 
constitute  but  one  cause  of  action :  and  where  suit  was  brouo-ht 
to  abate  a  nuisance  the  judgment  therein  barred  a  subsequent 
proceeding  for  damages  based  upon  the  same  facts,  notwith- 
standing the  pleading  in  that  case  would  not  sustain  an  award 
of  damages  and  none  were  recovered.' 

Until  recently  it  has  been  regarded  as  established  by  the 
English  decisions  that,  where  injuries  to  the  land  of  one  per- 
son result  from  digging,  mining  or  building  upon  the  property 
of  another,  all  the  damages,  past  and  prospective,  were  recover- 
able in  one  suit  brought  upon  the  original  cause  of  action.* 
Late  adjudications  have  established  another  rule.  In  1861 
the  house  of  lords  passed  upon  a  question  based  upon  the  fol- 
lowing facts:  A.  B.  was  the  owner  of  a  house;  C.  D.  was  the 
owner  of  a  mine  under  the  house  and  under  the  surroundino- 

o 

land;  C.  D.  worked  the  mine,  and  in  so  doing  left  insufficient 
support  to  the  house,  which  was  not  damaged  nor  the  enjoy- 
ment of  it  prejudiced  until  sometime  after  the  workings  had 
ceased.  The  question  submitted  by  the  lord  chancellor  to  the 
lords  was:  "Can  A.  B.  bring  an  action  at  any  time  within 
six  years  after  the  mischief  happened,  or  must  he  bring  it 
within  six  years  after  the  working  rendered  the  support  in- 
sufficient?" The  opinion  was  that  the  action  was  not  barred 
if  brought  within  six  years  from  the  time  the  mischief  was 
done.^  In  an  earlier  case®  an  excavation  had  been  made  and 
a  subsidence  had  resulted,  the  injury  from  which  had  been  sat- 

iHayden  v.  Albee,  20  Minn.  159;  3 Gilbert  v.  Boak  Fish  Co.,  86  Minn. 

Clark  V.  Nevada  Land  &  Mining  Co.,  365,  90  N.  W.  Rep.  767. 

6  Nev.  202;  Baltimore  v.  Merry naan,  *  Mayne's  Dam.  138. 

86  Md.  584,  39  Atl.  Rep.  9a    See  Crab-  »  Backhouse  v.  Bonomi,  9  H.  of  L. 

tree  v.  Hagenbaugh,  25  IlL  214,  76  Cas.  503:  Bonomi  v.  Backhouse,  El. 

Am.  Dec.  793.  B.  &  E.  622,  654. 

'■J  Waterman  v.  Buck,  63  Vt.  544,  23  CNicklin   v.  Williams,  10  Ex.  259 

Atl.  Rep.  15.  (1854). 


32G  ENTIRETY    OF   DAMAGES.  [§   114. 

isfied.  Subsequently  another  subsidence  from  the  same  exca- 
vation caused  additional  injury.  In  an  action  to  recover  lor 
the  latter  the  defense  was  that  the  cause  of  action  in  respect 
to  the  subsidence  had  been  satisfied.  The  plaintiff  pleaded 
that  he  was  not  suing  for  that  cause  of  action,  but  for  a  new 
and  different  cause,  the  subsequent  subsidence.  The  defendant 
contended  that  the  pleading  was  bad  because  it  was  only  a 
new  assiornment  of  damao:e  which  was  the  result  of  the  former 
cause  of  action;  with  this  contention  the  court  agreed.  In  an- 
other case'  the  trustees  of  a  turnpike  road  made  a  covered 
drain  by  the  side  of  the  highway;  it  was  so  made  that  it  col- 
lected water  in  it,  and  the  water  was  caused  to  flow  into  the 
plaintiff's  mines,  and  could  not  go  elsewhere.  It  was  answered 
that  the  action  was  barred;  but  it  appeared  that  the  plaintiff 
had  been  injured  within  the  time  constituting  the  limitation. 
The  court  said  the  causa  cavsans  of  the  injury  to  the  property 
was  a  continuing  cause;  but  that  cause  alone  gave  to  the  mine- 
owner  no  right  of  action:  it  was  a  cause  which  if  thereby  any 
damage  was  occasioned  to  the  mine-owner's  property  would 
immediately  give  him  a  cause  of  action;  it  had  given  him  a 
cause  of  action  sometime  ago,  but  since  that  the  trustees  con- 
tinued it;  they  might  have  stopped  it;  the  continuing  causa 
causans  remained  and  remained  in  the  power  of  the  trustees, 
and  that  caused  a  new  injury  to  the  mine-owner's  property, 
that  was  a  new  right  of  action  because  it  was  an  injury  to  his 
property  in  each  case.  In  a  case  ^  later  than  any  referred  to  it 
was  held  by  a  majority  of  the  court,  Cockburn,  C.  J.,  dissent- 
ing, that,  where  land  and  buildings  are  injured  by  the  removal 
of  lateral  support  through  mining  operations  carried  on  by  the 
defendant  on  his  own  land,  future  damages  are  recoverable. 
Up  to  this  point  it  seems  clear  that  these  cases  are  in  conflict; 
AVhitehouse  v.  Fellowes  not  being  harmonizable  with  Nicklin 
V.  Williams,  and  the  latter  being  in  antagonism  with  Back- 
house  V.  Bonomi.  This  is  the  view  of  the  court  of  appeal  in  a 
case  decided  in  1884,'  and  in  which  the  conclusion  of  the  dis- 
senting member  of  the  court  in  Lamb  v.  Walker  was  adopted 

iWhitehouse  v.  Fellowes,  10  C.  B.        ^  Mitchell  v.  Darley  Main  Colliery 
(N.  S.)  765  (1861).  Co.,  14  Q.  B.  Div.  125. 

2  Lamb  v.  Walker,  3  Q.  B.  Div.  389 

(1878). 


§  114.]  GENERAL   PRINCIPLES.  327 

as  a  correct  exposition  of  the  law,  and  as  being  in  harmony 
with  the  decision  of  the  house  of  lords  in  Backhouse  v.  Bonomi. 
As  stated  by  the  master  of  the  rolls  in  ]\Iitchell  v.  Darley 
Main  Colliery  Co.  the  views  of  the  chief  justice  in  Lamb  v. 
Walker  were  that  where  an  excavation  had  been  made  and  a 
subsidence  had  taken  place,  it  may  be  true  that  for  all  the  ef- 
fects, both  existing  and  prospective,  of  that  subsidence,  the 
person  injured  ought  to  sue  at  once.  But  what  is  to  be  done 
as  to  a  new  subsidence  ?  The  mine-owner  has  excavated  in 
his  own  property;  he  knows  that  he  has  caused  a  subsidence 
to  his  neighbor's  property,  and  he  knows  that  that  neighbor  is 
entitled  to  damages  for  it;  will  he  run  the  risk  of  allowing 
that  excavation  to  continue,  the  effects  of  which  he  may  ob- 
viate by  immediately  putting  in  a  wall  or  propping  up  his  own 
property?  There  is  nothing  to  prevent  him;  will  he  allow 
that  to  continue  or  will  he  not?  If  he  does  nothing,  he  is  not 
counteracting  the  effects  on  his  neighbor's  property  of  some- 
thing which  he  has  done  on  his  own;  he  is  not  counteracting 
that  mischief  to  his  neighbor  by  doing  something  on  his  own 
property;  and  if  there  is  a  new  subsidence  that  will  give  his 
neighbor  a  new  cause  of  action.  It  is  diflBcult  to  conceive 
that  the  jury  which  is  to  give  damages  for  the  first  subsidence 
that  is  existing  ought  to  give  damages  for  a  prospective  new 
subsidence  which  the  defendant  has  the  option  and  right  to 
prevent;  so  that,  although  before  the  verdict  of  the  first  jury 
is  given,  or  although  at  the  time  that  that  verdict  is  given,  the 
mine-owner  is  doing  that  which  will  prevent  any  future  dam- 
age, nevertheless  the  jury  in  the  first  action  ought  to  take  into 
consideration  the  prospective  injury  which  might  be  thought 
likely  to  occur  at  the  time  when  the  action  was  brought.  Ex- 
pressing his  own  views,  the  master  of  the  rolls  continued : 
"  That  seems  to  me  a  proposition  which,  when  it  is  well  sifted 
out  and  examined,  cannot  stand,  and  therefore  the  chief  jus- 
tice's reasoning,  of  itself,  and  without  reference  to  Backhouse 
v.  Bonomi,  is  conclusive  to  show  that  each  subsidence  is  a  fresh 
cause  of  action.  Besides  that,  it  seems  to  me  to  be  in  accord- 
ance with  what  was  decided  in  Backhouse  v.  Bonomi,  and  to 
be  the  logical  result  of  Backhouse  v.  Bonomi.  .  .  .  There- 
fore, I  agree  with  the  lord  chief  justice's  view  that  each  sub- 
sidence is  a  new  cause  of  action,  although  the  causa  causaus  of 


528 


ENTIEETY    OF    DAMAGES. 


[§  115. 


each  subsidence  may  be  the  same.  Jt  may  be  argued  that  the 
causa  causans  is  not  the  same.  The  causa  causans  of  the  first 
is  the  excavation,  the  causa  causans  of  the  second  is,  as  a  mat- 
ter of  fact,  the  excavation  unremedied,  or  the  combining  of 
the  excavation  and  of  its  remaining  unremedied."  A  similar 
rule  has  been  applied  where  the  ^icts  complained  of  were  not 
continuous,  as  where  temporary  flash-boards  were  erected  on 
a  dam  from  time  to  time  or  the  gates  thereof  were  opened  at 
intervals;  ^  and  where  the  wate^  in  a  stream  has  been  diverted 
by  placing  obstructions  therein,^  The  cases  in  the  state  courts 
are  generally  in  accord  with  the  existing  English  doctrine.' 
In  Pennsylvania  the  rule  is  otherwise.* 

§  115.  Same  subject.  W/iere  injuries  result  from  a  tem- 
porary trespass  upon  land  all  the  damage  done  must  be  re- 
covered for  in  a  single  action.  If  there  has  been  a  recovery 
for  the  injury  inflicted  upon  a  special  part  of  a  tract  a  subse- 
quent action  cannot  be  maintained  to  recover  for  that  done 
to  another  portion  of  it  at  the  same  time  and  by  the  same  act. -^ 


1  Noyes  v.  Stillman,  24  C/^nn.  15. 

2Beckwith  v,  Griswold,  29  Barb. 
294.  See  Williams  v.  Missouri  Fur- 
nace Co.,  13  Mo.  App.  70. 

3  Smith  V.  Seattle,  18  Wash.  484,51 
Pac.  Eep.  1057;  St.  Louis,  etc.  R.  Co.  v. 
Biggs,  52  Ark.  240, 12  S.  W.  Rep.  331, 
6  L.  R.  A.  804;  Church  of  Holy  Com- 
munion V.  Paterson  Kxtension  R.  Co., 
66  N.  J.  L.  218,  49  Atl.  Rep.  1030; 
Bank  of  Hartford  County  v.  Water- 
man, 26  Conn.  324. 

4  Noonan  v.  Pa -dee,  200  Pa.  474,  50 
Atl.  Rep.  255, 55  L.  R.  A.  410,  86  Am. 
St.  722,  approved  in  Guarantee  Trust 
&  Safe  Deposit  Co.  v.  Farmers'  & 
Mechanics'  Nat.  Bank,  202  Pa.  94, 100, 
51  Atl.  Rep.  765.  See  Pantall  v. 
Rochester  &  P.  Coal  &  Iron  Co.,  18 
Pa.  Super.  Ct.  341,  53  Atl.  Rep.  751,  — 
Pa.  —  ,  which  is  to  the  same  effect. 

6  Pierro  v.  St.  Paul,  etc.  R.  Co.,  39 
Minn.  451,  40  N.  W.  Rep.  530,  12  Am. 
St.  673;  Child  v.  Boston  &  F.  L  Works, 
19  Fed.  Rep.  258;  Williams  v.  Pome- 
roy  Coal  Co.,  37  Ohio  St  583;  Jack- 


son V.  Emmons,  19  D.  C.  App.jCas.  250; 
Dick  V.  Webster,  6  Wis.  481;  Mar- 
shall V.  Ulleswater  Steam  Nav.  Co., 
L.  R.  7  Q.  B.  166;  Lord  Oakley  v.  Ken- 
sington Canal  Co.,  5  B.  &  Aid.  138; 
Clegg  V.  Dearden,  12  Q.  B.  575;  Ved- 
der  V.  Vedder,  1  Denio.  257;  Beronio 
V.  Soutliern  Pacific  R.  Co.,  86  Cal.  415, 
21  Am.  St.  57,  24  Pac.  Rep.  1093; 
Hoffman  v.  Mill  Creek  Coal  Co.,  16 
Pa.  Super.  Ct.  631.  See  Pantall  v. 
Rochester  &  P.  Coal  &  Iron  Co.,  18 
id.  341,  —  Pa.  — ,  53  Atl.  Rep.  751. 

Where  damage  was  done  to  crops 
by  animals  which  got  access  to  them 
through  a  defective  fence  from 
June  to  December,  a  recovery  for 
the  whole  damage  alleged  in  one 
count  was  proper.  Darby  v.  Mis- 
souri, etc.  R,  Co.,  156  Mo.  391,  57  S.  W. 
Rep.  550;  Cook  v.  Redman,  45  Mo. 
App.  397. 

A  recovery  by  a  cotenant  for  dam- 
age to  land  inclosed  and  used  by 
him  does  not  bar  a  subsequent  ac- 
tion by  another  cotenant  for  damage 


§  115.] 


GENEEAL   PKI^OIPLES. 


329 


Where  the  trespass  is  continuing  or  is  repeated  each  repeti- 
tion or  the  continuation  after  suit  broufjht  is  a  fresh  wrong 
and  affords  ground  for  a  new  action.  So  where  the  plaintiff 
was  seized  of  an  ancient  house  with  liofhts  therein,  and  the  de- 


done  by  the  same  act.  Gillum  v.  St. 
Louis,  eto,  R.  Co..  4  Tex.  Civ.  App.  62-', 
2a  S.  W.  Rep.  716. 

In  Kansas  Pacific  R  Co.  v.  Mihl- 
man,  17  Kan.  224,  Brewer,  J.,  dis- 
cussed this  question  in  an  interest- 
ing way.  It  was  there  ruled  that 
where  A.  enters  upon  the  land  of  B. 
-and  digs  a  ditcli  thereon,  there  is  a 
direct  invasion  of  the  riglits  of  B.,  a 
completed  trespass,  and  the  cause  of 
action  for  all  injuries  resulting 
therefrom  commences  to  run  at  the 
time  of  the  trespass;  the  fact  that 
A.  does  not  re-enter  B.'s  land  and  fill 
up  the  ditch  does  not  make  him  a 
continuous  wrong-doer  and  liable  to 
repeated  actions  as  long  as  the  ditch 
remains  unfilled;  no  one  can  be 
charged  as  a  continuing  wrong-doer 
who  has  not  the  right,  and  who  is 
not  under  the  duty,  of  terminating 
that  which  causes  the  injury;  a 
party  who  has  dug  a  ditch  upon  the 
land  of  another  has  no  right  to  re- 
enter and  fill  it  up;  though  unfore- 
seen injury  results  from  a  completed 
act  there  does  not  arise  a  new  cause 
•of  action  for  which  a  recovery  may 
be  had  after  the  original  wrong  has 
been  satisfied. 

Clegg  V.  Dearden,  13  Q.  B.  576,  is 
interesting  upon  the  same  distinc- 
tion. There  the  owner  of  a  coal 
mine  excavated  as  far  as  the  bound- 
ary (which  he  was  by  custom  en 
titled  to  do),  and  continued  the  ex- 
cavation wrongfully  into  the  neigh- 
boring mine,  leaving  an  aperture  in 
the  coal  of  that  mine,  through  which 
water  passed  into  it  and  did  damage. 
It  was  held  that  the  party  so  exca- 
vating was  liable  in  trespass  for 
4L)reaking  into  the  neighboring  mine, 


but  not  in  an  action  on  the  case  for 
omitting  to  close  up  the  aperture  on 
his  neighbor's  soil,  though  a  contin- 
uing damage  resulted  from  its  being 
unclosed.  It  was  also  held  that  a 
new  action  could  not  be  maintained 
for  damages  occasioned  by  the  flow 
of  water  in  consequence  of  the  aper- 
ture remaining  unclosed  after  an  ac- 
tion on  the  case  had  already  been 
brought  for  making  the  aperture 
and  letting  in  the  water,  which  ac- 
tion was  referred  to  arbitration,  and 
the  plaintiff  being  made  a  party  to 
the  reference  in  respect  of  any  in- 
jury to  him  by  any  of  the  matters 
alleged  in  the  declaration  in  such 
action,  had  had  damages  awarded 
and  paid  for  such  injury,  although 
the  damage  last  complained  of  was 
subsequent  to  the  award  and  pay- 
ment. Lord  Den  man,  C.  J.,  said: 
"  The  gist  of  the  action  as  stated  in 
the  declaration  is  the  keeping  open 
and  unfilled  of  an  aperture  and  ex- 
cavation made  by  the  defendant 
into  the  plaintiff's  mine.  By  the 
custom  the  defendant  was  entitled 
to  excavate  up  to  the  boundary  of  his 
mine  without  leaving  any  barrier; 
and  the  cause  of  action,  therefore, 
is  the  not  filling  up  the  excavation 
made  by  him  on  the  plaintiff's  side 
of  the  boundary  and  within  his 
mine.  It  is  not,  as  in  the  case  of 
Holmes  v.  Wilson,  10  A.  &  E.  503,  a 
continuing  of  something  wrongfully 
placed  by  the  defendant  upon  the 
premises  of  the  plaintiff;  nor  is  it  a 
continuing  of  something  placed 
upon  the  land  of  a  third  person  to 
the  nuisance  of  the  plaintiff,  as  in 
the  case  of  Thompson  v.  Gibson,  7 
M.  &  W,  456.     There  is  a  legal  obii- 


330  ENTIKETY    OF   DAMAGES,  [§  115. 

fendant  erected  a  building  whereby  the  former's  lights  wore 
estopped,  a  recovery  for  the  erection  did  not  bar  an  action  for 
its  continuance.^  In  another  case  there  had  been  an  action  of 
trespass  for  placing  stumps  and  stakes  on  the  plaintiff's  land, 
which  action  had  been  satisfied ;  a  subsequent  action  for  leav- 
in**-  them  there  was  sustained  on  the  ground  that  a  new  tres- 
pass  was  thereby  committed.^  In  Holmes  v.  Wilson*  trespass 
was  brought  against  a  turnpike  company  for  continuing  but- 
tresses on  the  plaintiff's  land  to  support  its  road.  He  had  re- 
covered compensation  in  a  former  action.  After  refusing  to- 
remove  the  buttresses  on  request  another  action  of  trespass 
was  brouo^ht.  It  was  arfjued  for  the  defendant  that  the  dam- 
ages  given  in  the  first  action  were  to  be  regarded  as  full  com- 
pensation for  all  injuries  and  were  to  be  taken  as  the  full  esti- 
mated value  of  the  land  occupied  by  the  buttresses;  that  the 
judgment  operated  as  a  purchase  of  the  land.  In  reply  Pat- 
terson, J.,  said :  "  How  can  you  convert  a  recovery  and  pay- 
ment of  damages  for  the  trespass  into  a  purchase  ?  A  recov- 
ery of  damages  for  a  nuisance  to  land  will  not  prevent  an- 
other action  for  continuing  it.  As  to  the  supposed  effect  of 
the  judgment  in  changing  the  property  of  the  land,  the  con- 
sequence of  that  doctrine  would  be  that  a  person  who  wants 
his  neighbor's  land  might  always  buy  it  against  his  will,  pay- 
ing only  such  purchase-money  as  a  jury  might  assess  for  dam- 
ages up  to  the  time  of  the  action.  If  the  property  was  changed 
when  did  it  pass  ?  Suppose  the  plaintiff  had  brought  eject- 
ment for  the  part  occupied  by  the  defendant's  buttresses, 
would  the  recovery  of  damages  in  trespass  be  a  defense  ?  There 

gation  to  discontinue  a  trespass  or  such  an  omission   is  neither  a  con- 
remove  a  nuisance;   but  no  such  ob-  tinuation  of  a  trespass  nor  of  a  nui- 
ligation  upon  a  trespasser  to  replace  sance;  nor  is  it  the  breach  of  any 
what  he    has    pulled  down  or  de-  legal  duty."  Cumberland  &  O.  Canal 
stroyed  upon  the  land  of  another,  Co.  v.  Hitchings,  65  Me.  140. 
though  he  is  liable  to  an  action  of  Successive  actions  lie  for  the  un- 
trespass  to  compensate  in  damages  lawful  diversion  of  water.    Irving  v. 
for  the  loss  sustained.    The  defend-  Media,  10  Pa.  Super.  Ct.  132,  affirmed 
ant  having  made  an  excavation  and  without  opinion,  194  Pa,  648. 
aperture  in  the  plaintiff's  land  was  ^  Rosewell  v.  Prior,  2  Salk.  459. 
liable  to  an  action  of  trespass;  but  2  Bowyer  v.  Cook,  4  M,  G,  &  S.  236. 
no  cause  of  action  arises  from  his  Compare    Kansas    Pacific    R.  Co.  v.. 
omitting  to  re-enter  the    plaintiff's  Mihlnian,  17  Kan.  224. 
land  and    fill    up   the    excavation;  s  lo  A.  &  E.  503. 


§  110.]  GENERAL    PKINCIPLES.  331 

is  no  case  to  show  that  when  hind  is  vested  in  a  party  and 
fresh  injuries  are  done  upon  it  fresh  actions  will  not  lie." 
Where  the  defendant  dug  holes  in  and  deepened  the  bed  of  a 
stream  in  order  to  increase  its  water  supply,  with  the  result 
that  the  water  flowed  more  rapidly  past  the  land  of  the  plaint- 
iff and  was  of  less  depth,  so  that  such  land  was  liable  to  be 
trespassed  on  by  cattle,  the  plaintiff  was  entitled  to  bring  suc- 
cessive actions  for  separate  acts  of  trespass.'  These  cases  may 
be  distinguishable  from  the  Kansas  decision-  on  the  irround 
that  the  request  to  remove  the  things  complained  of  may  be 
considered  as  a  license  to  enter  for  that  purpose;  but  other- 
wise it  is  difficult  to  harmonize  them  with  it.  It  may  be  that 
the  true  ground  of  distmction  is  stated  in  a  ]\[aine  case:' 
"When  something  has  been  unlawfully  placed  upon  the  land 
of  another,  which  can  and  ought  to  be  removed,  then,  inas- 
much as  successive  actions  may  be  maintained  until  the  wrong- 
doer is  compelled  to  remove  it,  the  damages  in  such  suit  must 
be  limited  to  the  past  and  cannot  embrace  the  future." 

§  116.  Same  subject.  The  authorities  are  not  agreed  as  to 
the  right  to  bring  successive  actions  where  the  result  of  a  tort 
to  real  property  is  to  create  a  permanent  appropriation  of  it 
to  the  public  use,  as  for  railroads,  streets,  sewers  and  the  like; 
or  to  change  its  condition  so  as  to  adapt  it  to  the  grade  of 
streets.  Where  property  is  taken  for  public  use  under  the 
statutes  which  provide  therefor  prospective  damages  as  well 
as  others  are  assessed;  they  are  an  entirety,  and  all  such  as 
proceed  from  the  appropriation  of  it  to  the  use  for  which  it 
is  taken  are  presumed  to  have  been  anticipated.'*     If  land  is 

1  Clarke  v.  Midland  Great  West-  Schoick  v.  Delaware  Canal,  20  N.  J. 
ern  R.  Co..  [1895]  2  Irish,  294.  L.  249;  Water  Co.  v.  Chambers,  13 

2  Kansas    Pacific    R.   Co.  v.  Mihl-  N.  J.  Eq.  199;  Waterman  v.  Connee- 
man,  supra.  ticut  R.  Co.,  80  Vt.  610,  73  Am.  Dec. 

3  Cumberland  &  O.   Canal   Co.  v,  326;  Chesapeake  Canal  v.  Grove,  11 
Hitchings.  65  Me.  140.  Gill  &    J.  398;    Furniss   v.   Hudson 

*  White  V.  Chicago,  etc.  R.  Co.,  122  River  R.  Co..  5  Sandf.  551;  Baltimore 

Ind.  317,  23  N.  E.  Rep.  782,  7  L.  R.  A.  R.  Co.  v.  Magruder,  34  Md.  79,  6  Am. 

257;  Perley  v.  B.,  C.  &  M.  R.  Co.,  57  Rep.  310;  Missouri  R.  Co.  v.  Haines, 

N.  H.  212;  Sawyer  v.  Keene,  47  id.  10  Kan.  439;  La  Fayette  R.  Co.  v.  New 

173;  Aldrich  v.  Cheshire  R.   Co.,  21  Albany,  13  Ind.  90,  74  Am.  Dec.  246; 

id.  359,  53  Am.   Dec.  212;  Fowle  v.  Montmorency  R.  Co.  v.  Stockton,  43 

New  Haven  &  N.  Co.,  107  Mass.  352,  Ind.  328;  Evans  v.  Haefner,  29  Mo. 

112  id.  334,  17  Am.  Rep.  106;   Van  141;  Baker  v.  Johnson,  2  Hill,  342; 


332 


ENTIKETY    OF    DAMAGES. 


[§  116. 


damao-ed  by  a  permanent  structure  lawfully  erected,  which, 
without  any  further  act  except  to  keep  it  in  repair,  must  con. 
tinue  to  cause  the  result  which  is  complained  of,  the  owner 
may  recover  in  one  action  for  damages  sustained  and  those 
which  will  fall  upon  him.  The  judgment  in  the  action  first 
brouo-ht  will  bar  another  like  action  for  subsequent  injuries 
from  the  same  cause.^  A  recovery  of  prospective  damages  in 
such  a  case  will  bar  an  action  for  subsequent  damages  though 
caused  by  an  unusual  event.-  In  some  cases  this  principle  has 
been  extended  to  the  unlawful  entry  upon  land  by  railroads 
and  the  building  of  tracks  thereon,^  and  in  others  to  the  right- 
ful improvement  of  a  street,  though  the  work  was  negligently 
done,  and  the  negligence  was  the  cause  of  the  action.*  These 
decisions  are  rested  on  the  principle  that  the  parties  have 
elected  to  consider  the  trespass  as  permanent,  and  they  apply 
the  rule  applicable  in  condemnation  proceedings  which  requires 
a  final  adjustment  of  the  liability  of  the  party  condemning. 


Call  V.  Middlesex,  2  Gray,  232; 
Veghte  V.  Hoagland,  29  N.  J.  L.  125; 
Gait  V.  Chicago,  etc  R.  Co.,  157  111. 
125,  140,  41  N.  E.  Eep.  648,  citing  the 
text.  But  see  Lancashire  R.  Co.  v. 
Evans,  15  Beav.  322. 

It  is  said  in  North  Vernon  v.  Voeg- 
ler,  103  Ind.  314,  3  N.  K  Rep.  821, 
that  the  construction  of  works  of  a 
public  character  by  municipal  of- 
ficers is  clearly  analogous  to  the  seiz- 
ure of  land  under  the  right  of  emi- 
nent domain,  and  that  all  the  dam- 
ages occasioned  thereby  must  be 
assessed  in  one  action.  But  this  posi- 
tion is  controverted  by  a  case  con- 
sidered in  the  text  of  this  section. 

1  Fowle  V.  New  Haven  &  N.  Co.,  107 
Mass.  352;  Troy  v.  Cheshire  R  Co., 
23  N.  H.  83;  Chicago  &  A.  R.  Co.  v. 
Maher,  91  111.  312;  Same  v.  Schaffer. 
2G  111.  App.  280:  Same  v.  Loeb,  118 
111.  203,  8  N.  E.  Rep.  460;  Swantz  v. 
MuUer,  27  111.  App.  320;  Elizabeth- 
town,  etc.  R.  Co.  V.  Combs,  10  Bush, 
382,  19  Am.  Rep.  67;  Jeffersonville, 
etc.  R.  Co.  v.  Esterle,  13  Bush,  667; 
North  Vernon  v.  Voegler,  103  Ind. 


314,  2  N.  E.  Rep.  821;  Central  Branch 
Union  Pacific  R.  Co.  v.  Andrews,  26 
Kan.  702;  Ohio  &  M.  R.  Co.  v.  Wach- 
ter.  123  111.  440,  15  N.  E.  Rep.  279; 
Bizer  v.  Ottumwa  Hydraulic  Co.,  70 
Iowa,  145,  30  N.  W.  Rep.  172;  Powers 
V.  Council  Bluffs,  45  Iowa,  652,  24 
Am.  Rep.  792;  Indiana,  etc.  R.  Co.  v. 
Eberle,  110  Ind.  542,  59  Am.  Rep.  225, 
11  N.  E.  Rep.  467;  Lafayette  v.  Nagle, 
113  Ind.  425,  15  N.  E.  Rep.  1;  Frankle 
V.  Jackson,  33  Fed.  Rep.  371. 

2  Fowle  v.  New  Haven  &  N.  Co.,  113 
Mass.  334,  17  Am.  Rep.  106. 

3  Chesapeake  &  O.  R.  Co.  v.  Moats, 
20  Ky.  L.  Rep.  1757,  50  S.  W.  Rep.  31; 
International,  etc.  R.  Co.  v.  Giesel- 
man,  13  Tex.  Civ.  App.  133,  34  S.  W. 
Rep.  658:  Frankle  v.  Jackson,  33 
Fed.  Rep.  371;  Central  Branch  Union 
Pacific  R.  Co.  v.  Andrews,  26  Kan. 
702;  Indiana,  etc.  R  Co.  v.  Eberle, 
supra;  Baldwin  v.  Chicago,  etc.  R. 
Co.,  35  Minn.  354,  29  N.  W.  Rep.  5. 

*  North  Vernon  v.  Voegler,  103  Ind. 
314,  2  N.  E.  Rep.  831;  Powers  v,  Coun- 
oil  Bluffs,  supra. 


§  IIG.]  GENERAL    PKINCIPLES.  333 

As  will  appear  there  are  strong  objections  and  weighty  au- 
thorities in  opposition.  Some  of  the  courts  which  entertain 
this  view  hold  that  if  the  gist  of  the  complaint  is  not  the  un- 
lawful entr}^  and  occupation,  but  the  improper  use,  that  the 
wrong  may  be  redressed  in  successive  actions.^ 

For  damages  resulting  from  the  negligent  erection  or  con- 
struction of  a  building  or  culvert  which  is  erected  or  con- 
structed pursuant  to  law,  successive  actions  may  be  brought.'^ 
Damage  to  crops  by  the  annual  overflow  of  water  is  suscep- 
tible of  apportionment,  and  compensation  therefor  may  be  re- 
covered in  successive  actions.^  In  a  New  York  case,  which 
was  fully  considered,*  it  is  held  that,  if  a  railroad  is  constructed 
upon  or  over  a  highway  in  which  or  in  the  soil  of  which  in- 
dividuals have  private  rights,  unless  the  public  right  is  obtained 
and  private  rights  are  lawfull}'  acquired  the  builders  thereof 
are  trespassers;  and  an  adjacent  owner  may  recover  only  the 
damages  he  has  sustained  up  to  the  commencement  of  the  action ; 
for  damages  thereafter  resulting  successive  actions  may  be 
brought.^  There  is  no  presumption  that  the  trespass  will  be 
continued,  and  title  to  land  cannot  be  acquired  otherwise  than 
by  purchase  or  condemnation  proceedings.®  Criticising  the  rule 
held  by  some  courts  to  the  effect  that  where  the  character  of 
the  injury  is  permanent,  and  the  complaint  recognizes  the  de- 
fendant's right  to  continue  in  the  use  of  the  property,  and  to 
acquire  as  the  result  of  the  suit  the  owner's  right  thereto,  in  pur- 
suance of  which  the  damages  are  assessed  on  the  basis  of  the 
permanent  depreciation  of  the  property,  and  with  special  ref- 
erence to  a  case  which  holds  that  damages  may  be  so  assessed 

^  Lindquest  v.  Union  Pacific  R.  Co.,  New  York.    New  York  Nat.  Bank  v. 

33  Fed.  Rep.  372.  Metropolitan  E.  R.  Co.,  108  N.  Y.  660, 

^  Ohio  &  M.  R.  Co.  V.  Wachter,  123  15  N.  E.  Rep.  445 :  Pond  v.  Same,  112  N. 

111.  440.  15  N.  E.  Rep.  279;  Chicago,  Y.  186,  8  Am.  St.  734, 19  N.  E.  Rep.  487. 

etc.  R.  Co.  V.  Schaffer,  26  111.  App.  280,  See  Lahr  v.  Same.  104  N.  Y.  270,  10  N. 

124  III.  112,  16  N.  E.  Rep.  239.  E.  Rep.  528;  Henderson  v.  New  York 

3  Oldfield  V.  Wabash,  etc.  R.  Co.,  22  Central  R.  Co.,  78  N.  Y.  423;  Schell 

Mo.  App.  607;  Van  Hoozier  v.  Han-  v.  Plumb,  55  id.  592. 
nibal,  etc.  R.  Co.,  70  Mo.  145;    Dick-        6  Carl  v.  Sheboygan,  etc.  R.  Co.,  46 

son  V.  Chicago,  etc.  R.  Co.,  71  id.  575.  Wis.  625,  1  N.  W.  Rep.  295;  Blesch  v. 

<Uline  V.  New  York,  etc.  R.  Co.,  Chicago,  etc.   R   Co.,  43  Wis.   183- 

101  N.  Y.  98,  54  Am.  Rep.  601,  4  N.  E.  Russell  v.  Brown,  63  Me.  203;  Cum- 

Rep.  536.  berland  &  O.  Canal  Co.  v.  Hitchings, 

5  This   rule  is  well  established  in  65  id.  140. 


334 


ENTIRETY    OF    DAMAGES. 


[§  li6. 


for  negligence  in  making  a  lawful  improvement  in  a  street/ 
Earl,  J.,  saj's  that  in  his  opinion  that  decision  is  clearly  unsound 
as  to  the  precise  question  adjudged.  "What  right  was  there 
to  assume  that  the  street  would  be  left  permanently  in  a  neg- 
ligent  condition,  and  then  hold  that  the  plaintitf  could  recover 
damages  upon  the  theory  that  the  carelessness  would  forever 
continue?  "  The  municipality  "  may  cease  to  be  careless,  or 
remedy  the  effects  of  its  carelessness,  and  it  may  apply  the;; 
requisite  skill  to  its  embankment,  and  this  it  may  do  after  its 
carelessness  and  unskilful ness  and  the  consequent  damages 
have  been  established  by  a  recovery  in  an  action.  The  moment 
an  action  has  been  commenced,  shall  the  defendant  in  such  a 
case  be  precluded  from  remedying  its  wrong  ?  Shall  it  be  so 
precluded  after  a  recovery  against  it?  Does  it  establish  the 
right  to  continue  to  be  a  wrong-doer  forever  by  the  payment 
of  the  recovery  against  it?  Shall  it  have  no  benefit  by  discon- 
tinuing the  wrong,  and  shall  it  not  be  left  the  option  to  dis- 
continue it?  And  shall  the  plaintiff  be  obliged  to  anticipate 
his  damages  with  prophetic  ken  and  foresee  them  long  before, 
it  may  be  many  years  before,  they  actually  occur,  and  recover 
them  all  in  his  first  action  ?  I  think  it  is  quite  absurd  and  il- 
logical to  assume  that  a  wrong  of  any  kind  will  forever  be  con- 
tinued and  that  the  wrong-doer  will  not  discontinue  or  remedy 
it,  and  that  the  convenient  and  just  rule,  sanctioned  by  all  the 
authorities  in  this  state,  and  by  the  great  weight  of  authority 
elsewhere,  is  to  permit  recoveries  in  such  cases  by  successive 
actions  until  the  wrong  or  nuisance  shall  be  terminated  or 
abated."  ^     In  Pennsylvania  if  the  damage  from  the  taking  and 


1  North  Vernon  v.  Voegier,  103  Ind. 
314,  2  N.  E.  Rep.  831. 

2  The  writer  of  the  opinion  cited 
Rose  well  v.  Prior,  2  Salk,  460;  Bow- 
yer  v.  Cook,  4  M.,  G.  &  S.  236;  Holmes 
V.  Wilson,  10  A.  &  E.  503:  Thompson 
V.  Gibson,  8  M.  &  W.  281;  Mitchell 
V.  Darlej-  Main  Colliery  Co.,  14  Q.  B. 
Div.  125;  Whitehouse  v.  Fellowes,  10 
C.  B.  (N.  S.)  765;  Esty  v.  Baker,  48 
Me.  495;  Russell  v.  Brown,  63  id.  203; 
Cumberland  &  O.  Canal  Co.  v.  Hitch- 
ings,  65  id.  140;  Bare  v.  Hoffman,  79 
Pa.  71,  21  Am.  Rep.  42;  Thompson  v. 


Morris  Canal  &  B.  Co.,  17  N.  J.  L,  480: 
Thayer  v.  Brooks,  17  Ohio.  489;  An- 
derson, etc.  R.  Co.  V.  Kernodle,  54 
Ind.  314;  Harrington  v.  St.  Paul,  etc. 
R.  Co.,  17  Minn.  215;  Adams  v.  Hast- 
ings &  D.  R.  Co.,  18  id.  260;  Ford  v. 
Chicago  &  N.  R.  Co.,  14  Wis.  609,  80 
Am.  Dec.  791;  Carl  v.  Sheboygan, 
etc.  R.  Co.,  46  Wis.  625,  1  N.  W.  Rep. 
295;  Biesch  v.  Chicago  &  N.  R.  Co., 
43  Wis.  183;  Green  v.  New  York,  etc. 
R.  Co.,  65  How.  Pr.  154;  Taylor  v. 
Metropolitan  E.  R.  Co.,  50  N.  Y. 
Super.  Ct.  311;  Duryea  v.  Mayor,  etc.. 


§^   117,   118.]  GENERAL    PEINCIPLES.  335 

from  the  change  of  grade  arises  at  the  same  time  the  compen- 
sation awarded  or  recovered  for  the  taking  embraces  the  dam- 
ages resulting  from  the  change  of  grade,'  but  if  the  latter  is 
made  subsequent  to  the  taking  an  action  to  recover  the  dam- 
ages done  thereby  will  lie.^ 

§  117.  Contracts  of  indemnity.  Upon  contracts  of  indem- 
nity, if  there  has  been  a  breach  before  suit  brought,  any  actual 
damage  subsequently  resulting  therefrom,  or  payments  made 
by  the  indemnified  party  covered  by  the  agreement  after  as 
well  as  before  the  commencement  of  suit  and  down  to  the 
time  of  the  trial,  may  be  included  in  the  recovery.'  So  [101] 
if  the  defendant's  breach  of  any  contract  or  his  wrongful  act  has 
involved  the  injured  party  in  a  legal  liability  to  pay  money, 
or  he  has  incurred  indebtedness  to  a  third  person,  or  expenses 
to  relieve  against  the  effects  of  the  act  which  constitutes  the 
cause  of  action,  such  liability,  indebtedness  or  expenses,  paid 
or  not,  constitutes  an  element  of  damage  without  regard  to 
the  time  when  it  was  actually  incurred  or  discharged.* 

§  lis.  Damage  to  property  and  injury  to  person  by  same 
act.  The  question  has  arisen  whether  damage  inflicted  upon 
property  and  injury  resulting  to  the  person  from  one  act 
of  negligence  will  give  cause  for  independent  actions.  Through 
the  negligence  of  the  defendant's  servant  the  plaintiff's  cab 
was  damaged  and  his  person  injured.  An  action  to  recover 
for  the  damage  done  to  the  cab  was  successful.  Subsequently 
.an  action  to  recover  for  the  personal  injuries  was  instituted.  It 
was  held  that  inasmuch  as  the  damages  therefor  might  have 
been  claimed  in  the  other  action,  the  judgment  recovered  in 
it  barred  the  second  suit,*  It  was  considered  that  there  was 
but  one  wrong  though  there  were  two  consequences.  The 
court  of  appeal  reversed  this  judgment,  Coleridge,  C.  J.,  dis- 
senting.     The  majority  of  the  court  were  of  the  opinion  that 

26  Hun,  120,  and  other  cases  in  New  3  Spear  v.  Stacy,  26  Vt  61. 

York.  4  Id.;  Dixon  v.  Bell,  1  Stark.  287; 

1  Righter  v.  Philadelphia,  161  Pa.  Hagan  v.  Riley,  13  Gray,  515;  Smith 
73,  38  Atl.  Rep.  1015.  v.    Howell,   6   Ex.   730;   Kenyon    v. 

2  Clark  V.  Philadelphia,  171  Pa.  30,  Woodruff,  33  Mich.  310. 

33  AtL  Rep.  124,  50  Am.  St.  790;  Rod-  &  Brunsden  v.  Humphrey,  11  Q.  B. 
gers  V.  Philadelphia,  181  Pa.  243,  37  Div.  712  (1883),  per  Pollock,  R,  and 
Atl.  Rep.  339.  Lopes,  J. 


336  ENTIRETY    OF    DAMAGES.  [§  118. 

"  two  separate  kinds  of  injury  were  in  fact  inflicted,  and  two 
wrongs  done.  The  mere  negligent  driving. in  itself,  if 
accompanied  b}'-  no  injury  to  the  plaintiff,  was  not  ac- 
tionable at  all,  for  it  was  not  a  wrongful  act  at  all  till  a  wrong 
arose  out  of  the  damage  which  it  caused.  One  wrong  was 
done  as  soon  as  the  plaintiff's  enjoyment  of  his  property  was 
substantially  interfered  with.  A  further  wrong  arose  as  soon 
as  the  driving  also  caused  injury  to  the  plaintiff's  person.  Both 
causes  of  action  in  one  sense  may  be  said  to  be  founded  upon 
one  act  of  the  defendant's  servant,  but  they  are  not  on  that 
account  identical  causes  of  action."^  This  distinction  im- 
presses the  writer  as  being  too  metaphysical  for  practical 
purposes,  and  as  out  of  harmony  with  the  analogies  of  the 
law.  Our  assent  is  compelled  to  the  opposite  view  by  the 
reason  given  by  the  chief  justice  in  his  dissenting  opinion: 
"It  appears  to  me  that  whether  the  negligence  of  the  servant 
or  the  impact  of  the  vehicle  which  the  servant  drove  be  the 
technical  cause  of  action,  equally  the  cause  is  one  and  the 
same;  that  the  injury  done  to  the  plaintiff  is  injury  done  to 
him  at  one  and  the  same  moment  by  one  and  the  same  act  in 
respect  of  different  rights,  i.  e.,  his  person  and  his  goods,  I  do 
not  in  the  least  deny;  but  it  seems  to  me  a  subtlety  not  war- 
ranted by  law  to  hold  that  a  man  cannot  bring  two  actions  if 
he  is  injured  in  his  arm  and  in  his  leg,  but  can  bring  two  if 
besides  his  arm  and  leg  being  injured  his  trousers  which  con- 
tains his  leg  and  his  coat  sleeve  which  contains  his  arm  have 
been  torn."  The  rule  which  prevails  in  the  state  courts  gen- 
erally is  in  harmony  with  the  views  of  the  dissenting  opinion 
quoted  frora.^    In  New  York,  however,  the  English  doctrine 

1  Id. ;  14  Q.  B.  Div.  141  (1884).      See  ken  v.  Avery  Manuf.  Co.,  —  N.  D.  — , 
Rose  V.  Buckett,  [1901]  2  K.  B.  449.  92  N.  W.  Rep.  487;  Von  Fragstein  v. 

2  Pittsburgh,  etc.  R  Co.  v.  Carlson,  Windier,  2  Mo.  App.  598;  Lamb  v. 
24  Ind  App.  559,  566,  56  N.  E.  Rep.  St.  Louis,  etc.  R.  Co.,  33  id.  489. 
251;  Wesley  V.  Chicago,  etc.  R.  Co.,  Under  the  California  code,  which 
84  Iowa,  441.  51  N.  W.  Rep.  163;  is  to  the  effect  that  the  plaintiff  may 
Owensboro  &  BL  Gravel  Road  Co.  unite  several  causes  of  action  in  the 
V.  Coons,  20  Ky.  L.  Rep.  1678,  49  S.  W.  same  complaint  when  they  all  arise 
Rep.  966;  Braithwaite  v.  Hall,  168  out  of  injuries  to  character,  in- 
Masa  38,  46  N.  E.  Rep.  966;  Bliss  v.  juries  to  person,  injuries  to  prop- 
New  York  Centi'al,  etc.  R.  Co.,  160  erty,  a  complaint  seeking  a  re- 
Mass.  447,  455,  36  N.  E.  Rep.  65;  Nok-  covery    for    damages  to    property. 


§  110.]  GENERAL    PKIXCIPLES.  SZ1 

is  favored.  The  ground  upon  which  the  court  of  appoala 
rested  its  ruling  is  that  there  is  such  an  essential  difference 
between  an  injury  to  the  person  and  an  in  jury  to  property  that 
makes  it  impracticable,  or,  at  least,  very  inconvenient  in  the 
administration  of  justice  to  blend  the  two.  Different  periods 
of  limitation  apply,  and  the  law  governing  the  assignment  of 
the  two  causes  of  action  varies.'  One  of  the  Texas  courts  of 
civil  appeals  also  favors  the  English  rule.^ 

§  110.  What  is  not  a  double  remedy.  In  an  attachment 
in  equity  against  B.  and  A.  the  property  of  A.  was  taken  as 
the  property  of  B.,  and,  being  perishable,  was  sold  under  an 
order  of  the  court,  and  afterwards  the  court  decreed  that  the 
sheriff  pay  the  proceeds  of  sale  to  A.  The  sheriff  failing  lo 
pay,  A.  moved  against  him  and  his  sureties,  and  judgment  was 
entered  for  the  penalty  of  his  bond,  to  be  discharged  by  the 
payment  of  the  proceeds,  which  they  paid.  Previous  to  the 
decision  of  the  court  in  favor  of  A.  he  brought  an  action  on 
the  bond  of  the  sheriff,  against  him  and  his  sureties,  for  the 
trespass  in  taking  his  goods;  the  former  judgment  and  [1*V2] 
its  pa3'ment  were  set  up  in  defense  but  it  was  held  that  the 
action  was  not  thereby  barred ,  but  A.  might  recover  the  dif- 
ference between  the  value  of  the  goods  at  the  time  they  were 
taken  under  the  attachment  and  the  amount  of  the  proceeds 
of  sale  paid  him.''  If  the  mast-sr  of  a  whaling  vessel  [103] 
abandons  the  voyage  and  wrongfully  sells  the  property  of  the 
owner  on  board,  the  subsequent  collection  of  a  part  of  the  pro- 
ceeds of  such  sale  is  no  bar  to  an  action  against  him  for  break- 
ing up  the  voyage  and  disposing  of  the  property,  but  it  re- 
duces the  damage.*  One  whose  goods  were  maliciously  at- 
tached upon  a  writ  against  a  third  party  and  who  recovered 
judgment  in  replevin  against  the  attaching  officer  was  not 
thereby  barred  of  his  action  against  the  original  plaintiff  for 
wrongfully  directing  the  levy.     The  original  attachment  was, 

injury  to  character  and  impairment  Texas  Civ.   App.  144,  27  S.  W.  Rep. 

of  health  is  bad.      Lamb  v.    Har-  924.    See  Stickford   v.  St.  Louis,  7 

baugh,  105  Cal.  680,  39  Pac.  Rep.  56.  Mo.  App.  317. 

'  Reilly  v.  Sicilian  Asphalt  Paving  3  Sangster    v.   Commonwealth,  17 

Co.,  170  N.  Y.  40,  62  N.  E.  Rep.  772,  Gratt.  124. 

88  Am.  St.  636.  < Brown  v.  Smith,  12  Cush.  366. 

2  Watson  V.  Texas  &  P.  R.  Co.,  8 
VOKl  — 22 


338  ENTIRETY    OF    DAMAGES.  [§  120. 

on  the  part  of  the  present  defendant,  a  malicious  abuse  of 
legal  process.  Against  the  officer  no  malice  or  improper  mo- 
tive was  charged.  He  could  therefore  be  held  to  answer  in 
damages  only  to  the  extent  required  to  compensate  the  plaint- 
iff in  replevin  for  the  actual  pecuniary  loss  necessarily  in- 
volved. The  plaintiff  in  the  attachment,  on  the  other  hand, 
may  be  liable  for  consequential,  and,  perhaps,  for  vindictive, 
damages.     The  causes  of  action  were  different  and  distinct.^ 

§  120.  Prospective  damages.  In  the  application  of  the 
rule  that  all  the  damages  which  pertain  to  a  cause  of  action, 
without  reference  to  the  time  when  they  actually  accrue,  are 
entire  and  cannot  be  recovered  piecemeal  by  successive  actions, 
it  is  frequently  necessary  to  take  into  consideration  damages 
which  have  not  been  actually  suffered  either  at  the  commence- 
ment of  the  suit  or  its  trial;  for  otherwise  there  would  be  a 
[lt>4]  very  inconvenient  postponement  of  that  class  of  actions 
or  a  renunciation  of  a  large  part  of  the  compensation  due  to 
the  injured  party  When  a  cause  of  action  accrues  there  is  a 
right,  as  of  that  date,  to  all  the  consequent  damages  which  will 
ever  ensue.^  They  are  recoverable  in  one  action  if  they  can 
be  proved,  and  only  one  can  be  maintained;  it  may  be  brought 
at  any  time  after  the  accrual  of  the  right.  The  question  is  a 
practical  and  legal  one  in  each  case  whether  the  cause  of  ac- 
tion IS  of  such  a  nature  that  the  injurious  consequences  of  the 
wrong  complained  of  can  reach  into  the  future  or  whether 
any  subsequent  damages  will  be  owing  to  a  continuous  fault 
which  may  be  the  foundation  of  a  new  action.  So  is  the  ques- 
tion whether  any  offered  evidence  tends  to  prove  future  dam- 
ages which  are  the  legal  result  of  the  wrong  which  constitutes 
the  cause  of  action,  and  whether  the  sum  of  the  evidence  in 

1  V:ncent  v.  McNamara,  70  Conn.  Milk  Co.,  47  Minn.  460,  46  N.  W.  Rep. 

332,  -69  Ati.  Rep.  444.  142;  Erie  &  P.  R.  Co.  v.  Douthet,  88 

^  Empie  v.  Empie,  35  App.  Div.  51,  Pa.  243,  32  Am,  Rep.  451:  Commerce 

.•^4  N.  Y.  Supp.  402;   Morrison  v.  Mc-  Excliange  Nat.  Bank  v.  Blye,  123  N. 

Atee,  23  Ore.  530,  32  Pac.  Rep.  400;  Y.  132.  25  N.  E.  Rep.  208;  Bracken  v. 

Fales  V.    Hemenway,    64    Me.    373;  Atlantic  Trust  Co.,  167  N.  Y.  510,  60 

Paige  V.  Barrett,  151  Mass.  67,  23  N.  N.  E.  Rep.  772,  82  Am.  St.  731;  Am- 

E.  Rep.  725;  Cook  v.  Redman,  45  Mo.  erman  v.  Deane,  132  N.  Y.  355,  30  N. 

App.  397,  citing  the  text;  Ennis  v.  E.  Rep.  741.  SeeDrummond  v.  Crane, 

Buckeye  Pub.  Co..  44  Minn.  105,  46  159  Mass.  577,  35  N.  E.  Rep.  90,38  Am. 

N.  W.   Rep.  814;  Bowe  v.  Minnesota  St.  460,  23  L.  R.  A.  707. 


■§  120.]  GENERAL    PRINCIPLES.  339 

the  particular  case  is  sufficient  for  the  consideration  of  the 

If  a  growing  crop  is  destroyed  it  can,  of  course,  never  be 
shown  with  absolute  certainty  that  but  for  its  destruction  it 
would  have  matured;  nor  that  one  party  who  is  stopped  by 
the  other  in  the  performance  of  a  special  contract  would  other- 
wise have  proceeded  to  a  complete  execution  of  it  so  as  to  en- 
title himself  to  its  full  benefits.  Nor  is  it  matter  of  law  that 
the  jury  shall  assume  that  the  crop  would  have  matured,  or 
that  the  contract  would  have  been  fulfilled.  The  jury  may 
estimate,  with  the  aid  of  testimony,  the  value  of  the  crop  at 
the  time  of  its  destruction,  in  view  of  all  the  circumstances 
existing  at  any  time  before  the  trial,  favoring  or  rendering 
doubtful  the  conclusion  that  it  would  attain  to  a  more  valuable 
condition,  and  all  the  hazards  and  expenses  incident  to  the 
process  of  supposed  growth  or  appreciation;^  and  so  of  the  in- 
crease of  a  flock  of  sheep  and  the  growth  of  the  wool  thereof.^ 
The  same  uncertainties  and  a  greater  surface  of  them  are  en- 
countered in  actions  upon  warranties  that  seeds  sold  for  plant- 
ing are  of  particular  varieties.' 

In  actions  upon  contracts  which  contemplate  a  series  [195] 
•of  acts  and  a  considerable  period  of  time  for  performance  a 
party  complaining  of  a  total  breach  by  the  other  sufficiently 
maintains  his  right  to  recover  if  he  has  performed  without 
default  up  to  the  time  of  the  breach  and  is  ready  to  proceed, 
though  his  right  to  the  value  of  the  contract  depends  on  his 
ability  and  inclination  to  prosecute  the  performance  on  his 
part  to  completion.     He  is  entitled  to  recover  the  profits  which 

iShoemakerv.  Acker,  116  Cal.  239,  62  Tex.  570;  Chicago,  etc.  R.   Co.  v. 

48  Pac.  Rep.  62,  citing  the  text;  Slioe-  Schaffer,  26  111.  App.  280. 

maker  v.  Crawford,  82  Mo.  App.  487;  2  Schrandt  v.  Young,  89  N.  W.  Rep. 

Railway  Co.  v.  Yarborough,  56  Ark.  607  (Neb.),  citing  the  text;  Rule  v. 

012.  619,  20  S.  W.  Rep.  515,  quoting    McGregor,  Iowa,  — ,  90  N.  W. 

the  text;  Railway  Co.  v.  Lyman,  57  Rep.  811. 

Ark.  512,  22  S.  W.  Rep.  170:  Taylor  3  Randall  v.  Raper.  El,  B.  &  E.  84; 

V.  Bradley,  39  N.  Y.  129;  People's  Ice  Passinger  v.  Thorburn.  34  N.  Y.  634; 

Co.  V.  Steamer  Excelsior, 44  Mich.  229,  White  v.  Miller,  7  Hun,  427,  71  N.  Y. 

6  N.  W.  Rep.  686;  Smith  v.  Chicago,  118,  27  Am.  Rep.   13;  Van  Wyck  v. 

etc.  R.  Co.,  38  Iowa,  518;  Richardson  Allen,  69  N.  Y.  61,  25  Am.  Rep.  136; 

V.  Northrup.  66  Barb,  85;  Folsom  v.  Wolcott  v.  Mount,  36  N.  J.  L.  262,  13 

Apple  River  Log  Driving  Co.,  41  Wis.  Am.  Rep.  438;  Ferris  v.  Comstock, 

602;  Texas  Pacific  R.  Co.  v.  Bayliss,  33  Conn.  513. 


"40  ENTIRETY    OF    DAMAGES.  [§   121. 

he  would  have  made, —  the  contract  price  less  what  he  would 
have  to  do  or  expend  to  earn  or  otherwise  entitle  himself  to 
it.  This  deduction  may  be  the  price  of  labor  or  the  value  of 
property  at  a  future  day.  The  action  for  damages  recoverable 
for  such  a  breach  may  be  brought  and  tried  before  that  day 
arrives.  If  so,  the  prices  prevailing  at  the  time  of  the  breach 
may  be  acted  upon  as  the  test  of  values  at  the  times  mentioned 
in  the  contract;^  but  if  the  trial  be  delayed  until  the  date 
fixed  for  performance  the  parties  may  show  the  prices  actually 
prevailing  then  or  any  other  conditions,  favorable  or  other- 
wise, affecting  the  cost  of  fulfilling  the  contract,^ 

§  121.  Certainty  of  proof  of  future  damages.  The  con- 
servatism pervading  the  law  is  opposed  to  allowing  compen- 
sation for  probable  loss.  It  manifests  itself  more  particularly 
in  respect  to  those  damages  which  might  be  proved  with  cer- 
tainty if  they  were  real;  and,  if  not  fanciful  and  imaginary, 
are  past  damages:  not  such  as  are  contemplated  to  arise  in 
the  future  from  such  causes  as,  according  to  general  experience, 
produce  them.  The  decided  cases  which  relate  to  prospective 
damages  w^arrant  the  statement  that  the  injured  party  is  en- 
titled to  recover  compensation  for  such  elements  of  damage 
as  are  likely  to  occur;  the  jury  may  proceed  upon  reasonable 
probabilities,  and  accept  as  sufficiently  proved  those  results 
which,  under  like  circumstances,  generally  come  to  pass.'  It  is 
[196]  not,  however,  to  be  hence  inferred  that  prospective  dam- 

1  Masterton  v.  Mayor,  7  Hill,  61.  Mo.   534    (disapproved   in   Pellet   v. 

2  Burrell  v.  New  York  &  S.  Solar  Manufacturers'  &  Merchants'  Ins. 
Salt  Co.,  14  Mich.  34;  People's  Ice  Co.,  104  Fed.  Rep.  503,  43  C.  C.  A.  669); 
Co.  V.  Steamer  Excelsior,  44  Mich.  Howell  v.  Young,  5  B.  &C.  259;  Mac- 
229,  6  N.  W.  Rep.  636;  Chicago  v.  rae  v.  Clarke,  L.  R.  1  C.  P.  403;  Frye 
Greer,  9  Wall.  726;  Hochster  v.  De  v.  Maine  Central  R.  Co..  67  Me.  414; 
laTour,2  Ei.  &  B.  678;  Frost  v.Knight,  Richmond  v.  Dubuque,  etc.  R.  Co.,  40 
L.  R.  5  Ex.  323,  7  id.  Ill;  Taylor  v.  Iowa,  264;  Schell  v.  Plumb,  55  N.  Y. 
Bradley.  39  N.  Y.  129;  Howard  v.  592;  Missouri,  etc.  R.  Co.  v.  Fort  Scott, 
Daly,  61  id.  362,  19  Am.  Rep.  385;  15  Kan.  435;  Roper  v.  Johnson,  L.  R. 
Richmond  v.  Dubuque,  etc.  R.  Co.,  40  8  C.  P.  167;  Peltz  v.  Eichele,  63  Mo. 
Iowa,  264;  Jacobs  v.  Davis,  34  Md.  171;  Sutherland  v.  Wyer,  67  Me.  65; 
204;  Grover  v.  Buck,  34  Mich.  519;  Gifford  v.  Waters.  67  N.  Y.  80;  Rich. 
Shoemaker  v.  Acker,  supra.  ardson  v.  Mellish,  2  Bing.  229;  Wil- 

3  James  v.  Kibler,  94  Va.  165,  26  S.  sou  v.  Northampton,  etc.  R  Co.,  L 
R  Rep.  417,  citing  the  text;  Treat  v.  R.  9  Ch.  379,  quoted  from  in  i?  590. 
Hiles,  81  Wis.  278,  50  N.  W.  Rep.  896;  See  ch.  36. 

Lewis  V.  Atlas  Mut.   L.  Ins.  Co.,  61 


§   122.]  GENERAL    PRINCIPLES.  341 

ages  may  be  recovered  on  every  plausible  anticipation,  nor 
that  no  allowance  is  to  be  made  for  the  uncertainties  which 
affect  all  conclusions  depending  on  future  events;  it  is  only 
intended  that  such  uncertainties,  where  the  damages  are  shown 
by  evidence  reasonably  certain,  do  not  exclude  them  wholly 
from  consideration.  The  price  of  an  average  colt  cannot  be 
fixed  by  deducting  the  cost  of  its  keep  from  the  value  of  an 
average  horse,  for  there  is  not  a  certainty  of  exemption  from 
accidents  and  disease.  All  the  damaores  from  a  single  tor- 
tious  act  are  an  entirety,  and  must  be  assessed  and  recovered 
once  for  all.'  Successive  actions  cannot  be  maintained  for  their 
recovery  as  they  may  accrue  from  time  to  time.  The  injured 
party  is  entitled  to  recover  in  one  action  compensation  for  all 
the  damages  resulting  from  the  injury,  whether  present  or 
prospective.  And  in  respect  to  the  latter,  the  rule  is  that  ho 
can  recover  for  such  as  it  is  shown  with  reasonable  certainty 
will  result  from  the  wrongful  act  complained  of.^ 

§  122.  Action  for  enticing  away  apprentice,  servant  or 
son.  In  an  action  for  enticing  away  an  apprentice  damages 
cannot  include  the  loss  of  his  services  for  the  residue  of  his 
term,  for  he  may  return.^  Where  an  action  on  the  case  was 
brought  to  recover  for  the  defendant's  enticement  of  the 
plaintiff's  minor  son  from  his  service  and  inducing  him  to  en- 
list in  the  army  for  three  years,  it  was  held  that  the  plaintiff 
could  only  recover  damages  for  the  loss  of  service  up  to  [197] 
the  time  of  the  commencement  of  the  action,  or  at  most  up  to 
the  time  of  trial.'' 


1  §  120;  Galligan  v.  Sun  Printing  &  pp.  187,  193-198  of  the  text  of  the  1st 
Publishing  Ass'n,  25  N.  Y.  Misc.  355,  ed.;  Grotenkemper  v.  Harris,  25  Ohio 
54  N.  Y.  Supp.  471.  St.    514:    Hamilton   v.    Great    Falls 

2  Filer  v.  New  York  Central  R.  Co.,  Street  R.  Co.,  17  Mont.  334,  352,  43 
49  N.  Y.  42;  Miller  v.  Wilson,  24  Pa.  Pac.  Rep.  860,  43  id.  713,  citing  tlie 
114;  Fetter  V.  Beale.l  Salk.  11;  Hod-  text.     See  ^  1251. 

soil  V.  Stallebrass,  11  A.  &  K  301 ;        ^Fay  v.    Guynon,    131    Mass.    31; 

Short  V.  McCarthy,  3  B.  &  Aid.  620;  Hambleton  v.  Veere,  2  Saund.   170; 

Ilowell  V.  Young,  5  B.  &  C.  259;  In-  Moore  v.  Love,  3  Jones,  215;  Hodsoll 

gram  v.  Lawson,  8  Scott,  471;  Clegg  v.  Stallebrass,  11  A.  &  E.  301;  Trigg 

V.  Dearden,  12  Q.  B.  576;  Stroyan  v.  v.  Northcut,  Litt  Sel.  Cas.  4l4,  Lewis 

Knowles,  6  H.  &  N.  454;  East  Jersey  v.  Peachey,  1  H.  &  C.  518;  Drew  v. 

Water  Co.  v.  Bigelow,  60  N.  J.  L.  201,  Sixth   Avenue   R.  Co.,  26  N.  Y.  49. 

3S  Atl.  Rep.  631;  Smith  v.  Pittsburgh  See  McKay  v.  Bryson.  5  Ired.  216. 
&  W.  R.  Co.,  90  Fed.  Rep.  783,  citing        *  Covert  v.  Gray,  34  How.  Pr.  450. 


'A2 


ENTIRETY    OF   DAMAGES. 


[§  123. 


§  123.  Future  damages  for  personal  injuries.  In  ascer- 
taining the  amount  of  damages  resulting  from  a  personal  in- 
jury the  jury  may  consider  the  bodily  pain  and  mental  suffer- 
ing which  have  occurred  and  are  likely  to  occur  in  the  future 


In  this  case  there  were  numerous 
contingencies  with  elements  of  prob- 
ability in  each:  the  enlisted  man 
might  be  discharged  by  reason  of 
sickness  or  wounds:  his  enlistment 
being  illegal,  it  was  the  duty  of  the 
war  department  to  discharge  him; 
there  was  no  presumption  that  the 
war  would  continue  for  three  years. 
In  Moore  v.  Love,  3  Jones,  215, 
Battle,  J.,  thus  discusses  the  distinc- 
tion between  cases  u iiere  the  cause 
of  action  is  an  entirety  and  those 
which  admit  of  a  succession  of  suits: 
"It  is  clearly  stated  bj'  Lord  Mans- 
field, in  the  case  of  Robinson  v.  Bland, 
2  Burr.  1077,  'When  a  new  action 
may  be  brought  and  satisfaction  ob- 
tained thereupon  for  any  duties  or 
demands  which  may  have  arisen 
since  the  commencement  of  the  de- 
pending suit,  that  duty  or  demand 
shall  not  be  included  in  the  judg- 
ment u|ion  the  former  action.  As  in 
covenant  for  the  non-payment  of 
rent,  or  of  an  annuity  payable  at 
diflferent  times,  you  may  bring  a  new 
action  toties  quoties  as  often  as  the 
respective  sums  become  due  and  pay- 
able. So  in  trespass  and  in  tort,  new 
actions  may  be  brought  as  often  as 
new  injuries  ana  wrongs  are  re- 
peated; and  therefore  damages  shall 
be  assessed  only  up  to  the  time  of  the 
wrong  complained  of.  But  where  a 
man  brings  an  action  of  assumpsit 
for  principal  and  interest  upon  a  con- 
tract obliging  the  defendant  to  pay 
such  principal  money,  with  interest 
froni  such  a  time,  he  complains  of 
the  non-payment  of  both;  the  inter- 
est is  an  accessory  to  the  principal, 
tvnd  he  cannot  bring  a  new  action 
for  any  interetst  grown  duo  between 


the  commencement  of  his  action  and 
the  judgment  in  it.'  What  is  here  so 
well  said  about  the  interest  being  the 
accessory  to  the  principal  money, 
and  therefore  recoverable  down  to 
the  time  of  the  trial,  applies  with 
equal  force  to  the  case  of  trespass 
and  tort  where  the  wrong  done  is  not 
repeated  or  continued,  though  the 
damage  resulting  from  it  may  not 
cease  being  developed  until  after  the 
time  when  the  writ  was  issued.  In 
the  latter  case  the  plaintiff  is  not 
limited  solely  to  the  consequential 
damage  which  has  actually  occurred 
up  to  the  trial  of  the  cause,  but  he 
may  go  on  to  claim  relief  for  the 
prospective  damages  which  can  then 
be  estimated  as  reasonably  certain 
to  occur. 

"  This  brings  us  to  the  considera- 
tion of  tlie  case  of  McKay  v.  Bryson, 
5  Ired.  216,  which  may  seem  at  first 
view  to  militate  against  the  distinc- 
tion by  which  we  have  endeavored 
to  reconcile  the  decisions  which  have 
been  made  upon  the  subject  of  pros- 
pective damages.  It  was  an  action 
on  the  case  brought  to  recover  dam- 
ages for  enticing  the  plaintiff's  ap- 
prentice from  his  service  and  convey- 
ing him  out  of  the  state.  The  testi- 
mony showed  that  the  boy  was  bound 
apprentice  to  learn  the  business  of  a 
tailor,  and  that  he  continued  in  the 
service  of  his  master  until  he  was 
carried  away  by  the  defendant,  and 
when  last  heard  from  he  was  in  Ten- 
nessee. The  suit  was  brought  some 
time  before  the  expiration  of  the 
term  of  service,  and  the  jury  were  in- 
structed that  they  might  give  dam- 
ages as  for  a  total  loss  of  service 
during  the  whole  period  of  appren- 


§  123] 


GENERAL    PRINCIPLES. 


343 


in  consequence  thereof,  as  well  as  the  loss  of  time,  expense  [198] 
of  medical  and  other  attendance  and  the  diminution  of  ability 
to  earn  money. ^  The  inquiry  cannot  bo  extended  to  cover  the 
merely  possible  consequences  of  the  injury,  as  by  the  possible 


ticeship,  subject  to  a  deduction  on  ac- 
count of  the  plaintiff's  chance  of  re- 
gaining the  boy.  Tiie  charge  given 
to  the  jury  in  the  court  below  was 
approved  in  this  court  upon  the  au- 
thority of  the  case  of  Hodsoll  v.  Stal- 
lebrass,  11  A.  &  E.  301.  No  other  case 
appears  to  have  been  cited  and  the 
court  do  not  advert  to  the  fact  that 
in  Hodsoll  v.  Stallebrass  the  injury 
from  which  the  loss  accrued  to  the 
plaintiff  was  a  single  act  of  wrong; 
but  they  do  advert  to  and  state  the 
fact  that  the  loss  caused  l)y  the  tort 
of  the  defendant  was  in  effect  a  total 
loss  of  the  plaintiffs  apprentice.  The 
onl^-  wrong  alleged  in  the  declaration 
or  proved  on  the  trial  was  that  of 
carrying  the  apprentice  beyond  the 
limits  of  the  state,  which  caused  a 
total  loss  of  his  services  to  his  master. 
In  this  view  the  case  may  well  be 
sustained  upon  the  principle  appli- 
cable to  the  second  class  of  cases  to 
which  we  have  referred.  That  the 
removal  of  the  apprentice  out  of  the 
state  may  be  regarded  in  the  same 
light  as  if  a  permanent  injury  had 
been  inflicted  upon  him,  we  have 
the  strong  analogy  of  the  case  of 
trover  by  one  tenant  in  common 
against  another  for  the  destruction  of 
the  article  held  in  common.  If  the 
article  be  sent  off  by  the  defendant 
to  a  place  unknown  to  the  plaintiff, 
so  that,  as  to  him,  it  is  totally  lost,  it 
is  equivalent  to  its  destruction.  Lucas 
V.  Wasson,  3  Dev.  398.  24  Am.  Dec. 
266.  The  circumstances  of  the  present 
case  are  very  different  from  those  in 
McKay  v.  Bryson.  The  apprentices 
were  carried  by  the  defendant  to  his 
residence  in  an  adjoining  county, 
only  twenty-five  miles  distant  from 
the  plaintiff.    They  were  not  con- 


cealed from  him ;  and  it  appears  from 
the  proof  that  he  knew  where  they 
were.  The  continued  detention  of 
them  by  the  defendant  was  a  suc- 
cession of  torts  for  which  he  might 
bring  new  actions  from  time  to  time; 
and  hence  his  case  falls  into  the  class 
with  Hambleton  v.  Veere,  and  all 
those  on  which  damages  can  be  given 
for  the  loss  of  service  up  to  the  com- 
mencement of  the  suit  only."  ' 

The  true  distinction  is  undoubtedly 
pointed  out  in  the  foregoing  opinion, 
that  the  damages  in  an  action  can- 
not include  those  arising  after  suit  is 
brought  if  a  new  action  could  be 
brought  for  them;  but  it  may  admit 
of  a  doubt  if  the  case  was  properly 
disposed  of  upon  that  test.  A  tres- 
passer who  takes  personal  property 
and  retains  it  may  be  said  to  commit 
a  succession  of  torts  while  he  retains 
the  property;  but  in  an  action  for 
such  a  taking  the  injured  party  would 
undoubtedly  be  obliged  to  make  his 
full  claim  of  damages.  He  would  not 
be  entitled  to  a  succession  of  actions. 
In  cases  where  apprentices  have  been 
enticed  away,  and  the  enticer  has 
not,  by  the  injury  or  otherwise,  made 
it  reasonably  certain  that  the  appren- 
tice will  not  return,  prospective  dam- 
ages are  not  denied  because  a  new 
action  may  be  brought  for  them  but 
because  they  are  not  susceptible  of 
proof:  they  are  not  certain.  But  if 
the  defendant  has  control,  and  will 
have  it  in  the  future,  he  may  be 
charged  with  depriving  the  master 
of  the  services  of  an  apprentice  for 
the  whole  term  for  the  same  reason 
that  he  might  be  charged  with  the 
full  value  of  a  horse  tortiously  taken. 
See  Herriter  v.  Porter,  23  Cal.  3S5. 

1  Swift  V.  Raleigh,  54  IIL  App.  44; 


S44 


EXTIKETY    OF    DAMAGES. 


[§§  12i,  125. 


outbreak  of  a  new  disease  or  other  sufferings  having  their  cause 
in  the  original  wrong  done  the  plaintiff;  in  such  a  case  there  is 
a  double  speculation  —  one  that  the  result  may  possibly  occur, 
and  the  other  that  if  it  does  it  will  be  a  product  of  the  original 
injury  instead  of  some  other  new  and,  perhaps,  unknown  cause.* 

§  124.  Only  present  worth  of  future  damages  given.  An 
award  on  account  of  prospective  damages  is  like  payment  in 
advance,  and  in  fixing  the  same  that  fact  may  be  taken  into 
consideration  and  the  amount  may  properly  be  reduced  to  its 
present  worth.^ 

§  125.  Continuous  breach  of  contracts  or  infraction  of 
rights  not  an  entirety.  A  continuous  breach  of  contract  or 
infraction  of  a  right  is  not  an  entirety.  It  is  at  any  time  sev- 
erable for  the  purpose  of  redress  in  damages  for  the  injury 
already  suffered.  This  is  the  case  whenever  a  continuous  duty 
imposed  by  law  or  by  contract  is  uninterruptedly  neglected, 
whether  such  departure  from  the  line  of  duty  be  by  positive 
acts  or  by  culpable  inaction.^     There  is  a  legal  obligation  to 


Griswold  v.  New  York  Central,  etc. 
R.  Co.,  115  N.  Y.  61,  12  Am.  St.  775, 
21  N.  E.  Rep.  726;  Hamilton  v.  Great 
Falls  Street  R,  Co.,  17  Mont.  834,  353, 
42  Pac.  Rep.  860,  43  id.  713,  citing 
the  text;  Ayres  v.  Delaware,  etc.  R. 
Co.,  158  N.  Y.  254,  53  N.  K  Rep.  22; 
Denver  Consolidated  Tramway  Co.  v. 
Riley,  14  Colo.  App.  132,  59  Pac.  Rep. 
476;  Bay  Shore  R.  Co.  v.  Harri.s,  67 
Ala.  6;  Curtiss  v.  Rochester,  etc.  R. 
Co.,  20  Barb,  282;  Atchison  v.  King, 
9  Kan.  550;  Welch  v.  Ware,  32  Mich. 
77:  Birchard  v.  Booth,  4  Wis.  67; 
Merely  v.  Dunbar,  24  Wis.  183;  Wil- 
son V.  Young,  31  Wis.  574;  Goodno 
V.  Oshkosh,  28  Wis.  300;  Spicer  v. 
Chicago,  etc.  R  Co.,  29  Wis.  580; 
Karasich  v.  Hasbrouck,  28  Wis.  569; 
Pennsylvania  R.  Co.  v.  Dale,  76  P* 
47;  Tomlinson  v.  Derby,  43  Conn.  562; 
Fulsome  v.  Concord,  46  Vt.  135; 
Nones  v.  Northouse.  id.  587;  Metcalf 
V.  Baker,  56  N.  Y.  662;  New  Jersey 
Exp.  Co.  V.  Nichols,  33  N.  J.  L.  434, 
97  Am.  Dec.  722;  Walker  v.  Erie  R. 
Co.,  63  Barb.  260;  Bradshaw  v.  Lan- 


cashire R.  Co..  L.  R,  10  C.  P.  189;  Col- 
lins V.  Council  Bluffs,  32  Iowa.  324; 
Russ  V.  Steamboat  War  Eagle,  14 
Iowa,  363;  Dixon  v.  Bell,  1  Stark.  287; 
McLain  v.  St  Louis  &  S.  R.  Co.,  — 
JVIo.  App.  — ,  73  S.  W.  Rep.  909.  912, 
citing  the  text.     See  ch.  36. 

1  Strohm  v.  New  York,  etc.  R.  Co., 
96  N.  Y.  305;  Toser  v.  New  York  Cen- 
tral, etc.  R  Co.,  105  N.  Y.  659,  11  N. 
E.  Rep.  369;  Turner  v.  Newburgh,  109 
N.  Y.  301,  16  N.  E.  Rep.  344;  Ayres  v. 
Delaware,  etc.  R  Co.,  158  N.  Y.  254, 
53  N.  E.  Rep.  22. 

2  Pickett  V.  Wilmington  &  W.  R. 
Co.,  117  N.  C.  616,  23  S.  E.  Rep.  264, 
53  Am.  St.  611,  30  L.  R.  A.  257;  Good- 
hart  V.  Pennsylvania  R  Co.,  177  Pa. 
1,  35  Atl.  Rep.  191,  50  Am.  St.  787; 
Morrisey  v.  Hughes,  65  Vt  553,  27 
Atl.  Rep.  205;  Alabama  G.  S.  R  Co. 
V.  Carroll,  28  C.  C.  A.  207,  84  Fed. 
Rep.  772:  Morrison  v.  McAtee,  23  Ore. 
530,  32  Pac.  Rep.  400;  Fulsome  v.  Con- 
cord, 46  Vt  135.     See  §§  1251.  1265. 

3  Lake  Shore,  etc.  R.  Co.  v.  Rich- 
ards. 152  IlL  59,  38  N.  E.  Rep.  773,  30 


120.] 


GENERAL    PKIXCIPLES. 


345 


discontinue  a  trespass  or  to  remove  a  nuisance.^  So  a  covenant 
to  keep  certain  premises  in  repair  for  a  specified  period  im- 
poses a  continuous  duty,  and  when  neglected  gives  a  continuous 
■cause  of  action.^  AVhen  an  action  is  brought  the  injury  to  that 
time  is  segregated  and  the  recovery  is  confined  to  such  dam- 
ages as  result  from  the  breach  or  wrong  continued  to  the  com- 
mencement of  the  action.' 

§  126.  Continuance  of  wrong  not  presumed.  [199-201] 
The  law  will  not  presume  the  continuance  of  a  wrong,  nor  al- 
low a  license  to  continue  it,  or  a  transfer  of  title  to  result  from 
the  recovery  of  damages  for  prospective  misconduct.*  But  in 
■equity  the  owner  of  real  property  upon  which  a  trespass  has 
been  committed  may  restrain  the  continuance  of  the  wrong 
and  thus  prevent  a  multiplicity  of  actions  at  law  to  recover 
•damages.  In  such  an  action  the  court  may  determine  the 
amount  of  damages  the  owner  would  sustain  if  the  trespass 
were  permanently  continued,  and  decree  that  upon  their  pay- 
ment the  plaintiff  shall  give  a  deed  or  convey  the  right  to  the 
defendant.* 


L.  R.  A.  33;  Van  Keurenv.  Miller,  78 
Hun,  173,  28  N.  Y.  Supp.  971;  Con- 
nolly V.  Coon,  23  Ont.  App.  87; 
Powers  V.  Wai'e,  4  Pick.  106;  Pierce 
V.  Woodward,  6  Pick.  206;  McConnel 
V.  Kibbe,  33  111.  175,  85  Am.  Dec.  265. 
See  Drummond  v.  Craue,  159  Mass. 
577,  35  N.  E.  Rep.  90,  38  Am.  St.  460, 
2:3  L.  R.   A.  707;  Wilson  v.  Sullivan, 

17  Utah,  341,  53  Pac.  Rep.  994. 

iPer  Lord  Denman  in  Clegg  v. 
Dearden,  12  Q.  B.  601;  Savannah,  etc. 
.R.  Co.  V.  Davis,  25  Fla.  917,  7  So.  Rep. 
•29;  Adams  v.  Hastings  &  D.  R.  Co., 

18  Minn.  260. 

2  Cooke  V.  England,  27  Md.  14; 
Beacli  V.  Crain,  2  N.  Y.  86;  Bleecker 
V.  Smith,  13  Wend.  530;  Phelps  v. 
New  Haven,  etc.  Co.,  43  Conn.  453; 
Keith  v.  Hinkston,  9  Bush,  283. 

8  Id. ;  Sackrider  v.  Beers,  10  Johns. 
241;  Shaw  v.  Etheridge,  3  Jones,  301; 
Brastield  v.  Lee,  1  Ld.  Raym.  329; 
Whitehouse  v.  Fellowes,  10  C.  B.  (N. 
S.)  765;  Mahon  v.  New  York  Central 
11.  Co.,  24  N.  Y.  658;  Phillips  v.  Terry, 


3  Keyes,  313;  Hayden  v.  Albee,  20 
Minn.  159;  Thompson  v.  Gibson,  7  M. 
&  W.  456;  Beck  with  v.  Griswold,  29 
Barb.  291:  Bi-adiey  v.  Amis,  2  Hayw. 
890;  Caruthers  v.  Tillman,  1  id.  501; 
Duncan  v.  Markley,  Harp.  276;  Moore 
v.  Love,  3  Jones,  215;  Cole  v.  Sprowl, 
35  Me.  101,  56  Am.  Dec.  696;  Hudson 
V.  Nicholson,  5  M.  &  W.  437. 

*  Adams  v.  Hastings  &  D.  R.  Co., 
18  Minn.  260;  Ford  v.  Chicago,  etc. 
R.  Co.,  14  Wis.  609.  80  Am.  Dec.  791; 
Uline  V.  New  York,  etc.  R.  Co.,  101  N. 
Y.  98,  54  Am.  Rep.  661,  4  N.  E.  Rep. 
536;  Savannah  &  O.  Canal  Co.  v.  Bour- 
quin,  51  Ga.  378;  Hanover  Water  Co. 
v.  Ashland  Iron  Co.,  84  Pa.  279; 
Whitmore  v.  Bischoff,  5  Hun,  176; 
Sherman  v.  Milwaukee,  etc.  R.  Co., 
40  Wis.  645;  Russell  v.  Brown,  63  Me. 
203:  Bowyer  v.  Cook,  4  C.  B.  236; 
Holmes  v.  Wilson,  10  A.  &  E.  503; 
Battishill  v.  Reed,  18  C.  B.  696;  Cum- 
berland &  O.  Canal  Co.  v.  Hitchings, 
65  Me.  140. 

6  Pappenheim  v.  Metropolitan  E. 


346  ENTIRETY    OF    DAMAGES.  [§   127. 

[202]  §  127.  Necessity  of  successive  actions.  The  neces- 
sity and  advantage  of  successive  actions  to  recover,  damages 
which  proceed  from  a  continuous  and  still  operating  cause  are 
very  obvious;  for,  besides  the  considerations  which  have  al- 
ready been  mentioned,  the  injurious  effects  so  blend  together 
that  in  most  instances  it  would  be  wholly  impracticable  to  ac- 
curately apportion  them.  Therefore,  the  right  to  recover  for 
all  damages  which  have  been  suffered  to  the  time  of  bringing 
the  first  action,  in  the  next,  all  damages  which  have  been  suf- 
fered from  that  time  to  that  of  commencing  such  second  ac- 
tion, and  so  on  while  the  cause  continues,  is  the  most  conven- 
ient course  for  practical  redress  that  can  be  devised.^  In  cases 
of  contracts  imposing  a  continuous  duty,  or  a  duty  the  con- 
tinued neglect  of  which  is  an  uninterrupted  breach,  from 
which  results  a  steady  accretion  of  damage,  the  injured  party 
may  bring  a  succession  of  actions  or  treat  defaults  having  that 
significance  as  a  total  breach,^  and  recover  damages  accord- 
ingly. Of  this  nature  was  the  contract  in  Grain  v.  Beach,^ 
where  the  plaintiff  had  granted  to  the  defendants  a  perpetual 
right  of  way  over  his  land  and  covenanted  to  erect  agate  of  a 
specified  description  at  the  terminus,  to  which  the  defendants 
covenanted  in  the  same  instrument  to  make  all  necessary  re- 
[203]  pairs.  The  plaintiff  erected  the  gate,  which  was  subse- 
quently removed  by  some  unknown  person.  It  was  held  that 
the  defendants  were  bound  to  replace  it;  the  covenant  was 
continuing;  an  action  brought  thereon  after  the  removal  of 
the  gate  for  damages  occasioned  by  cattle  coming  on  the 
plaintiff's  land  in  consequence  of  there  being  no  gate,  and  a 
recovery  therein,  were  no  bar  to  another  action  on  the  same 
covenant  for  damages  accruing  after  the  commencement  of 
the  first  suit.  The  defendants'  default  was  not  a  total  breach, 
nor  declared  and  recovered  on  as  such,  and  hence  they  were 

R.  Co.,  128  N.  Y.  436,  28  N.  E.  Rep.  518,  Dusen,  29    Mich.  431;   Royalton    v. 

13  L.  R.  A.  401;  Amerman  v.  Deane,  Royalton  &  W,  Turnpike  Co.  14  Vt. 

133   N.  Y.  355,  28  Am.  St.  584,  30  N.  311;  Withers  v.  Reynolds,  2  B.  &  Ad. 

K  Rep.  741.  882;   Fish  v.  Folley,  6   Hill,  54,   ex- 

1  Ulinev.  New  York  Central  R.  Co.,  plained  in  Crain  v.  Beach,  2  Barb. 
101  N.  Y.  88,  54  Am.  Rep.  661,  4  N.  124;  Keck  v.  Bieber,  148  Pa.  645,  24. 
E.  Rep.  536;  Mitchell  v.  Darley  Main  Atl.  Rep.  170. 

Colliery  Co.,  14  Q.  B.  Div.  125.  3  2  N.  Y.  86,  2  Barb.  120. 

2  Grand  Rapids,  etc.  R.  Co.  v.  Van 


§  12S.]  PARTIES    TO    SUE    AND    BE    SUED.  34:7 

not  thereby  relieved  of  the  continuing  obligation  of  the  cov- 
enant. If  it  were  an  entire  contract,  however,  any  breach 
would  be  or  might  be  treated  as  a  total  breach.^  Covenants 
for  support  and  maintenance  during  life  are  entire,  and  any 
breach  entitles  the  injured  party  to  recover  entire  damages  for 
a  total  breach,^  but  as  they  impose  a  continuous  duty  the  in- 
jured party  may  have  a  succession  of  actions  treating  any  acts 
of  breach  as  partial  only.' 

Section   2. 

parties  to  sue  and  be  sued. 

§  128.  Damages  to  parties  jointly  injured  entire.  Before 
leaving  the  subject  of  the  entirety  of  causes  of  action  and 
damages  it  is  proper  to  notice  some  points  relative  to  parties. 
At  common  law  all  the  parties  who  are  jointly  injured  by  a 
tort  or  breach  of  contract  may  sue  jointly  for  damages;  in  ac- 
tions ex  contractu  the  rule  is  imperative.  All  the  parties  [204] 
with  whom  the  violated  contract  was  made  must  join  as  plaint- 
iffs unless  their  interests  are  severed  in  the  contract,  so  that 
upon  a  breach  a  distinct  cause  of  action  accrues  to  each  or  less 
than  all.*  Actions  for  personal  injuries  to  a  married  woman 
must  be  in  the  names  of  the  husband  and  wife;^  except  where 

1  Fish  V.  Folley,  6  Hill,  54.  3  Woodb.  &  M.  277;  Little  v.  Hobbs, 

•-iSchell  V.  Plumb,  55  N.  Y.  592;  8  Jones,  179,  78  Am.  Dec.  275;  Grid- 
Dresser  V.  Dresser,  35  Barb.  573;  ley  v.  Starr,  1  Root,  281;  Farmer  v. 
Shaffer  v.  Lee,  8  id.  412;  Trustees  of  Stewart,  2  N.  H.  97;  Eastman  v. 
Howard  College  v.  Turner,  71  Ala.  Ramsey.  3  Ind.  419;  Millard  v.  Bald- 
439,  46  Am.  Rep.  326;  Carpenter  v.  win,  3  Gray,  484;  Dow  v.  Clark,  7 
Carpenter,  66 Hun,  177, 20  N.  Y.  Supp,  Gray,  198;  Weathers  v.  Ray,  4  Dana, 
928;  Empie  v.  Empie,  35  App.  Div.  474;  Frankem  v.  Trimble,  5  Pa.  520; 
51,  54  N.  Y.  Supp.  402.  See  Wriglit  Ross  v.  Milne,  12  Leigh,  204,  37  Am. 
V.  Wriglit,  49  Mich.  624,  14  N.  W.  Dec.  646;  Thompson  v.  Page,  1  Met. 
Rep.  571.  566;  The  Ship  Potomac,  2  Black,  581; 

3 Id.;  Fiske  v.  Fiske,  20  Pick.  499;  Archer  v.  Bogue,  4  111.  526;  Robert- 
Berry  V.  Harris,  43  N.  H.  376;  Fergu-  son  v.  Reed,  47  Pa.  115;  Sawyer  v. 
son  V.  Ferguson,  2  N.  Y.  360;  Turner  Steele,  4  Wash.  227;  Newcomb  v. 
V.  Hadden,  62  Barb.  480.  Clark,  1  Denio,  226;  Law  v.  Cross,  1 

<  Bigelow  V.  Reynolds,  68  Mich.  344,  Black,  533;    Beetle  v.  Anderson,  98 

36  N.  W.  Rep.  95;  Hall  v.  Leigh,  8  Wis.  6,  73  N.  W.  Rep.  560. 
Cranch,  50;  Fugurev.  Mutual  Society        ^Larnb  v.  Harbaugh.  105  Cal.  680, 

of  St.  Joseph,  46  Vt.  362;  Cleaves  v.  39    Pac.    Rep.    56;  White   v.    Vicks- 

Lord,  3  Gray,  66;  Jewett  v.  Cunard,  burg,  etc.  R  Co.,  42  La.  Ann.  990,  8  So. 


348  ENTIRETY    OF    DAMAGES.  [§  129. 

statutes  have  so  enlarged  the  property  rights  of  married 
women  as  to  enable  them  to  maintain  such  actions  in  their 
own  names.^  In  an  action  for  malicious  prosecution  of  hus- 
band and  wife  each  has  a  separate  right  of  action,  and  they 
cannot  join  their  causes  of  action;  but  the  husband  is  a  neces- 
sary co-plaintiff  with  the  wife  in  her  action.-  If  the  duty  of 
supporting  a  child  devolves  upon  the  father  and  he  is  alive 
when  the  mother  sues  for  an  injury  to  the  child  she  cannot 
maintain  the  action,  notwithstanding  she  has  been  divorced 
and  the  care  and  custod}^  of  the  child  were  awarded  her.^ 

§  129.  Actions  under  statutes.  In  actions  brought  under 
statutes  which  create  a  liability  where  none  existed  at  com- 
mon law,  the  parties  who  sue  thereunder  must  bring  them- 
selves clearly  within  the  language  used  by  the  legislature. 
Such  statutes  will  not  be  extended  or  enlarged  by  construc- 
tion.^ The  relief  or  remedy  is  not  available  to  any  person 
who  is  not  included  therein.-^  If  the  right  to  sue  for  an  injury 
which  has  resulted  in  death  is  given  to  a  "child,"  an  illegiti- 
mate child  cannot  recover  for  its  mother's  death  in  England,^ 
nor  in  Canada;^  but  it  is  otherwise  in  Ohio  under  a  statute 

Rep.  475;  Gallagher  V.Bowie,  66  Tex.  v.  Pope,  122   Cal.  253,  54  Pac.  Rep. 

265,  17  S.  W.  Rep.  407;  Ezell  v.  Dod-  847.     See  ch.  38. 

son,  60  Tex.  331;  Tell  v.  Gibson.  66  Cal.  ^  Williams  v.  Casebeer,  126  Cal.  77, 

247,  5  Pac.  Rep.  223;  King  v.  Thorn p-  58  Pac.  Rep.  380. 

son,  87  Pa.  365,   30   Am.   Rep.   364;  » Keller  v.  St.  Louis,  152  Mo.  596, 

Northern  Central  R.  Co.  v.  Mills,  61  54  S.  W.  Rep.  438,  47  L.  R  A.  391. 

Md.  355:  Blair  v.  Chicago  &  A.  R.  ''Sutherland,  Const,  of  Stats.,  g  371. 

Co.,  89  Mo.  384.    Compare  Bennett  v.  sid.;    McNamara    v.    Slavens,    76 

Bennett,  116  N.  Y.  584,  23  N.  K  Rep.  Mo.  330;    Gibbs  v.  Hannibal,  82  id. 

17,  6  L.  Pu  A.  553.  143;  Warren  v.   Englehart.  13  Neb. 

1  Chicago,  etc.  R.  Co.  v.  Dunn,  52  283.  13  N.  W.  Rep.  401;  Woodward  v. 

111.  260;  Mussel  man  v.  Galligiier.  33  Chicago  &  N.   R,  Co.,  23  Wis.  400; 

Iowa,   383:    Chadron    v.    Glover,   43  Dickins  v.  New  York  Central  R.  Co., 

Neb.  733,  63  N.  W.  Rep.  63.  23  N.  Y.  158:  Tennessee  Coal,  Iron  & 

A  wife  may  maintain  an  action  in  R.  Co.  v.  Herndon,  100  Ala.  451,  14 

her  own  name  against  a  woman  who  So.  Rep.  287;  Woodward  Iron  Co.  v. 

has  alienated  from  her  the  affection  Cook,  124  Ala.  349,  27  So.  Rep.  455; 

and  deprived  her  of  the  society  of  Maule  Coal  Co.  v.  Partenheimer,  155 

her  husband,  although  they  live  to-  Ind.  100.  109,  55  N.  E.  Rep.  751. 

gether  as  husband  and  wife.    Foot  v.  ^  Dickinson  v.  Northeastern  R  Co., 

Card,  58  Conn.  1,  18  Am.  St.  258,  18  2  H.  &  C.  735. 

Atl.  Rep.  1027,  6  L.  R  A.  839;  Ben-  ^  Gibson  v.  Midland  R.  Co.,  2  Ont. 

nett  v.  Bennett,  116  N.  Y.  584,  24  N.  658,  15  Am.  &  Eng.  R  R  Cas.  507. 
E.  Rep.  17,  6  L.  R.  A.  553;  Humphrey 


§   130.]  PARTIES    TO    SUE    AND    BE    SUED.  3i9 

which  uses  the  words  "next  of  Icin."^  "Where  an  action  is 
given  for  the  benefit  of  the  widow  and  next  of  kin  it  may  be 
brought,  though  there  be  no  widow,  if  there  are  next  of  kin, 
and  vice  ve?'sa.-  Kor  are  the  "  next  of  kin  "  required  to  be  so 
nearly  related  to  the  person  whose  death  is  sued  for  as  to  re- 
quire any  duty  of  sustenance,  support  or  education.' 

§  130.  Must  be  recovered  by  person  in  whom  legal  inter- 
est is  vested.  The  suit  must  be  brought  in  the  name  of  the 
party  in  whom  is  vested  the  legal  interest  though  the  equitable 
interest  be  in  another  person.*  The  funds  of  a  voluntary  as- 
sociation were  put  under  the  control  and  management  of 
trustees  who  took  a  note  payable  to  themselves  on  lending  the 
funds  to  some  other  members.  It  was  held  that  the  trustees 
in  their  individual  names  were  entitled  to  maintain  an  action 
on  the  note,  as  it  was  payable  to  them,  though  the  defendants 
as  well  as  themselves  were  members  of  the  association  bene- 
ficiall}''  interested  in  the  collection."  One  who  pays  the  con- 
sideration for  a  privilege  or  benefit  which  he  may  confer  upon 
another  may  sue  for  the  denial  of  it.®  A  trustee  who  has  sold 
trust  property  without  assigning  a  claim  for  damages  resulting 
from  a  wrong  done  thereto  prior  to  the  sale  may  bring  suit  to 
recover  therefor.'  In  an  action  by  a  firm  the  name  of  a 
dormant  partner  need  not  and  ought  not  to  be  used®  unless 

iMuhl   V.   Michigan   Southern   R,  Ball,  Hempst  541;  Lord  v.  Carnes.  98 

Co.,  10  Ohio,  272.     See  ch.  37.  Mass.  308;  Hart  v.  Stone,  30  Conn.  94; 

2  Sutherland.  Const,  of  Stat^,  g  371,  Pierce  v.  Robie,  39  Me.  205,  G3  Am. 

citing  McMahon  v.  Mayor,  33  N.  Y.  Dec.  614;  Yeager  v.  Wallace.  44  Pa, 

642,  647.  94;    Morton    v.    Webb,    7    Vt.    123; 

3Tilley  v.  Hudson  River  R  Co.,  24  Boardman  v.  Keeler,  2  Vt.  65;  Clark- 

N.  Y.  474;  Galveston,  etc.  R.  Co.  v.  son  v.  Carter.  3  Cow.  84;   Mitchell  v. 

Kutac,  72  Tex.  643,  37  Am.  &  Eng.  Dall,  2  H.  &  G.  159;  Lord  v.  Bald- 

R  R   Cas.  470,  11   S.   W.  Rep.  127;  win,  6  Pick.  352;  Wilson  v.  Wallace. 

Petrie  v.  Columbia,  etc.  R  Co..  29  S.  8  S.  &  R  55;  Warner  v.  Griswold.  8 

C.  303,  7  S.  E.  Rep.  515;  Railroad  Co.  Wend.  666;  Clark  v.  Miller,  4  Wend. 

V.  Barron,  5  Wall.  90;  Baltimore,  etc.  628. 

R  Co.  v.  Hauer.  60  Md.  449,  12  Am.  *  Pierce  v,  Robie,  89  Me.  205, 63  Am. 

&  Eng.  R.  R  Cas.  149. 155.  Dec.  614. 

nChitty  PI.  2-6;  Treat  V.  Stanton,  «  Trustees  of  Howard    College   v. 

14  Conn.  445;  Denton  v.  Denton.   17  Turner,  71  Ala.  429,  46  Am.  Rep.  326. 

Md.  403;  Sunapee  v.  Eastman,  32  N.  "Lancaster  v.  Connecticut  Mut.  L. 

H.  470;    Pike  v.  Pike,  24  N.  H.  384;  Ins.  Co.,  92  Mo.  460,  1  Am.  St.  739.  5 

Phillips  V.  Pennywit.  1  Ark.  59;  Lap-  S.  W.  Rep.  23. 

ham  V.  Green,  9  Vt  407;  Governor  v.  8  Clark  v.  Miller,  4  Wend.  628. 


350 


ENTIRETY    OF    DAMAGES. 


[§  131. 


he  is  one  of  the  parties  disclosed  in  the  contract.^  The  parties 
to  a  contract  are  the  persons  in  whom  the  legal  interest  in  the 
subject  of  it  is  deemed  to  be  vested,  and  who  therefore  must 
be  the  parties  to  the  action  which  is  instituted  for  the  purpose 
of  enforcing  it  or  recovering  damages  for  its  violation.^  An 
agent  who  has  sold  property  on  credit,  pursuant  to  authority 
from  and  for  his  principal,  may  sue  the  purchaser  in  his  own 
name  if  he  is  bound  to  account  to  the  owner  or  if  he  has  ac- 
counted to  him  for  it.*'  An  undisclosed  principal  may  sue  on 
a  contract  made  for  his  benefit  by  an  agent.*  An  agreement 
to  relinquish  a  business  and  not  to  carry  it  on  thereafter  in  a 
designated  place,  no  limit  being  specified  as  to  time,  and  a  bond 
conditioned  for  the  observance  thereof,  are  not  so  personal 
to  the  obligee  that  he  cannot  sue  thereon  for  a  breach  of  the 
agreement  after  he  has  transferred  the  property  and  busi- 
ness for  the  benefit  of  his  vendee.  There  seems  no  doubt,  upon 
the  authorities,  that  the  agreement  could  be  transferred  with 
and  as  an  incident  of  the  property,  the  purchase  being  made 
with  knowledge  of  the  condition  of  the  bond.^  The  contrary 
doctrine  is  held  in  Oregon.^  The  English  cases  referred  to  in 
the  note  are  not  considered  in  that  case;  and  the  California 
case  cited  is  distinguished  because  the  word  "  heirs  "  was  used 
in  the  contract  there  passed  upon  while  it  was  not  employed 
in  the  one  before  the  court.  The  breach  of  a  covenant  which 
runs  with  land  gives  the  widow  who  occupies  it  as  a  home- 
stead a  right  of  action  though  she  was  not  to  pay  for  it.^ 
[205]  §  131.  Not  joint  when  contract  apportions  the  legal 
interests.  Where  the  contract  separates  and  apportions  the 
legal  interests,  the  injury  in  case  of  a  breach  is  correspondingly 


1  Clark  V.  Carter,  2  Cow.  84:  Lord 
V.  Baldwin,  6  Pick.  353. 

2  Treat  v.  Stanton,  14  Conn.  445; 
Dauglierty  v.  American  U.  Tel.  Co., 
75  Ala.  168,  51  Ana.  Rep.  435. 

3  Fuller  V.  Curtis.  100  Ind.  237,  50 
Am.  Rep.  786;  Jackson  v.  Mott,  76 
Iowa,  263,  41  N.  W.  Rep.  12. 

4  Bell  V.  Lee,  78  Ala.  511,  56  Am. 
Rep.  52. 

5  Webster  v.  Buss,  61  N.  H.  40,  6 
Am.  Rep.  317;  Guerand  v.  Bandelet, 
32  Md.  562,   3   Am.    Rep.   164;  Cali- 


fornia Steam  Nav,  Co.  v.  Wright,  6 
Cal.  258,  8  id.  585;  Pemberton  v. 
Vaughan,  10  Q.  B.  87;  Hastings  v. 
Whitley,  2  Ex.  611.  It  was  held  in 
the  last  case  that  a  suit  might  be 
brought  by  the  executors  of  the  ob- 
ligee for  a  breach  arising  after  his 
death. 

6  Hillman  v.  Shannahau,  4  Ore.  163, 
18  Am.  Rep.  281. 

7  St.  L..  L  M.  &  S.   R.  V.  O'Baugh, 
49  Ark.  418,  5  S.  W.  Rep.  71L 


§§   132,  lo3.]  PARTIES    TO    SUE    AND    BE    SUED.  351 

separate  and  distinct.  Thus  a  promise  to  pay  the  respective 
owners  of  land  taken  for  a  road  such  sums  as  a  referee  named 
shall  award  gives  each  a  separate  action  lor  the  amount  awarded 
him.'  A  contract  between  a  fruit  company  and  a  number  of 
fruit  growers  to  receive,  dry,  and  market  their  crops,  at  speci- 
fied rates  per  pound,  that  delivered  by  each  person  being 
weighed  and  dried  separately,  and  then  weighed  out  to  the 
■owner  and  mingled  with  other  fruit,  a  receipt  being  given  each 
owner,  is  several.- 

§  132.  Implied  assumpsit  follows  the  consideration.  Where 
the  assumpsit  is  implied  it  will  follow  the  consideration.'  A 
committee  appointed  by  a  school  district  to  repair  a  school- 
house  took  the  job  among  themselves,  each  performing  work 
and  furnishing  a  separate  portion  of  materials.  Each  had  a 
distinct  cause  of  action.^  B}"  the  failure  of  1.  to  fulfill  a  prom- 
ise made  to  G.  and  S.  to  enter  satisfaction  of  a  judgment  against 
them  the  judgment  was  collected  entirely  out  of  the  property 
•of  G. ;  he  could  recover  in  an  action  by  himself  alone  for  money 
paid.*  If  money  is  deposited  with  a  stakeholder  on  the  event 
oi  a  wager  by  one  who  acts  as  an  agent  for  several  others,  each 
■of  the  latter  may  bring  a  separate  action  to  recover  the  money 
deposited  for  him,  though  the  stakeholder  was  ignorant  of  the 
principals  on  whose  account  the  deposit  was  made.^  Several 
plaintiffs  claiming  distinct  rights  cannot  join  in  the  same  action.'' 

§  133.  Effect  of  release  by  or  death  of  one  of  several  en- 
titled to  entire  damages.  Where  a  cause  of  action  ex  con- 
tractu accrues  to  several  jointly  it  is  an  entirety;  they  must 
all  join  in  an  action  upon  it;  no  others  can,  except  where  as- 
signments are  sanctioned  by  statute  as  a  transfer  of  the  legal 
right  of  action,  or  unless  that  right  devolves  upon  others  by 
operation  of  law  as  in  case  of  death  or  marriage.  It  cannot 
be  severed  by  partial  assignment,*  nor  by  the  giving  of  a  re- 

1  Farmer  v.  Stewart,  3  N.  H.  97;        » Taylor  v.  Gould,  57  Pa.  152. 
Jewett  V.  Cunard.  3  Woodb.  &  M.  277;        «  Yates  v.  Foot,  12  Johns.  1. 

State  Ins.  Co.  v.  Belford,  2  Kan.  A  pp.  ^  Barry    v.    Rogers,   2    Bibb,    314; 

280,  43  Pac.  Rep.  409.  Hinchman  v.  Paterson  R,  Co.,  17  N. 

2  Arnold   v.   Producers'  Fruit  Co.,  J.  Eq.  75,  86  Am.  Dec.  252;  Chambers 
.128  Cal.  G37,  61  Pac.  Rep.  283.  v.  Hunt,  18  N.  J.  L.  339. 

8  Lee  V.  Gibbons,  14  S.  &  R.  110.  sciiicago,  etc.  R.  Co.  v.  Nichols,  57 

*  Geer  v.  School  Disti  ict,  6  Vt.  76.     Ill  404. 


352 


ENTIRETY    OF    DAMAGES. 


[§  134. 


[206]  lease  by  one  of  several  jointly  entitled  to  sue.  Such  a 
release  would  operate  to  extinguish  the  right  of  action  at  law; 
for  if,  for  such  a  reason,  all  to  whom  the  right  of  action  ac- 
crued cannot  join  in  a  suit  upon  it  no  action  can  be  main- 
tained.^ But  one  of  several  joint  creditors  between  whom  no 
partnership  exists  cannot  release  the  common  debtor  so  as 
wholly  to  conclude  his  co-creditors  who  do  not  assent.  He 
may  defeat  an  action  at  law,  but  they  will  be  entitled  to  as- 
sert their  rights  in  equity.  It  is  a  general  rule  that  joint 
creditors  cannot,  by  a  division  of  their  claim  between  them- 
selves, acquire  a  separate  right  of  action  against  their  debtor, 
either  at  law  or  in  equity;  but  when  a  debtor  procures  a  re- 
lease from  a  part  of  them  he  cannot  object  to  the  others  pro- 
ceeding against  him  in  equity.-  On  the  death  of  one  of  two- 
persons  who  have  a  joint  right  of  action  upon  contract,  it  sur- 
vives, and  the  survivor  alone  is  entitled  to  sue.  The  personal 
representatives  of  the  deceased  cannot  be  joined  with  him.^ 
By  consent  a  joint  demand  may  be  severed  so  that  several 
suits  may  be  brought.*  So  an  assignee  of  the  whole  or  a  part 
may  sue  in  his  own  name,  if  the  debtor  promise  to  pay  him/ 
but  not  otherwise.® 

§  134:.  Misjoinder  of  plaintiffs,  when  a  fatal  objection.  In 
such  action  it  is  a  fatal  objection,  available  on  the  trial,  that 
there  is  a  misjoinder  of  plaintiffs.'^  It  is  equally  so  in  actions 
ex  delicto?  And  in  actions  ex  contracUib  the  non-joinder  of  all 
the  parties  in  whom  the  right  of  action  is  vested  is  fatal,  and 
[207]  the  objection  may  be  taken  on   the  trial.®     But  in  ac- 


iHall  V.  Gray,  54  Me.  230;  Kim- 
ball V.  Wilson,  3  N.  H.  96;  My  rick  v. 
Dame,  9  Cush.  248,  69  Am.  Dec.  284; 
Tuckerman  v.  Newhall.  17  Mass.  581; 
Eaton  V.  Lincoln,  13  Mass.  424.  See 
Eisenhart  v.  Slaymaker,  14  S.  &  R 
154. 

2  Upjohn  V.  Ewing,  2  Ohio  St.  13; 
Hosack  V.  Rogers,  8  Paige,  229;  Car- 
rington  v.  Crocker,  37  N.  Y.  386. 

3  Jackson  v.  People,  6  Mich.  154; 
Smith  V.  Franklin,  1  Mass.  480; 
Walker  v.  Maxwell,  id.  113;  Morri- 
son V.  Winn,  Hardin,  480;  Beebe  v. 
Miller,  Minor,  364;  Brown  v.  King, 


1  Bibb,  462:  Clark  v.  Parish,  id.  547; 
Chandler  v.  Hill,  2  Hen.  &  Mun.  124. 

4  Parker  v.  Bryant,  40  Vt.  291;  Car- 
rington  v.  Crocker,  37  N.  Y.  836. 

5  Page  V.  Danforth.  58  Me.  174. 

6  Hay  V.  Green,  12  Cush.  282. 

7  Brent  v.  Tivebaugh,  12  B.  Mon. 
87;  Blakey  v.  Blakey,  2  Dana,  460: 
Doremus  v.  Selden,  19  Johns.  213; 
Waldsmith  v.  Waldsmith,  2  Ohio, 
338,  15  Am.  Dec.  547;  Robinson  v. 
Scull,  3  N.  J.  L.  817. 

8  Glover  v.  Hunnewell,  6  Pick.  222; 
Ainsworth  v.  Allen,  Kirby,  145. 

9  Dob  V.  Halsey,  16  Johns.  34;  Ehle 


§  135.]  PARTIES   TO    SUE    AXD    BE    SUED.  353 

tions  of  tort  the  non-joinder  of  a  party  who  ought  to  join  as 
co-plaintiff  can  only  be  taken  advantage  of  by  plea  in  abate- 
ment or  upon  the  trial  by  an  apportionment  of  damages.^ 

§  135.  Joinder  of  defendants ;  etfect  of  non-joinder  and 
misjoinder.  By  the  common  law  all  joint  promisors  should 
be  joined  as  defendants;  and  all  should  be  sued,  or  only  one, 
on  a  joint  and  several  contract.-  On  a  joint  and  several  jirom- 
issory  note  made  by  a  firm  in  the  firm  name  and  l>y  another 
person  in  his  individual  character,  a  suit  may  be  maintain(  d 
against  the  members  of  the  firm  without  joining  the  other 
maker,  they,  for  this  purpose,  being  considered  but  one  person, 
the  non-joinder  of  the  other  being  no  ground  of  objection.^ 
Where,  some  weeks  after  the  execution  of  a  lease  of  real  estate, 
a  third  person,  by  writing  obligatory,  became  surety  for  the 
lessee  they  were  not  jointly  liable  and  could  not  be  joined  as 
defendants.*  Two  or  more  persons  cannot  be  sued  jointly  un- 
less a  joint  liability  is  proved.^  On  the  death  of  one  joint 
promisor  the  liability  survives  at  law  against  the  remaining  or 
surviving  promisor,  and  the  personal  representative  of  the  de- 
ceased cannot  be  joined  as  co-defendant.®  Many  persons  may 
join  in  one  instrument  without  making  themselves  jointly 
bound.  AVhether  they  have  done  so  or  not  is  a  question  [208] 
of  intention  to  be  determined  by  the  construction  of  the  entire 
contract.  The  undertaking  of  each  may  be  several,  as  is  usual 
in  subscriptions  for  some  common  purpose,  and  sometimes  in 

V.  Purdy,  6  Wend.  629;    Hansel   v.  Merrick  v.  Trustees  of  Bank,  8  Gill, 

Morris,  1  Blackf.  307;  Mcintosh  v.  59;  Minor  v.  Mechanics'  Bank,  1  Pet. 

Long,   2   N.   J.    L.   274;    Hilliker   v.  73;  Bangor  Bank  v.  Treat.  6  Me.  207, 

Loop.  5  Vt.  116,  26   Am.  Dec.   286;  19  Am.  Dec.  210;  Fielden  v.  Lahens, 

Ellis  V.  McLemoor,  1  Bailey,  13;  Cof-  9   Bosvr.    436;    Claremont    Bank    v. 

fee  V.   Eastland,  Cooke,  159;    Swei-  Wood,  12  Vt.  252;  Keller  v.  Biasdel, 

gart  V.  Berk,  8  S.  &  R.  308;  Morse  v.  1  Nev.  491. 

Chase,   4    Watts,   456;    Connolly    v.  ^  Van  Tine  v.  Crane,  1  Wend.  524. 

Cottle,  Breese,  364;  Beach  v.  Hotch-  ^Tourtelott  v.   Junkin,  4  Blackf. 

kiss,  2  Conn.  697;  Baker  v.  Jewell,  6  483. 

Mass.  460,  4  Am.  Dec.  162;  Halliday  5  Rowan  v.  Rowan,  29  Pa.  181. 

V.  Doggett,  6  Pick.  359;  Gordon  v.  «  Sigler  v.  Interest,  3  N.  J.  L.  724; 

Goodwin,  2  N.  &  McC.  70,  10  Am.  Gillin    v.  Pence.  4   T.  B.   Mon.  304; 

Dec.  573.  Murphy  v.  Branch  Bank.  5  Ala.  421; 

1  Wright  V.  Bennett,  2  Barb.  451;  Poole  v.  McLeod,  1   Sm.  &  IL   391; 

White  V.  Webb,  15  Conn.  302.  Union  Bank  v.  Mott,  27  N.  Y.  633; 

-  Damron  v.  Sweetser,  16  III.  App.  Voorhis  v.  Childs'  Ex'r,  17  id.  354. 
339;  Deloach  v.  Dixon,  Hempst.  428; 
Vol.  1  —  23 


354 


ENTIRETY    OF    DAMAGES. 


[§  136. 


other  promises  to  pay.^  Joining  too  many  persons  as  defend- 
ants in  an  action  upon  contract  is  a  fatal  objection  and  may 
be  taken  advantage  of  on  the  trial  ;'^  but  if  less  than  all  those 
jointly  liable  are  sued  the  objection  of  the  non-joinder  of 
others  can  only  be  taken  advantage  of  by  plea  in  abatement 
unless  it  appears  on  the  face  of  the  declaration.' 

§  136.  Mow  joint  liability  extinguislied  or  severed.  If 
one  jointly  or  jointly  and  severally  liable  is  released  by  a  satis- 
faction, all  are  discharged.*  So  a  specialty  taken  from  one 
merges  any  simple  contract  liability,  not  only  of  the  person 
giving  the  specialty,  but  of  others  who  were  jointly  liable 
with  him.'  Thus  where  a  mercantile  business  was  carried  on 
in  a  sino-le  name  and  the  merchant  in  whose  name  it  was  con- 
ducted  bought  goods  and  executed  a  specialty  for  the  price, 
the  vendor,  though  ignorant  at  the  time  that  such  purchaser 
had  a  dormant  partner,  but  who  discovered  that  fact  after  the 
death  of  the  purchaser  who  executed  the  specialty,  was  held 
not  entitled  to  maintain  assumjjsit  on  the  simple  contract  against 
the  dormant  partner  because  that  contract  was  extinguished.^ 
According  to  some  authorities  the  satisfaction  and  discharge 
of  one  who  was  not  in  fact  liable  to  the  person  injured  does 


iLarkin  v.  Butterfield,  29  Mich. 
254. 

2Tuttle  V.  Cooper,  10  Pick.  281; 
Walcott  V.  Canfield,  3  Coun.  194; 
Livingston  v.  Tremper,  11  Johns.  101; 
Erwin  v.  Devine,  2  T.  B.  Mon.  124; 
Jenkins  v.  Hart,  2  Rand.  446. 

3  Bragg  V.  Wetzell.  5  Blackf.  95; 
Burgess  v.  Abbott,  6  Hill,  135;  Nash 
V.  Skinner,  12  Vt.  219,  36  Am.  Dec. 
338;  Hicks  v.  Cram,  17  Vt.  449; 
Means  v.  Milliken,  33  Pa.  517;  Douglas 
V.  Cliapin,  26  Conn.  76. 

*  Chetwood  v.  California  Nat.  Bank, 
113  Cal.  414,  45  Pac.  Rep.  704;  Donald- 
son  V.  Carmichael,  102  Ga.  40,  29  S. 
E.  Rep.  135;  Lord  v.  Tiffany,  98  N. 
Y.  412,  50  Am.  Rep.  689;  Ellis  v. 
Esson,  50  Wis.  138,  36  Am.  Rep.  830, 
6  N.  W.  Rep.  518;  Gross  v.  Pennsyl- 
vania, etc.  R.  Co.,  65  Hun,  191,  20  N. 
Y.  Supp.  28;  Blackman  v.  Simpson, 
120  MiclL  377,  79  N.  W.  Rep.   573; 


State  V,  Watson,  44  Mo.  305;  Heck- 
man  V.  Manning,  4  Colo.  543;  Gunther 
V.  Lee,  45  Md.  60,  24  Am.  Rep.  504; 
Line  v.  Nelson,  38  N.  J.  L.  358;  Bon- 
ney  v.  Bonney,  29  Iowa,  448;  Prince 
V.  Lynch,  38  Cal.  528. 

Where  judgment  was  rendered 
against  two  defendants  upon  a  ver- 
dict which  apportioned  their  liabil- 
ity, a  motion  to  vacate  it  and  dismiss 
the  action  as  to  one  was  denied  oa 
the  ground  that  it  might  operate  as 
a  discharge  of  both.  McCool  v.  Ma- 
honey,  54  Cal.  491.  See  Minor  v. 
]\Iechanics'  Bank.  1  Pet.  46,  87. 

A  similar  verdict  was  considered 
as  being  against  one  defendant,  and 
a  finding  in  favor  of  the  other  against 
whom  the  smaller  sum  was  charged. 
Clissold  V.  Machell,  25  Up.  Can.  Q.  B. 
80,  26  id.  422. 

5  Ward  V.  Motter,  2  Rob.  (Va.)  53a 

6  Id. 


§  130.]  partip:s  to  sue  and  be  sued.  355 

not  affect  the  rights  of  the  latter  against  those  who  are  liable;  ^ 
several  courts  take  the  opposing  view.'^  Joint  tort-feasors  may 
be  sued  jointly  in  the  same  action  or  in  separate  actions,  and 
several  judgments  may  be  rendered  in  either  action;  these  do 
not  affect  the  liability  of  any  of  tiie  parties  unless  satisfaction 
in  some  form  is  made.^  But  the  issue  of  an  execution  or  the 
granting  of  an  order  for  issuance  seems  to  be  considered  a 
satisfaction  in  Indiana."*  The  satisfaction  of  a  judgment 
against  a  builder  for  the  substitution  of  inferior  material  and 
for  doing  work  in  an  unworkmanlike  manner  bars  an  action 
by  the  same  plaintiff  against  the  architect  who  made  the  plans 
for  the  building  and  contracted  to  supervise  its  erection  in  ac- 
cordance therewith.  It  is  said  the  former  suit  ae:ainst  the 
builder  was  based  on  his  violation  of  the  building  contract, 
while  this  suit  appears  to  have  been  brought  for  the  purpose 
not  only  of  recovering  damages  from  the  defendant  for  his  al- 
leged neglect  as  an  architect,  but  also  to  recover  damages  aris- 
ing in  consequence  of  the  omissions,  negligence,  unfaithfulness 
and  wrongdoing  of  the  builder.  It  is  true  that  the  acts  of  the 
builder  which  formed  the  basis  for  the  damages  awarded  in 
the  suit  against  him  are  now  alleged  to  have  been  allowed  to 
occur  by  reason  of  the  architect's  negligence  in  the  perform- 
ance of  his  duty.  But  whether  the  wrongdoing  complained 
of  in  the  former  case  be  the  joint  act  of  the  builder  and  the 
defendant,  or  the  several  tort  of  each,  can  make  no  difference 
in  determining  the  validity  ot"  the  plea  or  the  admissibility  of 
the  record  in  evidence  in  this  case.     If  the  defendant  and  the 

1  Missouri,  etc.  R.  Co,  v.  McWher-  Rep.  8?.8;  Tompkins  v.  Clay  Street 
ter,  59  Kan.  345,  53  Pac.  Rep.  135,  R.  Co..  66  Cal.  163;  Miller  v.  Beck, 
citing  Turner  v.  Hitclicock,  :20  Iowa,  lOS  Iowa,  575,  79  N.  W.  Rep.  344; 
310;  Bloss  V.  Plymale,  3  W.  Va.  393,  Butler  v.  Ashworth,  110  Cal.  614,  43 
100  Am.  Dec.  752;  Wilson  v.  Reed,  3  Pac.  Rep.  380. 

Johns.  175;   Wardell  v.   McConnell,  ^  Grundel  v.  Union  Iron  Works.  127 

25  Neb.  558,  41  N.  W.  Rep.  548;  Snow  Cal.  438,  59  Pac.  Rep.  826,  78  Am. 

V.  Chandler,  10  N,  H.  92,34  Am.  Dec.  St.  75,  47  L.  R.   A.  407;  Vincent  v. 

140;  Bell  v.  Perry,  48  Iowa,  368;  Owen  McNamara.  70  Conn.  332,  39  Atl.  Rep. 

V.  Brockschmidt,  54  Mo.  285;Pogel  V.  444;  Lovejoy  v.  Murray.  3  Wall.  1; 

Meilke,  60  Wis.  248,  18  N.  W.  Rep.  Norfolk  Lumber  Co.  v.  Simmons,  3 

927.                                •  Marvel,  317,  43  Atl.  Rep.   163.     See 

2  Leddy  v.  Barney,  139  Mass.  394,  3  g  216. 

N.  E,  Rep.  107;  Leither  v.  Philadel-  ^Ashcraft  v.  Knoblock,  146  Ind. 
phia  Traction  Co.,  125  Pa.  397, 17  Atl.     169,  45  N.  E.  Rep.  69. 


356 


ENTIRETY    OF    DAMAGES. 


[§  137. 


builder  had  both  been  sued  in  the  first  case  for  the  injury 
there  alleged,  there  could  have  been  but  one  recovery.  And 
it  would  seem  to  be  very  clear  reason,  and  authority  as  well, 
that  the  same  result  must  follow  when  the  same  injury  is 
caused  by  the  independent  acts  of  several  wrong-doers.  The 
reason  of  this  rule  is  apparent.  It  is  neither  just  nor  lawful 
that  there  should  be  more  than  one  satisfaction  for  the  same 
injury  whether  that  injury  be  done  by  one  or  more.' 

§  137.  Principles  on  which  joint  right  or  liability  for 
tort  determined.  Whether  actions  in  tort  are  joint  as  to  the 
[209]  parties  injured  or  as  to  those  liable  depends  on  very 
plain  principles.  The  injury  is  joint  where  it  at  once  affects 
property  or  interests  jointly  owned ;  in  other  words,  there  must 
be  a  community  of  interest  between  the  parties  injured  in  that 
which  the  injury  affects.  And  to  render  wrong-doers  jointly 
liable  there  must  be  concert  or  a  common  purpose  between 
them.2  Persons  w^ho  are  jointly  interested  in  the  damages  re- 
coverable for  an  injury  to  property  may  unite  in  a  suit  for 
their  recovery  although  they  are  not  joint  owners  of  the  prop- 
erty itself.  Thus  two  persons  in  possession  of  land  carrying 
on  business  in  a  mill  which  belongs  to  one  of  them  only  may 
unite  in  an  action  for  damages  for  a  negligent  burning  of  it.* 


1  Berkley  v.  Wilson,  87  Md.  219.  39 
Atl.  Rep.  503,  citing  Cleveland  v. 
Bangor,  87  Me.  264,  32  Atl.  Rep.  892; 
Brown  v.  Cambridge,  3  Allen,  474; 
Lovejoy  v.  Murray,  3  Wall.  1;  Gun- 
ther  V.  Lee,  45  Md.  67, 24  Am.  Rep.  504. 

2  If  one  or  more  persons  conspire 
with  another  to  commit,  or  two  or 
more  persons  combine  together  to  ef- 
fect, the  violation  of  a  contract,  and 
their  object  be  effected  to  the  dam- 
age of  a  third  person,  the  latter  may 
recover  against  him  who  broke  the 
contract,  and  against  those  so  con- 
nected with  the  wrong.  Martens  v. 
Reilly,  109  Wis.  464,  84  N.  W.  Rep. 
840.  See  Quinn  v.  Leathem,  [1901] 
App.  Cas.  495. 

Where  the  complaint  alleged  that 
each  of  two  defendants  was  negli- 
gent in  not  having  a  sufficient  wall 
to  sustain    his  building,  by   reason 


whereof  both  buildings  fell  upon  and 
destroyed  the  plaintiff's  building,  at 
the  same  time  and  on  the  whole  of 
said  building  and  both  of  which  be- 
came an  undistinguishable  mass,  as 
was  the  building  on  which  they  fell, 
so  that  it  could  not  be  said  which 
produced  the  greater  damage,  and  it 
could  not  be  determined  as  to  the  ex- 
tent of  the  damage  either  did,  both 
defendants  were  liable  for  the  whole 
damage  and  neither  could  complain 
that  both  were  sued  jointly.  If  the 
evidence  showed  that  either  was  not 
negligent  he  would  not  be  liable,  in 
which  case  the  others  would  have 
no  reason  to  complain  of  the  mis- 
joinder. Johnson  v.  Chapman,  43 
W.  Va.  639,  28  S.  E.  Rep.  744. 

3  Cleveland  v.  Grand  Trunk  R.  Co., 
42  Vt.  449;  Rhoads  v.  Booth,  14  Iowa, 
575. 


§  13S.J  PARTIES   TO    SUE    AND    BE    SUED.  357 

If  injuiy  is  done  both  to  the  possession  and  the  freehold, 
and  the  interests  of  both  owners  are  affected,  though  in  dif- 
ferent degrees,  the  life  tenant  and  the  remainder-man  may- 
join  in  case  for  the  recovery  of  the  damages.'  All  joint  own- 
ers of  personal  property  are  rightly  joined  in  actions  for  tor- 
tious injuries  thereto.^  At  common  law  the  rule  was  that 
"  when  two  or  more  persons  are  jointly  entitled,  or  have  a 
joint  legal  interest  in  the  property  affected,  they  must,  in  gen- 
eral, join  in  the  action  or  the  defendant  may  plead  in  abate- 
ment.'" As  to  tenants  in  common  who  briny:  actions  asrainst 
third  parties  a  distinction  existed  between  real  and  personal 
actions.  "  When  the  action  is  in  the  realty  they  must  sue  sep- 
arately;* when  in  the  personalty  they  must  join."^  This  rule 
must  give  way  if  the  effect  of  enforcing  it  will  be  to  deny  a 
remedy.  The  remedy  for  it  —  to  protect  defendants  from  a 
multiplicity  of  suits  —  is  good;  but  if  adherence  to  it  will  cause 
a  failure  of  justice  the  reason  for  departing  from  the  rule  is 
stronger  than  that  for  applying  it  because  there  is  a  possibility 
that  no  other  suit  will  be  brought  on  the  cause  of  action;  while 
there  is  a  certainty  that  adherence  to  it  will  work  the  loss  of 
a  remedy.  These  considerations  induced  the  Minnesota  court 
to  permit  one  tenant  in  common  of  personalt}''  to  maintain  an 
action  against  a  stranger  for  a  ^vrong  done  to  it,  the  co-tenants 
refusing  to  join  as  plaintiffs;  and  being  non-residents  they 
could  not  be  made  defendants.^ 

§  138.  Tortious  act  not  an  entirety  as  to  parties  injured. 
A  tortious  act  is  not  an  entirety  as  to  the  persons  affected  by 

1  McTntire  v.  Westmoreland  Coal  elude  parol  proof  that  the  purchase 
Co.,  118  Pa.  108,  11  Atl.  Rep.  808.  of  each  machine  was  made  by  one  of 

2  Glover  v.    Austin,   6    Pick.   209;  them  as  agent  for  the  other  and  on 
Pickering  v.  Pickering,  11  N.  H.  141.  their  joint  account;  such  evidence 

But  in  California  one  joint  owner  will  sustain  a  joint  action  for  breach 

can  recover  but  one-half  the  damages  of  warranty  of  the  machines.     Fox 

for  the  injury  done  to  the  joint  prop-  v.  Stockton  Harvester,  etc.  Works, 

erty.     Loveland  v.  Gardner,  79  Cal.  83  Cal.  333,  23  Pac.  Rep.  295. 
317,  21  Pac.  Rep.  766,  4  L.  R.  A.  395.        » 1  Chitty  Plead.  64. 

If  two  machines    are  bought  on        *  Carley  v.  Parton,  75  Tex.  98,  12  S. 

joint  account  and   paid  for  out  of  W.  Rep.  950. 

joint  funds  the  fact  tliat  the  purchas-        ^  Hill  v.  Gibbs,  5  Hill,  56;  Rowland 

ers  entered  into  a  separate  contract  v.  Murphy,  66  Tex.  534,  1  S.  W.  Rep. 

for  each  machine  and  that  each  con-  658. 

tract  was  signed  by  one  of  them  only        ^Peck  v.  McLean,  36  Minn.  228,  1 

in  his  individual  name  does  not  pre-  Am.  St.  605,  30  N,  W.  Rep.  754. 


358 


ENTIRETY    OF    DAMAGES. 


[§  139. 


it;  it  mav  affect  many  persons  and  do  a  several  injury  to  each. 
A  single  trespass  upon  real  estate,  injurious  to  the  possession 
and  to  the  inheritance,  will  be  an  entire  cause  of  action  if  one 
person  has  the  whole  title  and  is  in  possession.  But  if  one 
person  has  the  possession  and  another  a  reversionary  title  a 
distinct  wrong  is  done  to  each,  for  which  each  may  bring  a 
separate  and  independent  action,*  One  having  a  special  in- 
terest in  real  estate  injured  by  the  tortious  act  of  another  may 
recover  damages  therefor  wliether  the  wrong-doer  is  a  stranger 
or  has  another  interest  in  the  same  premises.^  The  purchaser 
of  a  crop  of  growing  grass  is  entitled  to  the  exclusive  enjoy- 
ment of  the  crop  standing  on  the  land  during  the  proper  pe- 
riod of  its  full  growth  and  removal,  and  may  maintain  tres- 
pass qiiare  clausum  fregit  against  a  stranger  who  during  that 
time  wrongfully  enters  and  cuts  and  carries  away  the  grass.' 
[210]  He  could  maintain  a  like  action  against  the  general  owner 
of  the  land  for  such  a  trespass.* 

§  139.  General  and  special  owners.  In  such  case  the  dam- 
ages will  be  according  to  the  tenure  b}''  which  the  plaintiff 
holds  and  such  as  result  from  the  injury  he  has  suffered.  He 
must  show  that  his  title  gives  him  an  interest  in  the  damages 
he  claims,  and  can  recover  none  except  such  as  affect  his  right.* 
In  actions  against  a  stranger  for  taking  or  converting  personal 
property,  a  bailee,  mortgagee  or  other  special  property  man  is- 
entitled  to  recover  its  full  value,  but  must  account  to  the  gen- 
eral owner  for  the  surplus  recovered  beyond  the  value  of  his 
own  interest;  but  against  the  general  owner,  or  one  in  privity 


1  Wood  V.  Williamsburgh,  46  Barb. 
601;  Gilbert  v.  Kennedy,  22  Mich.  5; 
Files  V.  Magoon,  41  Me.  104:  Stevens 
V.  Adams.  1  Thomp.  &  C.  587;  Stoner 
V.  Hunsicker,  47  Pa.  514;  Adams  v. 
Emerson,  6  Pick.  57;  Robbins  v.  Bor- 
man,  1  Pick.  122;  Jordan  v.  Ben- 
wood,  42  W.  Va.  312,  26  S.  E.  Rep. 
266,  36  L.  R.  A.  519;  Yeager  v.  Fair- 
mont, 43  W.  Va.  259, 27  S.  E.  Rep.  234. 

In  Pennsylvania  a  joint  action  may 
be  maintained.  Mclntire  v.  West- 
moreland Coal  Ca,  118  Pa.  108,  11 
Atl.  Rep.  808. 

2  Hasbrouck  v.  AVinkler,  48  N.  J.  L. 


4:^1,  6  Atl.  Rep.  22;  Luse  v.  Jones,  39 
N.  J.  L.  707;  Turnpike  Co.  v.  Fry,  88 
Tenn.  296,  12  S.  W.  Rep.  720. 

3  Dolloflf  V.  Danforth,  43  N.  H.  219; 
Howard  v.  Lincoln,  13  Me.  122;  Aus- 
tin V.  Hudson  River  R  Co.,  25  N.  Y. 
334. 

•*  Clap  V.  Draper,  4  Mass.  266,  8  Am. 
Dec.  215;  Caldwell  v.  Julian,  2  Mills, 
294. 

5  Gilbert  v.  Kennedy,  22  Mich.  5. 

One  who  has  borrowed  property 
cannot  maintain  an  action  for  its 
loss.  Lock  hart  v.  Western  &  A.  R. 
Co..  73  Ga.  472,  44  Am.  Rep.  883. 


§  139.]  PARTIES    TO    SUE    AND    BE    SUED.  359 

with  him,  only  the  value  of  the  special  property.'  "Where  goods 
assigned  to  a  creditor  in  trust  to  pa}'^  himself  and  other  cred- 
itors were  attached  at  the  suit  of  some  of  the  creditors  as  prop- 
erty of  the  assignor  before  the  assignment  was  assented  to  by 
any  creditor  but  the  assignee,  and  the  value  of  the  goods  ex- 
ceeded the  amount  of  the  latter's  demand,  in  an  action  of  tres- 
pass brought  by  the  assignee  against  the  attaching  officer,  the 
measure  of  damages  was  the  amount  of  the  plaintiff's  demand 
against  the  assignor  and  not  the  value  of  the  goods.^  An  offi- 
cer, with  an  execution  against  one  of  two  partners,  who  makes 
himself  a  trespasser  ab  initio  by  levying  on  the  entire  property 
of  the  concern,  still  represents  the  interest  of  the  execution 
debtor,  and  the  owner  of  the  other  interest  can  recover  against 
him  only  the  value  thereof.' 

Several  persons  having  separate  and  distinct  interests  in  a 
chattel  cannot  unite  in  replevin  for  it;*  two  persons  cannot 
join  in  suing  for  an  injury  done  to  one  of  them.^  Where  [211] 
two  constables  levy  on  the  same  goods  by  virtue  of  separate 
executions  they  cannot  join  in  an  action  against  one  who  takes 
away  the  goods.^  One  of  several  joint  debtors  whose  separate 
goods  are  taken  on  execution  and  wasted  must  sue  alone  for 
redress;  and  so  if  the  officer  extorsively  demand  and  receive 
of  the  debtors  illegal  fees.''  Actions  for  torts  connected  with 
the  matter  of  a  contract,  where  the  tort  consists  in  the  mere 
omission  of  a  contract  duty,  must  be  brought  by  the  party  in- 

1  Denver,  etc.   R,  Co.  v.  Frame,  6  Fed.    Rep.    662;   The   Mercedes,   108 

Colo.  382;  White  v.  Webb,  15  Conn.  Fed.  Rep.  559. 

302;  Seaman  v.  Luce,  23  Barb.  240;  A  recent  English  case  holds  that  a 
Chad  wick    v.    Lamb,   29  Barb.   518;  bailee  wlio  is  under  no  liability  to 
Rhoads  V.  Woods,  41  Barb.  471;Sher-  his  bailor  cannot  recover  for  an  in- 
nian  v.  Fall  River  Iron  Co..  5  Allen,  jury  to  the  property  held  by   him. 
213;  Bartlett  V.Kidder,  14  Gray,  449;  Claridge      v.     South     Staffordshire 
Russell  v.  Butterfield,  21  Wend.  300;  Tramway  Co.,  [1892]  1  Q.  B.  422. 
Fallon  V.  Manning,  35  Mo.  271;  Chaf-  2  Boyden  v.  Moore,  11   Pick.   362; 
fee  V.  Sherman,  26  Vt.  237;  Soule  v.  Mantonya  v.  Martin  Emerich   Out- 
White,  14  Me.  436;  Mead  v.  Thomp-  fitting  Co.,  172  111.  92,  49  N.  E.   Rep. 
son.  78   111.   62;   Guttner   v.    Pacific  721,  citing  the  text. 
Steam  Whaling  Co.,  96  Fed.  Rep.  617,  3  Berry  v.  Kelly.  4  Robert.  106. 
citing  the    text;    Armory  v.    Dela-  *  Chambers  v.  Hunt,  18  N.  J.  L.  339. 
mire,  1  Str.  505;  The  Jersey  City,  2  ^  Winans  v.  Denman,  3  N.J.  L.  124. 
C.  C,  A.  365,  51  Fed.  Rep.  527;  Knight  «  Warne  v.  Rose,  5  N.  J.  L,  809. 
V.  Carriage  Co.,  18  C.  C.  A.  287,  71  ''uimer  v.  Cunningham,  2  Me.  117. 


3G0 


ENTIRETY    OF    DAMAGES. 


[§  lio. 


jured.*  In  one  suit  the  court  will  not  take  cognizance  of  dis- 
tinct and  separate  claims  of  different  persons.  "Where  the 
damage  as  well  as  the  interest  is  several  each  party  must  sue 
separately.^  "Whether  the  plaintiffs  in  a  joint  action  are  co- 
partners or  not  is  immaterial  so  long  as  their  cause  of  action  is 
shown  to  be  joint.' 

§  140.  Joint  and  several  liability  for  torts.  If  injuries  or 
damage  are  sustained  through  the  affirmative  acts  or  negli- 
gence of  several  persons  an  action  may  be  brought  against  all 
or  any  of  them.*     If  separate  judgments  are  obtained  the 


1  Fairmount  R  Co.  v.  Stutler,  54 
Pa.  375,  93  Am.  Dec.  714. 

The  assignment  by  one  member  of 
a  firm  of  all  his  right,  title  and  in- 
terest in  and  to  the  partnership  as- 
sets gives  the  assignee  such  an  inter- 
est in  a  claim  secured  by  a  mortgage 
on  crops  as  makes  him  a  proper  co- 
plaiutitf  with  the  other  partner  in 
an  action  for  the  conversion  of  the 
crops  or  a  special  action  on  the  case 
in  tiie  nature  of  trover  for  damages 
thereto.  Keith  v.  Ham,  89  Ala.  590, 
7  So.  Rep.  234. 

2  Hufnagel  v.  Mt.  Vernon,  49  Hun, 
286,  1  N.  Y.  Supp.  787;  Governor  v. 
Hicks,  12  Ga.  189;  Rhoads  v.  Booth, 
14  Iowa,  575;  Schaeffer  v.  Marien- 
thal,  17  Ohio  St.  183. 

3  Wood  V.  Fithian,  24  N.  J.  L.  33. 

4  Williams  v.  Sheldon,  10  Wend. 
<554;  Merryweather  v.  Nixan,  8  T.  R. 
186;  Wheeler  v.  Worcester,  10  Allen, 
591;  Murphy  v.  Wilson,  44  Mo.  313, 
100  Am.  Dec.  390;  Moore  v.  Appleton, 
26  Ala.  633. 

Some  authorities  state  the  rule 
thus:  If  injuries  or  damage  are  sus- 
tained through  the  affirmative  acts 
or  negligence  of  several  persons  act- 
ing jointly,  or,  if  contributed  to  by 
each,  in  pursuance  of  a  joint  purpose, 
an  action  may  be  brought  agamst  all 
or  any  of  them.  Others,  and  the 
weight  of  authority  favors  the  rule 
as  stated  in  the  text,  ignore  the  ne- 
cessity for  joint  action  or  the  exist- 


ence of  a  common  purpose;  as  where, 
by  the  separate,  but  concurrent,  neg- 
ligence of  two  carriers  a  passenger 
is  injured  by  a  collision,  or  a  person 
is  simultaneously  arrested  on  two 
warrants  issued  at  the  instance  of 
two  persons.  Colgrove  v.  New  York, 
etc.  R.  Co.,  20  N.  Y.  492,  75  Am.  Dec. 
419;  Slater  v.  Mersereau,  64  N.  Y.  147; 
Boyd  V.  Watt,  27  Ohio  St.  268;  City 
Electric  St.  R.  Co.  v.  Conery,  61  Ark. 
381,  54  Am.  St.  262,  31  L.  R.  A.  570; 
33  S.  W.  Rep.  426;  Pine  Blufif  Water 
&  Light  Co.  V.  McCain,  62  Ark.  118, 
35  S.  W.  Rep.  227;  Klauber  v.  Mc- 
Grath,  35  Pa.  118,  78  Am.  Dec.  329; 
Peckham  v.  Burlington,  Brayton,134; 
Allison  V.  Hobbs,  96  Me.  26,  51  Atl. 
Rep.  245:  Boston  &  A.  R.  Co.  v. 
Shanly,  107  Mass.  568;  Newman  v. 
Fowler,  37  N  J.  L.  89:  Lake  Erie  & 
W.  R.  Co.  V.  Middlecoff,  150  III  27,  37 
N.  E.  Rep.  600;  Kansas  City  v.  Slang- 
strom,  53  Kan.  431,  36  Pac.  Rep.  706: 
Pugh  v.  Chesapeake  &  O.  R.  Co.,  101 
Ky.  77,  72  Am.  St.  392,  39  S.  W.  Rep. 
695;  Stone  v.  Dickson,  5  Allen,  29,  81 
Am.  Dec.  727;  Cuddy  v.  Horn,  46 
Mich.  603,  10  N.  W.  Rep.  32;  Flaherty 
V.  Minneapolis,  etc.  R.  Co.,  39  Minn., 
328,  40  N.  W.  Rep.  160,  12  Am.  St.  654; 
Grand  Trunk R.  Co.  v.  Cummings,  106 
U.  S.  700, 1  Sup.  Ct.  Rep.  493;  Brown  v. 
Coxe.  75  Fed.  Rep.  689.  See  §  141 
and  note.  But  this  doctrine  has  been 
doubted.  Lull  v.  Fox  &  Wisconsin 
Imp.  Co.,  19  Wis.  100;  Trowbridge  v. 


§  140.] 


PARTIES    TO    SUE    AND    BE    SUED. 


301 


plaintifif  may  enforce  the  one  which  is  for  the  largest  sum.* 
The  rule  concerning  the  bringing  of  actions  applies  in  ecjuity 
as  well  as  at  law."^  Such  persons  may  participate  so  as  to  be 
thus  liable  by  preconcert  to  do  tlie  wrong  complained  of,  or  to 


Forepaugh,  14  Minn.  133;  Larkins  v. 
Eckwurzel.  43  Ala.  822,  94  Am.  Dec. 
651;  Powell  v.  Thompson,  80  Ala,  51. 

It  has  been  said,  arguendo,  of  a 
compkunt  which  set  up  the  separate 
and  distinct  wrongs  of  the  respective 
defendants  and  sought  to  enforce  a 
joint  liability  for  acts  which  were 
not  joint  in  themselves  nor  bound 
together  by  the  tie  of  a  common  pur- 
pose, that  this  cannot  be  done;  the 
wrong  done  must  be  jointly  done  in 
fact  by  the  defendants,  or  if  con- 
tributed to  by  each,  a  joint  purpose 
must  be  imputable  to  them  before 
they  can  be  said  to  be  joint  tort-fea- 
sors, and  responsible  jointly  and  sev- 
•erally  for  the  resulting  injury.  It 
will  not  suffice,  as  a  general  propo- 
sition at  least,  that  the  separate 
wrongful  acts  or  omissions  of  two 
persons,  having  no  connection  with 
-each  other,  the  motive  of  each  being 
foreign  to  that  of  the  othei",  have  in 
their  unintended  coalescence  and  co- 
action  produced  an  injury.  Rich- 
mond &  D.  R.  Co.  V.  Greenwood,  99 
Ala.  501,  14  So.  Rep.  495;  Ensley 
Lumber  Co.  v.  Lewis,  121  Ala.  100,  25 
So.  Rep.  729. 

This  appears  to  be  in  conformity 
with  the  rule  in  England.  In  a  re- 
cent case  the  plaintiff  brought  an 
action  for  negligently  excavating 
near  his  house,  whereby  it  was  dam- 
aged; the  defendant  attributed  the 
damage,  wholly  or  in  part,  to  the 
negligence  of  a  water  company 
in  leaving  a  main  insufficiently 
stopped.  The  court  declined  to  join 
such  company  as  a  defendant  be- 
cause the  torts  were  separate,  though 
the  resulting  damage  was  the  same 
in  each  case.  Thompson  v.  London 
•County  Council,  [1897J  1  Q.  B.  84. 


In  an  earlier  case  against  two  de- 
fendants it  was  alleged  that  each  of 
them,  by  their  several  acts,  and  that 
they  by  their  combined  acts,  ob- 
structed the  plaintiffs  access  to  his 
premises,  and  an  injunction  and 
damages  were  prayed  against  each 
of  them;  it  was  determined  that  the 
action  could  not  be  maintained;  that 
one  of  the  defendants  must  be  struck 
out.  Sadler  v.  Great  Western  R.  Co., 
[1896]  App.  Cas.  450,  affirming  [1895] 
2  Q.  B.  088. 

Wliere  a  municipality  is  bound  to 
see  that  its  streets  and  sidewalks  are 
kept  in  proper  condition,  it  cannot 
be  joined  as  a  defendant  with  a  resi- 
dent property  owner  whose  duty  it 
is  to  see  that  the  walk  adjoining  his 
premises  is  in  good  repair  for  an  in- 
jury resulting  from  his  neglect. 
Their  co-operation  is  not  of  a  nature 
which  makes  them  joint  wrong- 
doers. Button  v.  Lansdowne,  198  Pa. 
563,  48  Atl.  Rep.  494.  See  Wiest  v. 
Electric  Traction  Co.,  200  Pa.  148,  49 
Atl.  Rep.  891. 

1  Roodhouse  v.  Christian,  55  111. 
App.  107;  Kansas  City  v.  Slangstrom, 
53  Kan.  431,  36  Pac.  Rep.  706;  Pugh 
V.  Chesapeake  &  O.  R.  Co.,  101  Ky. 
77,  72  Am.  St.  392,  39  S.  W.  Rep.  695; 
Blackman  v.  Simpson,  120  Mich.  377, 
79  N.  W.  Rep.  573;  Berkson  v.  Kansas 
City  Cable  R.  Co.,  144  Mo.  211,  45  S. 
W.  Rep.  1119;  Burk  v.  Howley,  179 
Pa.  539.  36  Atl.  Rep.  327,  57  Am.  St. 
607;  Koch  v.  Peters,  97  Wis.  492.  73 
N.  W.  Rep.  25. 

2  Hopkins  v.  Oxley  Stave  Co.,  28  C. 
C.  A.  99,  103,  83  Fed.  Rep.  912,  citing 
Cunningham  v.  Pell.  5  Paige,  607; 
Wall  V.  Thomas,  41  Fed.  Rep.  620. 


362 


ENTIRETY    OF    DAMAGKa 


[§  1^0. 


procure  it  to  be  done,  as  well  as  by  jointly  taking  part  in  it, 
or  b}'  subsequently  adopting  the  act  done  or  neglect  suffered 
as  principals.^  The  extent  of  individual  participation  in,  or  of 
expected  benefit  from,  a  joint  tort  is  immaterial;  each  and  all 
of  the  tort-feasors  are  liable  for  the  entire  damage.^  The  law 
[212]  is  thus  accurately  and  comprehensively  laid  down  in  a 
Nev/  York  case:  "  To  entitle  the  plaintiff  to  a  verdict  against 
all  the  defendants  as  joint  trespassers  it  must  appear  that  they 
acted  in  concert  in  committing  the  trespass  complained  of;  if 
some  aided  and  assisted  the  others  to  commit  the  trespass  or 
assented  to  the  trespass  committed  by  others,  having  an  inter- 
est therein,  they  are  all  jointly  guilty ;  ...  it  would  not 
be  material  if  they  had  unequal  interests  in  the  avails  of  the 
trespass;  for  those  who  confederate  to  do  an  unlawful  act  are 
deemed  guilty  of  the  whole  although  their  share  in  the  profits 
may  be  small.  But  if  any  of  the  defendants  are  not  guilty  at 
all,  or  if  any  of  them,  though  guilty,  were  acting  separately 
and  for  themselves  alone  without  any  concert  with  the  others, 
they  ought  to  be  acquitted  and  those  only  found  guilty  who 
Avere  acting  jointly."^  The  fact  that  one  who  orders  an  act 
done,  which  results  in  injury  to  a  third  person,  gave  such  order 
as  the  officer  of  a  municipal  or  private  corporation  does  not 


1  Northern  Trust  Co.  v.  Palmer, 
171  111.  383,  49  N.  E.  Rep.  553;  Dono- 
van V.  Consolidated  Coal  Co.,  187  111. 
28.  58  N.  E.  Rep.  290,  88  111.  App.  589; 
Lewis  V.  Read.  13  M.  &  W.  834; 
Davis  V.  Newkirk,  5  Denio,  92;  Cook 
V.  Hopper,  23  Mich.  511;  Bonn  el  v. 
Dunn,  28  N.  J.  L.  153;  Ford  v.  Will- 
iams, 13  N.  Y.  584;  Ball  v,  Loomis,  29 
N.  Y.  412;  Hyde  v.  Cooper,  26  Vt. 
552;  Lewis  v.  Johns,  34  Cal.  629; 
Adams  v.  Freeman,  9  Johns.  118; 
Guille  V.  Swan,  19  Johns.  381,  10  Am. 
Dec.  234;  Hume  v.  Oldacre,  1  Stark. 
351;  Stewart  v.  Wells,  6  Barb.  81; 
Wheeler  v.  Worcester,  10  Allen,  591, 

-McCool  v.  Mahoney,  54  Cal.  491; 
Learned  v.  Castle,  73  id.  454,  18  Pac. 
Rep.  872,  21  id.  11;  McCalla  v,  Shaw, 
72  Ga.  458;  Everroad  v.  Gabbert,  83 
Ind.  489;  Westbrook  v.  Mize,  35  Kan. 
299,  10  Pac.  Rep.  881;  Sharpe  v.  Will- 


iams, 41  Kan.  56;  Boaz  v.  Tate.  43  Ind. 
60;  Breedlove  v.  Bundy,  96  id.  319;. 
Page  V.  Freeman,  19  Mo.  421;  Wright 
v.  Lathrop,  2  Ohio,  275;  Knicker- 
backer  v.  Colver,  8  Cow.  Ill;  Turner 
V.  Hitchcock,  20  Iowa,  310;  Nelson  v. 
Cook,  17  111.  443;  McMannus  v.  Lee, 
43  Mo.  206,  97  Am.  Dec.  386;  Brown 
V.  Perkins,  1  Allen,  89;  Barden  v. 
Felch,  109  Mass.  154;  Williams  v. 
Sheldon,  10  Wend.  654;  Currier  v. 
Swan,  63  Me.  323;  Mason  v.  Sieglitz, 
22  Colo.  320.  44  Pac.  Rep.  588;  Hunter 
v.  Wakefield,  97  Ga.  543,  25  S.  E. 
Rep.  347;  Sternfels  v.  Metropolitan 
Street  R.  Co.,  73  App.  Div.  494,  77  N. 
Y.  Supp.  309;  Hill  v.  Ninth  Avenue 
R.  Co.,  109  N.  Y.  239,  16  N.  E.  Rep.  61. 
3  Williams  v.  Sheldon,  10  Wend.  6-54 ; 
Howard  v.  Daj^ton  Coal  &  Iron  Co.,. 
94  Ga.  416,  20  S.  E.  Rep.  336. 


§  140.]  PARTIES    TO    SUE    AND    BE    SUED.  303 

absolve  him  from  liability  for  the  consequences.'  The  rule  is 
that  two  or  more  persons  cannot  be  held  jointly  liable  for  verbal 
slander.2  While  admitting  this  it  is  said  in  a  recent  case  in 
which  slander  of  title  was  the  ground  of  the  action,  that  under 
circumstances  where  all  the  defendants  are  jointly  concerned 
and  interested  and  participate  in  the  general  purpose,  their 
concert  and  co-operation  may  be  shown  although  the  false  and 
malicious  statements  may  have  been  made  b\'  one  alone.' 
Where  a  master  is  liable  for  the  tort  of  his  servant,  a  principal 
for  that  of  his  agent  or  deputy,  they  are  jointly  liable.*  If  an 
officer  takes  property  of  a  wrong  person  on  process  he,  as  well 
as  the  party  or  attorney  who  directs  it  and  even  the  sureties 
who  execute  a  bond  of  indemnity  to  the  officer  covering  that 
tort,  may  be  held  jointh'^  liable.^  An  action  for  deceit  in  the 
nature  of  a  conspiracy  cannot  be  sustamed  against  a  principal 
for  the  unauthorized  fraudulent  acts  and  representations  of  the 
agent  alone.^  According  to  the  Iowa  court  if  one  joint  wrong- 
doer was  actuated  by  malice  his  condition  of  mind  will  be  at- 
tributed to  the  others,  and  each  will  be  liable  for  all  the  dam- 
ages, actual  and  exemplary,  resulting  from  the  wrong.''  But 
this  we  regard  as  a  very  doubtful  proposition.  In  Kentucky 
a  cause  of  action  under  the  common  law^  against  one  party  for 
compensatory  damages  cannot  be  joined  with  an  action  against 
another  party  for  punitive  damages,  the  right  thereto  resting 
on  a  statute,  although  both  causes  of  action  arose  out  of  the 
same  transaction.^ 

1  Jenne  V.  Sutton,  43  N.  J.  L.  257,  &  M.  278;  Armstrong  v.  Dubois,  4 
39  Am.  Eep.  578;  Myers  v.  Dauben-    Keyes,  291. 

biss,  84  Cal.  1,  23  Pac.  Rep.  1027.  &  Murray  v,  Lovejoy,  2  Cliff.  191; 

2  Blake  v.  Smith,  19  R.  I.  476.  34  Lovejoy  v.  Murray,  3  Wall.  1;  Lewis 
Atl.  Rep.  995.  See  State  v.  Marlier,  v.  Johns.  34  Cal.  629;  Knight  v.  Nel- 
46  Mo.  App.  233;  Butts  v.  Long,  94  id.  son,  117  Mass.  458;  Ball  v.  Loomis,  29 
687,  692.  N.  Y.  412;   Herring  v.   Hoppock,  15 

3  Chesebro  v.  Powers,  78  Mich.  472,  N.  Y.  409;  Root  v.  Chandler,  10  Wend. 
44  N.  W.  Rep.  290.  See  Thomas  v.  110,  35  Am.  Dec.  540;  Vincent  v. 
Rumsey,  6  Johns.'  26.  McNamara,  70  Conn.  332,  39  Atl.  Rep. 

4Balme  v.   Button,   9   Bing.   471;  444. 

Waterbury   v.  Westervelt,   9  N.   Y.  6  Page  v.  Parker,  40  N.  H.  47. 

598;  Morgan  v.  Chester.  4  Conn.  387;  7  Reizenstem  v.    Clark,  104   Iowa, 

Barker  v.  Braham,  3  Wils.  368;  Bates  287,  292, 73  N.  W.  Rep.  588,  citing  this 

V.  Pilling,  6  B.  &  C.  38;  Newberry  v.  section.     See  ch.  9. 

Lee,  3  Hill,  523;  Crook  v.  Wright,  R.  »  Clayton   v.  Henderson,    103   Ky. 

228,  44  S.  W.  Rep.  667,  44  L  R.  A.  474. 


JGi 


ENTIKETY    OF    DAMAGES. 


[§  141. 


§  141.  Same  subject.  In  an  action  for  diverting  water  from 
a  natural  water-course  so  as  to  flood  the  plaintiff's  land  it  ap- 
peared that  the  defendant  did  it  by  walling  the  banks  on  his 
[213,214]  own  land  to  preserve  them.  A  third  person,  by  cer- 
tain acts  wholly  independent  of  defendant's  and  without  con- 
cert with  him,  increased  the  volume  of  water  that  flowed 
upon  such  land.  The  defendant  was  only  liable  for  the  flood- 
ing caused  b}'  him,  and  not  for  that  part  of  the  plaintiff's  dam- 
ages resulting  from  the  increased  volume  of  water  caused  by 
such  third  person.^  But  where  nine  different  creditors,  act- 
ing without  concert  and  without  knowing  that  they  were  em- 
ploying a  common  agent,  wrongfully  caused  their  debtor  to 
be  arrested  by  the  same  officer  on  their  several  writs,  service 
being  made  simultaneously,  and  by  virtue  thereof  committed 
the  debtor  to  jail  where  he  was  confined  upon  all  of  the  writs 
at  the  same  time,  they  were  deemed  joint  trespassers,  and  full 
satisfaction  recovered  by  the  debtor  from  one  of  them  was 
held  a  bar  to  an  action  against  the  others.-  It  is  not  possible  to 


1  Wallace  v.  Drew.  59  Barb.  413. 

2  Stone  V.  Dickinson,  5  Allen,  29, 
81  Am.  Dec.  727;  Allison  v.  Hobbs, 
96  Me.  26,  51  Atl.  Rep.  245.  Bigelow, 
J.,  said  in  the  Massachusetts  case: 
As  a  matter  of  iirst  impression,  it 
might  seem  that  the  legal  inference 
from  .  .  .  (the  fact  that  the  de- 
fendants acted  separately  and  inde- 
pendently of  each  other  without  any 
appai'ent  concert  among  themselves) 
,  .  .  is  that  the  plaintiflf  might 
hold  each  of  them  liable  for  his  tor- 
tious act,  but  that  they  could  not 
be  regarded  as  co-trespassers,  in  the 
absence  of  proof  of  any  intention  to 
act  together,  or  of  knowledge  that 
they  were  engaged  in  a  common 
enterprise  or  undertaking.  But  a 
careful  consideration  of  the  nature 
of  the  action,  and  of  the  injury  done 
to  the  plaintiff,  for  which  he  seeks 
redress  in  damages,  will  disclose  the 
fallacy  of  this  view  of  the  case. 
The  plaintiff  alleges  in  his  declara- 
tion that  he  was  unlawfully  arrested 
and  imprisoned.     This  is  the  wrong 


which  constitutes  the  gist  of  the  ac- 
tion, and  for  which  he  is  entitled  to 
indemnity.  But  it  is  only  one 
wrong,  for  which  in  law  he  can  re- 
ceive but  one  compensation.  He  has 
not  in  fact  suffered  nine  separate 
arrests,  or  undergone  nine  separate 
terms  of  imprisonment.  The  writs 
against  him  were  all  served  simul- 
taneously, by  the  same  officer,  acting 
for  all  the  creditors,  and  the  confine- 
ment was  enforced  by  the  jailor  on 
all  the  processes,  contemporaneously, 
during  the  entire  period  of  his  im- 
prisonment. The  alleged  trespasses 
on  tlie  person  of  the  plaintiff  were, 
therefore,  simultaneous  and  contem- 
poraneous acts,  committed  on  him  by 
the  same  person,  acting  at  the  same 
time  for  each  and  all  of  the  plaintiffs 
in  the  nine  writs  upon  which  he  was 
arrested  and  imprisoned.  It  is,  then, 
the  common  case  of  a  wrongful  or 
unlawful  act,  committed  by  a  com- 
mon agent,  acting  for  several  and 
distinct  principals. 


Ul.] 


PARTIES    TO    SUE    AND    BE    SUED. 


3G5 


harmonize  the  cases  on  the  extent  of  the  co-operation  -which 
makes  parties  jointly  liable.  It  seems  perfectly  })roper  that 
an  unlawful  act  done  by  one  person,  though  it  be  in  further- 
ance of  a  hiwful  purpose  in  the  accomplishment  of  which 
others  are  engaged,  should  not  make  the  latter  liable  if  it  is 
done  without  their  concurrence,  and  no  benefit  is  received  by 
them  from  it.^  Where  the  effects  of  the  independent  acts  of  two. 


"It  does  not  in  any  way  change  or 
affect  the  injury  done  to  the  phiintiff, 
or  enhance  in  any  degree  the  dam- 
ages wliich  he  has  suffered,  that  the 
immediate  trespassers,  by  whom  the 
tortious  act  was  done,  were  the  agents 
of  several  different  plaintiffs,  who 
without  preconcert  had  sued  out 
separate  writs  against  him.  The 
measure  of  his  indemnity  cannot  be 
made  to  depend  on  the  number  of 
principals  who  employed  the  officers 
to  arrest  and  imprison  him.  We 
know  of  no  rule  of  law  by  which  a 
single  act  of  trespass  committed  by 
an  agent  can  be  multiplied  by  the 
number  of  principals  who  procured  it 
to  be  done,  so  as  to  entitle  the  party 
injured  toa  compensation  graduated, 
not  according  to  the  damages  actu- 
ally sustained,  but  bj'  the  number  of 
persons  through  whose  instrumental- 
ity the  injury  was  inflicted.  The 
error  of  tlie  plaintiff  consists  in  sup- 
posing that  the  several  parties  who 
sued  out  writs  against  him,  and 
caused  him  to  be  arrested  and  im- 
prisoned, cannot  be  regarded  as  co- 
trespassers,  because  it  does  not  ap- 
pear that  they  acted  in  concert,  or 
knowingly  employed  a  common 
agent.  Such  preconcert  or  knowl- 
edge is  not  essential  to  the  commis- 
sion of  a  joint  trespass.  It  is  the 
fact  that  they  all  united  in  the  wrong- 
ful act,  or  set  on  foot  or  put  in  mo- 
tion the  agency  by  which  it  was 
committed,  that  renders  them  jointly 
liable  to  the  party  injured.  Whether 
the  act  was  done  b}'  the  procure- 
ment of  one  person  or  of  many,  and, 


if  by  many,  whether  they  acted  from 
a  common  purpose  and  design  in 
which  they  all  sliared,  or  from  sep- 
arate and  distinct  motives,  and  with- 
out any  knowledge  of  the  intentions 
of  each  other,  the  nature  of  the  in- 
jury is  not  in  any  degree  changed, 
or  the  damages  increased  which  the 
party  injured  has  a  right  to  recover. 
He  may,  it  is  true,  have  a  good 
cause  of  action  against  several  per- 
sons for  tlie  same  wrongful  act,  and 
a  right  to  recover  damages  against 
each  and  all  tlierefor,  with  the  priv- 
ilege of  electing  to  take  his  satisfac- 
tion de  melioribus  damnis.  But 
there  is  no  rule  of  law  by  which  he 
can  claim  to  convert  a  joint  into  a 
several  trespass,  or  to  recover  more 
than  one  satisfaction  for  his  dam- 
ages, when  it  appears  that  lie  has  suf- 
fered the  consequences  of  a  single 
tortious  act  only."  See  Wehle  v. 
Butler,  12  Abb.  Pr.  (N.  S.)  139. 

1  Wert  v.  Potts.  76  Iowa,  612,  14 
Am.  St.  252,  41  N.  W.  Rep.  374. 

One  does  not  become  a  partici- 
pator in  an  assault  and  battery  by 
witnessing  and  mentally  approving 
it,  no  word  or  sign  being  used.  Lis- 
ter v.  McKee,  79  111.  A  pp.  210. 

After  mortgaged  goods  were 
wrongfully  attached  by  creditors  of 
the  mortgagor  other  creditors  placed 
their  writs  in  the  officer's  hands  and 
he  indorsed  returns  of  a  levy  upon 
the  same  goods,  subject  to  the  first 
levy.  It  appears  to  have  been  the 
opinion  of  the  court  that  if  such 
subsequent  attaching  creditors  did 
nothing  further  they  might  not  have 


Z66 


ENTIRETY    OF    DAMAGES. 


[§   1^1. 


persons  on  opposite  sides  of  a  street  united  in  causing  injury, 
there  being  no  concert  of  action,  they  were  held  not  jointly 
liable.^  So  where  a  dam  was  filled  with  deposits  of  coal  dirt 
from  different  mines  on  the  stream  above  the  dam,  worked  by 
persons  having  no  connection  with  each  other,  it  was  held  that 
they  were  not  jointly  liable  for  the  combined  results  of  throw- 
ing coal  dirt  into  the  river  by  all  the  workers  of  the  mines; 
that  the  ground  of  action  was  not  the  deposit  of  dirt  in  the 
dam  by  the  stream  but  the  negligent  act  above.  Throwing 
the  dirt  into  the  stream  was  the  tort;  the  deposit  in  the  dam 
only  the  consequence.  The  tort  of  each  was  several  when 
committed  and  did  not  become  joint  because  its  consequences 
united  with  other  consequences.^  Agnew,  J.,  referring  to  the 
[216]  instructions  of  the  trial  court  asserting  a  joint  liability 
or  the  liability  of  each  for  the  combined  results,  said :  "  The 
doctrine  of  the  learned  judge  is  somewhat  novel,  though  the 
case  itself  is  new;  but  if  correct  is  well  calculated  to  alarm  all 
riparian  owners  who  may  find  themselves  by  slight  negli- 
gence overwhelmed  by  others  in  gigantic  ruin.  It  is  imma- 
terial what  may  be  the  nature  of  their  several  acts  or  how 
small  their  share  in  the  ultimate  injury.  If  instead  of  coal 
dirt  others  were  felling  trees  and  suffering  their  tops  and 
branches  to  float  down  the  stream  finally  finding  a  lodgment 
in  the  dam  with  the  coal  dirt,  he  who  threw  in  the  coal  dirt 
and  he  who  felled  the  trees  would  each  be  responsible  for  the 


been  liable  jointly  with  the  officer 
and  the  original  attaching  creditor, 
in  the  absence  of  proof  showing  con- 
cert of  action  (Sparkman  v.  Swift, 
81  Ala.  231,  8  So.  Rep.  160;  Lee  v. 
Maxwell,  98  Mich.  496,  57  N.  W.  Rep. 
581);  but  they  afterward  joined  to- 
gether in  directing  and  assisting 
the  officer  in  selling  the  goods,  and 
in  bringing  a  suit  in  equity  to  set 
aside  the  mortgage  as  fraudulent, 
and  to  enjoin  a  sale  of  the  property 
by  the  mortgagee,  in  consequence  of 
which  acts  they  and  the  indemnitors 
of  the  officer  became  jointly  liable 
with  the  officer  and  the  first  attach- 
ing creditors.     Koch   v.   Peters,   97 


Wis.  492,   73  N.  W.  Rep.  25,  citing 
Lovejoy  v.  Murray,  3  Wall.  1. 

Where  creditors  employed  the 
same  attorney  and  separate  attacli- 
ments  were  levied  on  the  property 
of  their  debtor,  neither  creditor 
being  in  any  way  interested  in  the 
claim  of  any  other  creditor  or  its 
prosecution,  the  creditors  were  not 
joint  tort-feasors.  Miller  v.  Beck, 
108  Iowa.  575,  79  N.  W.  Rep.  344. 

1  De  Donato  v.  Morrison,  160  Mo. 
581,  61  S.  W.  Rep.  641:  Bard  v.  Yohn, 
26  Pa.  482;  Leidig  v.  Bucher,  74  Pa. 
67;  Wiest  v.  Electric  Traction  Co., 
200  Pa.  148,  49  Atl.  Rep.  891. 

2  Little  Schuylkill,  etc.  Co.  v.  Rich- 
ards. 57  Pa.  142,  98  Am.  Dec.  209. 


§  141.] 


PARTIES   TO    SUE    AND    BE   SUED, 


367 


acts  of  the  other.  In  the  same  manner  separate  trespassers 
who  should  haul  their  rubbish  upon  a  city  lot  and  throw  it 
upon  the  same  pile  would  each  be  liable  for  the  whole  if  the 
final  result  be  the  only  criterion  of  liability,"  The  court  re- 
jected this  view  and  held  as  above.  The  judge  further  said: 
"  True,  it  may  be  dillicult  to  determine  how  much  dirt  came 
from  each  colliery,  but  the  relative  proportions  thrown  in  by 
each  may  form  some  guide,  and  a  jury  in  a  case  of  such  diffi- 
culty caused  by  the  party  himself  would  measure  the  injury 
of  each  with  a  liberal  hand.  But  the  dilKculty  of  separating 
the  injury  of  each  from  the  others  would  be  no  reason  that 
one  man  should  be  held  to  be  liable  for  the  torts  of  others 
without  concert.  It  would  be  simply  to  say  because  the 
plaintiff  fails  to  prove  the  injury  one  man  does  him  he  may 
therefore  recover  from  that  one  all  the  injury  that  others  do. 
This  is  bad  logic  and  hard  law.  Without  concert  of  action  no 
joint  suit  could  be  brought  against  the  owners  of  all  the  col- 
lieries, and  clearly  this  must  be  the  test."^ 


1  In  Hillman  v.  Newington,  56  Cal. 
57,  the  plaintiff  was  entitled  to  four 
hundred  inches  of  the  water  in  a 
creek;  the  defendants  severally  and 
without  concert  of  action  diverted 
water  ro  such  an  extent  that  he  did 
not  receive  that  quantity.  In  pass- 
ing upon  the  question  of  misjoinder 
of  parties  defendant  the  court  said: 
"It  is  not  at  all  improbable  that  no 
one  of  the  defendants  deprives  the 
plaintiff  of  the  amount  to  which  he 
is  entitled.  If  not,  upon  what  ground 
could  he  maintain  an  action  against 
any  one  of  them  ?  If  he  were  en- 
titled to  all  the  water  of  the  creek, 
then  every  person  who  diverted  any 
of  it  would  be  liable  to  him  in  an 
action.  But  he  is  only  entitled  to  a 
certain  specific  amount  of  it,  and  if 
it  is  only  by  the  joint  action  of  the 
defendants  that  he  is  deprived  of 
that  amount,  it  seems  to  us  that  tlie 
wrong  is  committed  by  them  jointly 
because  no  one  of  them  alone  is 
guilty  of  any  wrong.  Each  of  them 
Ji verts  some  of  the  water;  and  the 


aggregate  reduces  the  volume  below 
the  amount  to  which  the  plaintiff  is 
entitled,  although  the  amount  di- 
verted by  any  one  would  not.  It  is 
quite  evident,  therefore,  that  with- 
out unity  or  concert  of  action  no 
wrong  could  be  committed,  and  we 
think  that  in  such  a  case  all  who  act 
must  be  held  to  act  jointly.  If  there 
be  a  surplus  [of  water]  tlie  defend- 
ants can  settle  the  priority  of  right 
to  it  among  themselves.  That  can 
in  no  way  affect  the  plaintiff's  right 
to  the  amount  to  which  he  is  enti- 
tled. It  does  not  seem  to  us  that  the 
defendants'  answer  that  each  one  of 
them  is  acting  independently  of 
every  other  one  shows  that  the 
wrong  complained  of  is  not  the  re- 
sult of  their  joint  action;  and  if  it 
does  not  the  answer  in  that  respect 
is  in.sufficient  to  constitute  a  de- 
fense. The  case  so  far  as  we  are  ad- 
vised is  sill  generis.  No  parallel  case 
is  cited  by  either  side."    See  §  142. 

As  to  the  measure  of  co-operation 
necessary    to    make    persons    joint 


3C8  ENTIKETY    OF   DAMAGES.  [§  141. 

Separate  owners  are  not  jointly  liable  for  injuries  jointly 
committed  by  their  respective  animals  though  the  latter  hap- 
pen to  unite  in  a  single  transaction.  Each  owner  is  liable 
only  for  the  injury  committed  by  his  own  animal;  and  his 
liability  is  based  on  his  duty  to  restrain  it  and  his  neglect  in 
allowing  it  to  go  at  large  where,  in  pursuing  its  known  nat- 
ural inclination,  it  may  do  damage.^  If,  however,  separate 
owners  keep  animals  in  common  and  by  a  concurring  negli- 
gence or  design  suffer  them  to  run  at  large  as  one  herd,  they 
are  jointly  liable  for  all  damages  by  the  united  trespass  of  all 
or  any  of  them.^  Where  three  persons,  on  returning  from  a 
horseback  ride,  opened  a  gate  leading  to  a  vacant  lot  in  which 
was  a  horse  owned  by  a  fourth  person,  and  turned  their  horses 
into  such  lot,  and  one  of  these  three  horses  injured  such  other 
horse,  each  of  those  persons  was  liable  as  a  joint  tort-feasor 
for  such  injury,  regardless  of  whether  they  owned  the  horses 
they  turned  in  or  knew  that  they  were  vicious.^  Two  railroad 
companies  used  the  same  track  by  joint  arrangement,  gov- 
erned by  common  rules;  their  trains  collided  owing  to  mutual 
and  concurring  negligence  and  caused  a  single  injury.  They 
were  held  jointly  liable.*     The  same  rule  applies  to  adjoining 

wrong-doers  in  a  conspiracy  to  ruin  every  owner  or  keeper  of  a  dog  en- 

the  Vjusiness  of  another,  see  Doreraus  engaged  in  doing  damage  to  sheep, 

V.    Hennessy,   176  111.  608,  53  N.    E.  lambs,  or   other  domestic    animals 

Rep.  924,  68  Am.  St.  203,  43  L.  R.  A.  shall  be  liable  in  an  action  of  tort  to 

797;  Martens  v.  Reiliy,  109  Wis.  464,  the  county  for  all  damages  so  done, 

84  N.  W.  Rep.  840:  State  v.  Huegin,  the  liability  is  for  all  the  damages 

110  Wis.  189,  89  N.  W.  Rep.  1046.  in  the  doing  of  which  the  dog  en- 

1  Dyer  v.  Hutchins,  87  Tenn.  198,  gages.     Worcester  County   v.  Ash- 

10  S."  W.    Rep.    194;    Auchmuty   v.  worth,  160  Mass.  186,  35  N.  E.  Rep. 

Ham,  1  Denio,  49.');  Wilbur  v.  Hub-  773;  Nelson  v.  Nugent,  106  Wis.  477, 

bard.  35  Barb.  303;  Partenheimer  v.  82  N.  W.  Rep.  287.     The  same  con- 

"Van   Order,   20   id.    479;    Russell   v.  elusion  has    been  reached  under    a 

Toralin.son,  2   Conn.   206;  Adams  v.  statute  less  general  in  its  language. 

Hall,  2  Vt.  9  (the  rule  in  Vermont  Kerr  v.  O'Connor.  63  Pa.  341. 

has  been  changed  by  statute.  Rem-  2  jack  v.  Hudnall,  25  Ohio  St.  255, 

ele  V.  Donohue,  54  Vt.  555;  Fairchild  18  Am,  Rep.  298. 

V.  Rich,  68  Vt.  202,  34  Atl.  Rep.  692);  3  Martin  v.    Farrell,  66  App.  Div. 

Van  Steinburgh  v.  Tobias,  17  Wend.  177,  77  N.  Y.  Supp.  934.     See  §  140, 

562;  Buddington  v.  Shearer,  20  Pick.  note. 

477;  Nierenberg  v.  Wood,  59  N.  J.  L,  <  Colegrove  v.  New  York,  etc.  R. 

112,  35  Atl.  Rep.  654.  Co.,  20  N.  Y.  493,  75  Am.  Dec  4ia 

Under  a  statute  expressing  that  See  §  140,  note. 


§  liJ:2.]         .  PARTIES  TO  SUE  AND  BE  SUED.  369 

land-owners  by  whose  concurring  negligence  an  insecure  party- 
wall  is  maintained.' 

§  142.  Same  subject.  A  statute  giving  a  joint  action  to 
any  person  who  shall  be  injured  in  his  means  of  support  by 
any  intoxicated  person,  or  in  consequence  of  the  intoxication, 
habitual  or  otherwise,  against  any  person  or  persons  who  shall, 
b}'  selling  or  giving  intoxicating  liquors,  have  caused  the  in- 
toxication in  whole  or  in  part  of  such  person  or  persons,  gives 
a  right  of  action  against  all  such  persons  who  participate  in 
causing  a  particular  or  several  particnhar  intoxications  of  a 
person;  if  damages  result  therefrom  the  person  injured  may 
sue  such  persons  jointly  or  severally;  and  also  all  persons 
who,  only  by  the  sale  of  liquor  to  any  person,  materially  con- 
tribute to  make  him  a  habitual  drunkard  may  be  sued  jointly 
by  the  person  injured  in  consequence.  But  the  two  classes 
cannot  be  sued  jointly,  and  those  who  alone  contributed  to 
cause  habitual  intoxication  made  responsible  jointly  with  those 
who  only  contributed  to  the  particular  intoxication  and  the 
reverse.^  Under  the  Iowa  statute  concerning  liability  for  the 
results  of  the  sale  of  liquors,  whoever  contributes  to  a  single 
act  of  intoxication,  though  by  sales  of  liquor  made  in  sepa- 
rate places,  whereby  distinct  damages  are  caused,  is  a  joint 
wrong-doer.'  But  there  is  no  joint  liability  unless  the  persons 
made  defendants  contributed  to  a  specific  act  or  acts  of  intox- 
ication.*    In  an  earlier  case  the  court  say:    "A  joint  liabil- 

1  Klauder  v.  McGrath,  35  Pa  128,  so  continuoJ  until  his  death  in  18G9. 

78  Am.  Dec.  329.  of  which  the  defendant  had  notice; 

'Tetzner  V,  Naughton,  12  111.  App.  that  during  that  period  and  at  sun- 

148.  dry  and  divers  times  the  defendant 

3  Kearney  v.  Fitzgerald,  43  Iowa,  sold  him  in  quantities  of  from  one 

580.  pint  to  a  quart  intoxicating  liquors, 

*  Richmond  v.  Shickler,  57  Iowa,  causing  said  Watt  to  become  intoxi- 

486,  10  N.  W.  Rep.  882.  cated  and  an  habitual  drunkard ;  and 

Boyd  V.  Watt,  27  Ohio  St.  259,  is  a  by  reason  thereof  during  said  period, 

novel  and    interesting    case.      The  and  resulting  therefrom,  he  became 

widow  of  Dr.  Watt  brought  an  ac-  incapable  of  attending  to  his  usual 

tion;  the  complaint  alleged  that  he  business,  and  squandered  his  estate, 

was  a  physician  with  an  extensive  and  so  deprived  her  of  her  means  of 

practice,  from  the  profits  of  which  support.     Johnson,  J.,  speaking  for  a 

he  was  able  to  furnish  her  comfort-  majority  of  the  court,  said:    "The 

able  means  of  support;  that  about  statute  gives  the  action  against 'any 

April,  1865,  he  became  and  was  in  person  who  shall  .    .    .  have  caused 

the  habit  of  getting  intoxicated,  and  the  intoxication.'  This  intoxication 
Vol.  1  —  24 


370 


ENTIRETY    OF    DAMAGES. 


[§  I'iS. 


ity  arises  where  an  immediate  act  is  done  by  the  co-operation 
or  joint  act  of  two  or  more  persons.  Mere  successive  wrongs, 
being  the  independent  acts  of  the  persons  doing  them,  will 
not  create  a  joint  liability  although  the  wrongs  may  be  corn- 


may  be 'habitual  or  otherwise.'  A 
right  of  action  is  given  for  damages 
resulting  from  single  cases  of  intoxi- 
cation or  from  habitual  intoxication. 
Under  the  code  several  distinct 
causes  of  action  may  be  joined  in 
one  action  for  damages  growing  out 
of  distinct  cases  of  intoxication, 
where  each  cause  of  action  is  sep- 
arate and  distinct,  and  is  between  the 
same  parties;  but  if  on  trial  it  ap- 
pears that  some  of  the  acts  of  intox- 
ication were  caused  by  others,  no  re- 
covery as  to  them  could  be  had.  In 
such  case  the  causes  of  action  are 
separate,  and  the  damages  resulting 
from  each  are  distinct  and  discon- 
nected; and  the  causes  of  action 
should  be  separately  stated  and  num- 
bered. 

"  In  such  a  case  the  question  would 
be  as  to  each  case  of  intoxication, 
who  caused  it,  and  what  damages 
resulted  from  it.  What  would  con- 
stitute a  causing  of  a  single  act  under 
thestatuteto  render  one  liable  would 
then  arise.  That  question  is  not 
made  in  this  case.  The  charge  is  of 
causing  habitual  intoxication  for  a 
series  of  years.  The  damages  alleged 
are  not  the  proximate  results  from 
distinct  cases,  but  the  ultimate  re- 
sult of  habitual  intoxication.  This 
continuedhabitof  drinking  is  alleged 
to  have  rendered  the  husband  inca- 
pable of  attendmg  to  his  business,  and 
caused  him  to  squander  his  estate. 
This  final  result  deprived  the  plaint- 
iff of  her  means  of  support.  It  is  a 
charge  of  repeated  illegal  acts,  pro- 
ducing by  their  united  effects  an  ul- 
timate sfaie  or  condition  ot  Dr.  Watt, 
out  of  which  the  damages  arise.  The 
plaintiff  asks  to  recover  the  dam- 
ages resulting  from  this  stateov  con- 


dition of  her  husband,  caused  by 
repeated  illegal  sales  for  a  series  of 
years,  and  not  the  damages  from  a 
single  case  of  intoxication,  nor  of  a 
series  of  distinct  cases  at  different 
times,  caused  by  separate  and  dis- 
tinct illegal  sales.  The  means  used 
were  sales  in  quantity  by  the  pint 
and  quart.  To  a  person  of  Dr.  Watt's 
habits,  frequent  sales  in  such  quan- 
tity were  calculated  to  produce  the 
result  complained  of.  Every  person 
is  presumed  to  have  intended  the 
natural  and  probable  consequences 
of  his  acts.  The  defendant  was,  in 
violation  of  law,  using  means  calcu- 
lated to  produce  the  alleged  injury. 
If  the  jury  found  that  this  was  so, 
and  that  the  means  so  employed  were 
so  continued  as  to  produce  the  con- 
dition of  the  husband  alleged,  then 
they  had  the  right  to  presume  he  in- 
tended the  result  which  followed, 
though  others,  with  or  without  pre- 
concert, contributed  to  cause  it.  The 
intent  with  which  the  act  or  acts  are 
done  is  alwaj's  an  important  element 
in  the  case.  In  this  case  it  is  pecul- 
iarly so.  The  means  used,  the  force 
or  agency  employed,  are  to  be  con- 
sidered in  ascertaining  that  intent. 
If,  as  seems  to  be  claimed,  a  defend- 
ant can  only  be  liable,  except  in  cases 
of  conspiracy  or  agreement,  when  he 
is  the  sole  cause  of  the  habitual  in- 
toxication, and  no  recovery  can  be 
had  unless  the  damages  can  be  sep- 
arated (an  impossibility  in  most  cases 
of  this  class),  then  this  part  of  the 
statute  is  virtually  a  dead  letter. 

"  Why  should  the  defendant  be 
exonerated  from  the  injury  he  has 
caused  by  his  habitual  wrongs  for  a 
series  of  years  by  showing  that 
others,  without  his  knowledge,  have 


§  1^2.] 


PAKTIES    TO    SUE    AND    BE    SDED. 


71 


mitted  against  the  same  person.  There  must  be  concurrent 
action,  co-operation  or  a  consent  or  approval  in  the  accom- 
plishment by  the  wrong-doers  of  the  particuhir  wrong  in  order 


also  contributed  by  like  means  to 
this  result?  He  was  using  adequate 
means  to  produce  the  result,  and 
may,  therefore,  fairly  be  presumed 
to  have  intended  it.  True,  he  may 
not  have  enjoyed  a  monopoly  in  the 
profits  accruing,  by  reason  of  the 
competition  of  others  in  a  common 
business;  but  that  certainly  is  no 
reason  why  he  should  not  be  liable 
for  the  injuries  he  was  intentionally 
engaged  in  causing.  If  such  is  the 
law,  then  he  could  take  advantage 
of  his  own  wrong  by  showing  that 
during  this  four  years  another  or 
others  had  also  contributed.  Such 
is  not  the  law  in  criminal  cases  at 
common  law,  as  will  be  shown  here- 
after; and  we  know  no  reason  for 
greater  strictness  under  this  statute 
than  in  cases  of  the  highest  crimes 
known  to  the  law.  This  section  of 
tlie  statute,  we  take  it,  is  to  be  con- 
strued by  ordinary  canons  of  con- 
struction." 

The  foregoing  views  of  the  court 
presuppose  that  the  defendant  in- 
sisted on  complete  exemption  from 
responsibility  because  other  persons 
made  sales  to  Dr.  Watt.  But  the  case 
as  reported  does  not  disclose  that  any 
sueli  position  was  taken.  The  de- 
fendant asked  the  court  to  charge 
the  jury  "that  the  defendant  was 
only  liable  for  damages  to  the  plaint- 
iff occasioned  by  intoxication  pro- 
duced by  the  intoxicating  liquor 
which  the  defendant  himself  had 
sold  to  said  Dr.  Watt,  and  that  the 
defendant  was  not  liable  for  any 
damages  produced  by  the  intoxica- 
tion of  said  Dr.  Watt,  occasioned  by 
intoxicating  liquors  sold  to  him  dur- 
ing said  period  by  other  persons;" 
which  charge  the  court  refused  to 
give  except  with  the  following  qual- 


ifications: "Siiould  you  find  tliatthe 
defendant  sold  intoxicating  licjuor  to 
Joseph  Watt  in  violation  of  law 
within  the  time  charged  in  the  peti- 
tion, and  that  the  plaintiff  sustained 
damages  by  reason  of  the  intoxica- 
tion of  said  Watt,  caused  tliereby 
to  her  person,  property  or  means  of 
support,  the  fact  that  other  persons 
also  sold  liquor  to  said  Watt,  in  vio- 
lation of  law,  within  that  period,  and 
which  liquor  may  have  contributed 
to  increase  the  intoxication,  and  con- 
sequently to  enhance  the  injury  re- 
sulting to  the  plaintiff  therefrom; 
such  facts,  if  they  be  shown  to  have 
existed,  will  not  exonerate  tiie  de- 
fendant from  the  consequence  of  his 
wrongful  acts;  but,  on  the  contrary, 
he  will  still  be  responsible  for  all  the 
injury  resulting  to  the  plaintiff  from 
the  intoxication  of  Joseph  Watt, 
caused  by  his  illegal  sale  of  liquor  to 
him.  If  yoii  can  separate  the  dam- 
ages resulting  from  the  intoxication 
caused  by  illegal  sales  to  Watt  by  de- 
fendant from  the  damages  resulting 
from  sales  by  others,  you  must  do  so; 
but  if  such  separation  cannot  be 
made  you  will  render  your  verdict 
against  the  defendant  for  all  the  act- 
ual pecuniary  damages  residting  to 
the  plaintiff  in  person,  property  or 
means  of  support  by  reason  of  the 
intoxication  of  the  said  Joseph  Wait, 
to  ichich  intoxication  the  illegal  sales 
of  intoxicating  liquor  by  the  defend- 
ant contributed." 

The  judgment  for  the  plaintiff  was 
afiirmed.  And  upon  the  state  of  facts 
supposed  by  the  defendant's  request, 
the  appellate  court  treat  the  defend- 
ant and  all  other  persons  wiio  sold 
liquor  to  Dr.  Watt  as  jointly  and  sev- 
erally liable  —  as  joint  tort-feasors. 
On  that  point  the  learned  judge  who 


372 


ENTIRETY    OF   DAMAGES. 


[§  142. 


to  make  them  jointly  liable."^  But  where  it  is  provided  that 
the  person  who  furnishes  the  liquor  which  causes  the  intoxica- 
tion "in  whole  or  in  part,"  habitual  or  otherwise,  shall  be 
liable,  the  damages  cannot  be  apportioned;  full  recovery  may 
be  had  against  any  one  who  contributed  to  the  result  com- 
plained of.^ 


delivered  the  majority  opinion  states 
the  defendant's  position  and  the  an- 
swer as  follows:  "Counsel  properly 
admit  that  where  two  or  more  act  by 
concert  in  an  unlawful  design  each 
is  liable  for  all  damages,  but  claim  if 
each  acts  independently,  or  without 
the  knowledge  of  the  other,  then  he 
is  only  liable  for  his  own  acts.  In 
the  former  case  the  acts  of  others  co- 
operating are  his  acts,  because  they 
are  only  in  furtherance  of  a  com- 
mon unlawful  design.  If  there  is  no 
common  intent  there  can  be  no  joint 
liability,  but  each  is  responsible  for 
his  own  act.  If  there  is  a  common 
intent,  or  one  without  such  intent 
aids  one  with  it  in  doing  an  unlaw- 
ful act,  the  latter  is  nevertheless 
guilty,  though  not  the  sole  cause. 
They  claim  this  principle  is  limited 
to  cases  of  conspiracy  or  concerted 
action.  In  this  we  think  they  mis- 
take the  authorities.  We  hold  that 
this  common  intent,  which  is  suffi- 
cient to  create  mutual  liability,  may 
exist  without  previous  agreement  or 
a  common  understanding  to  do  the 
unlawful  act,  and  that  it  may  be  pre- 
sumed to  exist  when  the  means  em- 
ployed create  that  presumption  as 
well  as  by  proving  an  express  agree- 
ment." 

This  "  common  intent  which  is  suf- 
ficient to  create  mutual  liability  "  is, 
further  on  in  the  opinion,  thus  eluci- 
dated: "If  the  defendant  was  usmg 
the  means  calculated  to  produce  the 
injury,  the  law  presumes  that  he  in- 
tended to  produce  it  If  others,  with 
or  without  concert,  were  concur- 
rently co-operating  with  him,  using 


like  means,  they  were  acting  with 
the  same  common  design,  and  if  the 
injury  resulted  each  is  liable,  though 
each  was  acting  without  the  knowl- 
edge of  whattheotherwas  doing.  So 
if  the  defendant  alone  was  using  such 
means  as  created  this  presumption 
of  intent  to  do  the  act  and  another, 
without  concert,  free  from  such  in- 
tent, was  contributing  to  the  injury, 
the  former  is  liable  for  all  damages, 
notwithstanding  the  other  also  con- 
tributed." 

The  majority  of  the  court  came  to 
the  conclusion  that  vendors  of  intox- 
icating liquors  who  separately  sell 
to  a  man,  who,  by  thus  imbibing,  in 
a  period  of  several  years,  becomes  an 
habitual  drunkard,  are  in  law  jointly 
and  severally  liable  for  that  re- 
sult, though  they  have  no  concert 
in  the  sense  of  communicating  with 
each  other  on  the  subject;  though 
they  do  not  act  together,  that  is.  no 
two  of  them  join  in  any  one  sale, 
and  each  may  be  unacquainted  with 
the  others,  and  perhaps  may  not 
even  know  that  there  are  others; 
though  the  only  circumstance  that  is 
supposed  to  join  and  unify  them  is 
they  are  engaged  in  the  same  kind 
of  business  and  each  is  doing  such  a 
business  as  has  a  tendency  to  make 
drunkards,  and  in  a  particular  case 
they  have  thus  made  one. 

1  La  France  v.  Krayer,  43  Iowa, 
143;    Hitchner  v.  Ehlers,  44  id.  40; 

Faivre  v.  Manderscheid, Iowa, — , 

90  N.  W.  Rep.  76. 

2  Neuerberg  v.  Gaulter,  4  111.  App. 
348:  Bryant  v.  Tidgewill,  133  Mass. 
86;    Werner  v.   Edmiston,  24  Kan. 


§  142.] 


PARTIES    TO    SUE    AND    BE    SUED. 


573 


Each  partner  is  an  agent  of  the  firm  of  which  he  is  a  mem- 
ber for  the  purpose  of  carrying  on  its  business  in  the  way  it  is 
usually  prosecuted;  hence  an  ordinary  partnership  is  liable  for 
the  results  of  the  negligence  of  any  one  of  its  members  in  con- 
ducting its  affairs  in  the  usual  way.^  Such  liability  extends  to 
the  fraudulent  or  malicious  conduct  of  one  partner  though  the 
others  had  no  knowledge  of  it,  if  the  act  was  done  for  the 
benefit  of  the  firm  and  was  within  the  scope  of  the  partner- 
ship.2  j^^^  [^  (jQgg  not  embrace  acts  done  beyond  such  scope,' 
unless  they  are  authorized  or  adopted  by  the  firm.'*  A  part- 
nership is  also  responsible  for  the  negligence  of  its  servants 
subject  to  the  same  limitations.* 


147;  Rantz  v.  Barnes,  40  Ohio  St.  43; 
Aldrich  v.  Parnell,  147  Mass.  409,  18 
N.  E  Rep.  170. 

TJiis  is  the  rule  applied  in  Michi- 
gan, although  the  statute  does  not 
contain  the  words  "  in  whole  or  in 
part."  Steele  v.  Thompson,  43  Mich. 
596,  4  N.  W.  Rep.  536.  See  Suther- 
land's Stat.  Const,  §  377. 

1  Lindley's  Part.  (2d  Am.  ed.)  *149; 
Linton  v.  Hurley,  14  Gray.  191; 
Buckie  v.  Cone.  25  Fla.  1,  6  So.  Rep. 
160;  Mode  v.  Penland.  93  N.  C.  292; 
Gerhardt  v.  Swaty,  57  Wis.  24, 14  N. 
W.  Rep.  851;  Robinson  v.  Goings,  63 
Miss.  500;  Wiley  v.  Stewart,  122  111. 
545.  14  N.  E.  Rep.  835;  Hall  v.  Younts, 
87  N.  C.  285;  Hyrne  v.  Erwin,  23  S. 
C.  226;  Stroher  v.  Elting,  97  N.  Y. 
102,  49  Am.  Rep.  515. 

2Lothropv.  Adams,  133  Mass.  471, 
43  Am.  Rep.  528;  Locke  v.  Stearns, 
1  Met  560,  35  Am.  Dec.  382;  Durant 


V.  Rogers,  87  111.  508;  Chester  v.  Dick- 
erson,  54  N.  Y.  1,  13  Am.  Rep.  550; 
Guillou  V.  Peterson,  89  Pa.  163;  Rob- 
inson V.  Goings,  63  Miss.  500.  But 
see  Gilbert  v.  Emmons,  43  111.  143,  89 
Am.  Dec.  412;  Grund  v.  Van  VIeck, 
69  111.  478;  Rosen krans  v.  Barker, 
115  id.  331,  56  Am.  Rep.  169,  3  N.  E. 
Rep.  93. 

3  Gwynn  v.  DufEeld.  66  Iowa,  708, 
55  Am.  Rep.  286,  24  N.  W.  Rep.  523; 
Schwabacker  v.  Riddle,  84  111.  517. 

<  Graham  v.  Meyer,  4  Blatch.  129; 
Heirn  v.  McCaughan,  32  Miss.  17; 
Taylor  v.  Jones,  42  N.  H.  25;  Ernst- 
man  V.  Black,  14  111.  App.  381;  Wood- 
ling  V.  Knickerbocker,  31  Minn.  268, 
17  N.  W.  Rep.  387. 

6  Roberts  v.  Johnson,  58  N.  Y.  613; 
Stables  v.  Eley,  1  C.  &  P.  614;  Brent 
V.  Davis,  9  Md.  217;  Linton  v.  Hur- 
ley, 14  Gray,  191. 


374  LEGAL    LIQUIDATIONS    AND    KEDUOTIONS. 


CHAPTER  Y. 

LEGAL  LIQUIDATIONS  AND  REDUCTIONS. 

Section  1. 

circuity  of  action. 

143.  Defense  of. 

144.  Agreement  not  to  sue. 

145.  Principle  operates  in  favor  of  plaintiff. 

146.  Damages  must  be  equal 

147.  Reciprocal  obligations. 

Section  2. 
mutual  credit. 

148.  Compensation  by  mutual  demands. 

Section  3. 
mitigation  of  damagea 

149.  Equitable  doctrine  of. 

150.  Abseuce  of  malice. 

151.  Words  as  provocation  for  assault;  agreements  to  fights 

153,  153.  Provocation  in  libel  and  slander. 

154.  Mitigating  circumstances  in  trespass  and  other  actions. 

155.  Plaintiff's  acts  and  negligence. 

156,  157.  Measures  of  prevention;  return  of  property;  discharge  of  plaint- 

iff's debt. 

158.  No  mitigation  when  benefit  not  derived  from  defendant. 

159.  Fuller  proof  of  the  res  gestce  in  trespass,  negligence,  etc. 

160.  Official  neglect. 

161.  Same  subject;  modification  of  the  old  rule. 

162.  Plaintiff's  consent. 

163.  Injuries  to  character  and  feelings. 

164.  Reduction  of  loss  or  benefit. 

165.  166.  Pleading  in  mitigation. 

167.  Payments. 

Section  4. 

recoupment  and  counter-claim; 

168,  189.  Definition  and  history  of  recoupment. 
170,  171.  Nature  of  defensa 

172.  Constituent  features  of  recoupment. 

173.  Remedy  by  counter-claim. 

174.  Validity  of  claim  essential. 

175.  176.  Parties. 

177.  Maturity  of  claim  or  demand;  statute  of  limftations. 

178.  Cross-claim  must  rest  on  contract  or  subject-matter  of  action. 

179.  180.  Recoupment  for  fraud,  breach  of  warranty,  negligence,  etc. 


§  143.]  CIRCUITY    OF   ACTION.  375 

§  181.  What  acts  may  be  the  basis  of  recoupment. 
183.  Cross-claims  between  landlord  and  tenant. 

183.  Cause  of  action,  connection  between  and  cross-claim. 

184.  Recoupment  between  vendor  and  purchaser. 

185.  Liquidated  and  unliquidated  damages  may  be  recouped. 

186.  Affirmative  relief  not  obtainable. 

187.  Election  of  defendant  to  file  cross-claim  or  sue  upon  his  demand. 

188.  Burden  of  proof;  measure  of  damages. 

189.  A  cross-claim  used  in  defense  cannot  be  sued  upon. 

190.  Notice  of  cross-claim. 

Section  5. 

marshaling  and  distribution. 

191.  Definition. 

192.  Sales  of  incumbered  property  in  parcels  to  different  purchasers. 

193.  Sale  subject  to  incumbrance. 

194.  Effect  of  creditor  releasing  part. 

195.  Rights  where  one  creditor  may  resort  to  two  funds  and  another  to 

only  one. 

196.  Same  where  the  funds  belong  to  two  debtora 

197.  Principles  on  which  priority  determined. 

Section  6. 
set-off  of  judgments. 

198.  Power  to  direct  set-off  inherent. 

199.  When  it  will  or  will  not  be  granted. 

200.  Interest  of  the  real  parties  considered. 

201.  Set-otf  not  granted  before  judgment. 

203.  Assignee  must  make  an  absolute  purchasa 
203.  Nature  of  action  immaterial. 
804.  Liens  of  attorneys. 

Section  1. 

circuity  of  action". 

§  143.  Defense  of.  The  defense  of  circuity  of  action  [220] 
is  available  where  the  parties  stand  in  such  legal  relation  ta 
each  other  that  if  the  plaintiff  recovers  against  the  defendant 
the  latter,  thereupon  and  by  reason  thereof,  has  a  cause  of 
action  against  the  former  for  the  very  sum  so  recovered.  The- 
plaintiff's  demand  is  then  neutralized  by  his  liability,  conse- 
quent upon  recovery,  to  pay  back  such  sum;  by  a  legal  equa- 
tion the  plaintiff  has  no  cause  of  action.  This  defense  ac- 
complishes the  same  result  as  would  the  circuity  of  action. 
Thus  in  an  action  against  the  surviving  partner  upon  the  prom- 
issory note  of  a  partnership  an  indenture  by  which  the  plaintiff 
and  others  had  covenanted  to  indemnify  the  defendant  against 


376 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


SS  144,  145. 


all  debts  due  from  the  partnership  and  against  all  actions 
brought  against  him  by  reason  of  such  debts  was  a  bar  to  the 
action.^  Under  a  statute  which  imposes  a  personal  liability 
upon  stockholders  for  the  debts  of  a  corporation,  a  creditor, 
who  is  himself  a  stockholder,  cannot  maintain  an  action  to  en- 
force such  liability  against  a  co-stockholder.^  One  who  is  a 
surety  upon  an  official  bond  can  not  recover  from  his  fellow- 
sureties  the  full  amount  of  damages  he  has  sustained  by  its 
breach.' 

§  144.  Agreements  not  to  sue.  On  this  principle  if  a  cred- 
itor makes  a  valid  agreement  never  to  sue  his  debtor  upon  a 
specified  demand  it  operates  to  extinguish  the  debt  like  a  re- 
lease.* But  when  the  covenant  is  that  a  demand  shall  not  be 
put  in  suit  within  a  limited  time  a  breach  thereof  cannot  be 
[221]  pleaded  in  bar  of  that  demand.  The  reason  is  that  the 
damacjes  for  the  breach  of  the  latter  covenant  being  uncertain 
and  not  determinable  by  the  amount  of  the  demand,  the  prin- 
ciple of  circuity  of  action  is  not  applicable. 

§  145.  Principle  operates  in  favor  of  plaintiff.  The  prin- 
ciple of  avoiding  circuity  of  action  will  sometimes  operate 
in  favor  of  the  plaintiff.  A  town  was  compelled  to  pay  dam- 
ages for  an  injury  resulting  from  a  defect  in  a  highway  occa- 
sioned by  the  want  of  repair  of  a  cellar  way  constructed  in  a 
sidewalk  and  leading  to  an  adjoining  building  occupied  by  a 


'  Whitaker  v.  Salisbury,  15  Pick. 
534;  Austin  v.  Cummings,  10  Vt.  26. 

2  Gray  v.  Coffin,  9  Gush.  193,  206; 
Bailey  v.  Bancker,  3  Hill,  188.  38  Am. 
Dec.  625. 

3  Alderson  v.  Mendes,  16  Nev.  298. 
The  plaintiff  declared   on  a  note 

made  by  C.  and  payable  to  the  plaint- 
iff or  his  order,  and  afterwards  in- 
dorsed by  him  to  the  defendant,  who 
re-indorsed  it  to  the  plaintiff.  After 
verdict  for  the  latter  the  ju  igment 
was  arrested.  Bishop  v.  Hayward, 
4  T.  R  470.  But  if  it  appears  that 
the  plaintiff's  name  was  originally 
used  for  form  only,  and  tliat  it  was 
understood  by  all  the  parties  to  the 
instrument  that  the  note,  though 
nominally     made     payable     to    the 


plaintiff,  was  substantially  to  be  paid 
to  the  defendant,  and  the  declaration 
so  alleges,  the  defense  of  circuity  of 
action  is  not  good.  Id.;  Wilders  v. 
Stevens,  15M.  &W.  208. 

*  Robinson  v.  Godfrey,  2  Mich.  408; 
Cuyler  v.  Cuyler,  2  Johns.  186; 
Phelps  V.  Johnson,  8  id.  54;  Lane 
V.  O wings,  3  Bibb,  247;  Millett  v. 
Hayford,  1  Wis.  401;  Pveed  v.  Shaw, 
1  Blackf.  245;  McNeal  v.  Blackburn, 
7  Dana,  170;  Jackson  v.  Stackhouse, 
1  Cow.  122,  13  Am.  Dec.  514;  Sewall 
V.  Sparrow,  16  Mass.  24;  Gibson  v. 
Gibson,  15  id.  106,  8  Am.  Dec.  94; 
Jones  V.  Quiunipiack  Bank,  29  Conn. 
25;  Clark  v.  Bush,  3  Cow.  151;  Dear- 
born V.  Cross,  7  id.  48. 


§  140.]  CIRCUITY    OF    ACTION.  377 

tenant;  it  was  held  that  the  occupant,  and  not  the  owner, 
was  liable  to  the  town  for  such  damages,  and  vfixs,  prima  facie 
liable  to  third  persons  suffering  injury  from  any  such  defect; 
but  if  there  be  an  express  agreement  between  the  landlord 
and  tenant  that  the  former  shall  keep  the  premises  in  repair, 
so  that  in  case  of  a  recovery  against  the  tenant  he  would  have 
his  remedy  over,  then  the  party  injured,  to  avoid  circuity, 
may  bring  his  suit  in  the  first  instance  against  the  landlord.' 

§  146.  Damages  must  be  equal.  If  a  deed  contains  recip- 
rocal covenants  which  are  governed  by  the  same  rule  of  dam- 
ages one  covenant  may  be  pleaded  in  bar  to  another  to  avoid 
circuity  of  action.  But  where  the  covenants  are  distinct  and 
independent  they  cannot  be  so  pleaded,  for  the  damages  may 
not  be  commensurate  and  each  party  must  recover  against  the 
■other  separate  damages  according  to  the  justice  of  the  case.^ 
This  defense  has  been  termed  a  setting  off  of  one  right  of  ac- 
tion against  another.*  It  is  available  though  the  damages  be 
unliquidated,  but  the  damages  on  the  two  causes  of  action  must 
be  the  same  in  amount  as  matter  of  law,  and  must  so  appear 
by  ttie  pleadings.^  In  other  words,  a  good  plea  in  avoidance 
•of  circuity  of  action  must  show  that  the  sum  which  the  de- 
fendant is  entitled  to  recover  from  the  plaintiff  is  necessarily 
the  same  as  that  in  respect  of  which  the  plaintiff  is  suing.  [222] 
The  rigid  severity  and  precision  of  this  test  are  illustrated  in 
the  following  case.  By  a  charter-party  it  was  agreed  between 
the  master  and  the  charterers  that  one-third  of  the  stipulated 
freight  should  be  paid  before  the  sailing  of  the  vessel,  the  same 
to  be  returned  if  the  cargo  was  not  delivered  at  the  port  of 
destination,  the  charterers  to  insure  the  amount  at  the  owners 
expense,  and  deduct  the  cost  of  doing  so  from  the  first  payment 
of  freight.  The  charterers  paid  the  one-third  freight,  deduct- 
ing the  premium  for  insurance.  The  vessel  and  cargo  did  not 
■reach  their  destination.     In  an  action  by  the  charterers  to  re- 

1  Lowell  V.  Spaulding,  4  Gush.  277;  3  Mayne  on  Dam.  (6th  ed.X  p.  130. 

Payne  v.  Rogers,  2  H.  Bl.  349.  *  Id. ;  Turner  v.  Thomas,  L.  R.  6  C. 

-'Gibson   v.  Gibson,  15  Mass.   106,  P.  610;  De  Mattos  v.  Saunders,  7  id. 

112,  8  Am.  Dec.  94;  Guard  v.  White-  570:  Walmesley  v.  Cooper,  11  A.  & 

side,  13I1L  7;  Millett  v.  Hay  ford,  1  E.  216;  Carr  v.  Stepliens.  9  B.  &  C. 

Wis.  401;  Thurston  v.  James,  6  R.  L  759;  Connop  v.  Levy,  11  Q.  B.  769. 
103;  Hovvland  v.  Marvin,  5  Cal.  501; 
Bac.  Abr.  Gov.  L. 


878  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  146.. 

cover  the  freight  so  paid,  the  owner  pleadod  that  the  loss  of 
the  part  of  the  freight  to  be  returned  was  such  a  loss  as  was 
by  the  charter-party  to  be  insured  against  b}^  the  charterers  at 
the  owners  expense,  and  such  insurance,  if  effected,  would  have 
indemnified  the  defendant  against  the  loss  of  the  freight  stip- 
ulated to  be  returned ;  that  although  the  plaintiffs  might,  with 
the  use  of  reasonable  care  and  diligence,  have  effected  an  in- 
surance, whereby  the  defendant  and  the  owner  of  the  ship 
Avould  have  been  fully  indemnified  against  the  loss  of  the  one- 
third  freight  so  to  be  returned,  yet  the  plaintiffs  effected  the 
insurance  so  negligently  and  in  such  disregard  of  the  usual 
course  of  business  that  the  same  became  of  no  use  or  value,  and 
the  defendant,  by  reason  of  such  improper  conduct,  had  sus- 
tained damages  to  the  amount  of  the  said  third  freight  so  in- 
sured, and  the  plaintiffs  thereby  became  liable  to  the  defendant 
for  the  same,  and  liable  to  make  good  to  him  such  amount  as 
he  should  have  to  return  to  the  plaintiffs  under  the  charter- 
party,  and  any  sum  paid  or  returned  by  the  defendant  to  the 
plaintiffs  in  respect  of  the  freight  would  be  the  damage  sus- 
tained by  the  defendant  by  reason  of  such  improper  conduct 
and  deviation,  and  he  would  be  damnified  to  that  extent.  The 
court  held  that  the  plea  was  bad  inasmuch  as  the  conclusion 
it  drew  was  not  warranted  by  the  facts  stated,  for  the  liability 
of  the  plaintiffs  in  respect  of  their  negligence  in  effecting  the 
insurance  was  a  liability  for  damages  which  were  not  neces- 
sarily identical  in  amount  with  the  claim  set  up  by  them  in 
their  action.  Jervis,  C.  J.:  "  It  is  not  denied  that  the  rule  in 
question  is  plain  and  well  ascertained,  viz. :  that  to  justify  a  de- 
fendant in  setting  up  a  demand  in  avoidance  of  circuity  of 
[2'23]  action  he  must  show  that  the  sura  which  he  claims  to  be 
entitled  to  recover  back  is  of  necessity  the  identical  sum  which 
the  plaintiff  is  suing  for.  The  only  difficulty  arises  from  the 
application  of  the  rule.  I  was  somewhat  struck  by  a  difficulty 
arising  from  the  allegation  in  the  plea  that,  by  and  through 
the  negligent  and  improper  conduct  of  the  plaintiffs  in  effecting 
the  insurance,  the  insurance  became  of  no  use  or  value  and  the 
defendant  thereby  sustained  damage  to  the  amount  of  one-third 
of  the  freight  so  insured;  and  that  the  plaintiffs  thereby  be- 
came liable  to  the  defendant  for  the  same,  .  .  .  and  liable 
to  make  good  to  the  defendant  such  amount  as  he  should  have- 


§  146.]  CIRCUITY    OF    ACTION.  379 

to  return  to  the  plaintiffs  under  the  charter-party;  and  that 
the  sum  paid  by  the  defendant  to  the  plaintiffs,  or  received  by 
them,  .  .  .  would  be  the  damages  sustained  by  the  de- 
fendant by  reason  of  such  improper  conduct.  But  I  think  my 
brother  Channell  has  relieved  me  from  that  difficulty  by  sug- 
gesting that  it  is  a  mere  conclusion  drawn  from  the  previous 
allegations, —  not  a  conclusion  of  law  necessarily  resulting  from 
such  previous  allegations,  one  which  a  jury  might  or  might 
not  arrive  at.  I  think  that  unless  the  judge  would  be 
bound  to  tell  the  jury  that  the  amount  which  the  defendant 
claims  by  his  plea  is  necessarily  the  same  amount  as  the  plaint- 
iffs claim  by  their  declaration  the  plea  does  not  bring  the  case 
within  the  rule  as  to  circuity  of  action.  The  case  differs  ma- 
terially from  those  which  were  cited,  ...  in  which  the 
defendant  was  bound  to  a  liquidated  and  ascertained  sum 
on  the  failure  of  the  plaintiff  to  perform  a  duty.  This  is  a 
matter  which  sounds  in  damages.  The  plaintiffs  had  under- 
taken to  effect  an  insurance  for  the  defendant  with  third  per- 
sons; and  it  may  be  that  in  the  result  the  defendant  will  be 
entitled  to  recover  from  the  plaintiffs  precisely  the  same 
amount  of  damages  that  the  plaintiffs  will  recover  in  this  ac- 
tion; but  there  are  various  circumstances  which  might  by  pos- 
sibility arise  to  reduce  the  damages  in  that  action  to  a  lesser 
or  even  to  a  nominal  amount;  and  unless  the  defendant  could 
negative  all  these  possible  circumstances,  he  could  not  make 
this  a  good  plea."  ^ 

1  Charles  v.   Altin,    15    C.    B.    46.  these  plaintiffs  recover  back  the  one- 

Crowder,  J.,  doubted  in  this  case.  He  third  freight  to-day  and  the  defend- 

said:  "  I  have  entertained  consider-  ant   were   to    bring    a    cross-action 

able   doubts   during  the  argument,  against  them,  and  to  allege  and  prove 

and  I  must  confess  that  these  doubts  what  is  stated  in  this  plea,  the  jury 

are   not    altogether    removed;    and  would  be  directed  to  give  damages 

although  my  lord  and  my  two  learned  to  precisely  the  same  amount."  After 

brothers  think  otherwise,  it  is  with  quoting  the  language  of  Mr.  Justice 

considerable  reluctance  that  I  should  Washington  in  Morris  v.  Summerl,  3 

come  to  the  conclusion  that  the  plea  Wash.  C.  C.  203,  he  continued:     "It 

is  no  answer  to  the  declaration.  The  is  not  said  that,  as  a  positive  matter 

rule  as  to  the  avoidance  of  circuity  of  law,  he  is  responsible  to  that  ex- 

of  action  is  in  my  opinion  a  just  and  tent.     It  probably  amounts  to  this, 

valuable  one,  and  it  is  important  that  that  the  loss  would  be  the  reasonable 

a  case  should  be  brought  within  it  if  measure  of  damages.     The  learned 

possible.     In  point  of  fact  and  com-  judge  is  referring  to  a  course  of  deal- 

mon  sense  nobody  can  doubt  that,  if  ing.     The  case  before  us  arises  upon 


380  LEGAL    LIQUIDATIONS    AND    KEDUCTIONS.       [§§   147,  148. 

[224]  §  147.  Reciprocal  obligations.  The  reciprocal  obliga- 
tions of  the  parties  may  be  such  that  the  action  of  one  may 
be  barred  by  a  counter  covenant  which  is  not  only  a  good  de- 
fense on  the  ground  of  avoiding  circuity  of  action,  but  also 
as  a  release.  Of  this  nature  is  a  covenant  never  to  sue.^  To 
sustain  a  bar  in  that  form,  however,  the  contract  must  be 
technically  such  as  to  amount  to  a  release.  But  the  defense  of 
circuity  of  action  does  not  depend  on  the  principle  of  a  re- 
lease, but  on  the  policy  of  the  law  against  unnecessary  litiga- 
tion and  the  convenience  of  admitting  a  party  to  his  ultimate 
right  by  the  shortest  and  most  direct  process. 

Section  2. 

MUTUAL    credit. 

§148.  Compensation  by  mutual  demand.  Mutual  debts  or 
credits  do  not  compensate  each  other  except  when  pleaded 
[225]  under  statutes  of  set-off,  unless  they  are  so  connected 
that  the  parties  have  reciprocally  the  right  to  retain  out  of 
the  moneys  they  owe  the  amount  they  are  creditors  for.  Then 
the  accounts  are  reciprocal  payments,  and  no  demand  exists 
upon  either  side  except  for  the  net  balance.  This  is  the  case 
w^here  the  demands  of  both  parties  are,  with  their  mutual  con- 
sent, brought  into  one  account  as  debit  and  credit;-  and  also 
wherever  a  party  has  a  lien  on  moneys  in  his  hands  or  which 
he  holds  for  the  satisfaction  of  a  cross-demand  in  favor  of 
himself,  as  in  the  case  of  factors,  brokers  and  others.     In  an 

a  contract  to  insure  the  amount, —  Johnson  v.  Carre.  1  Lev.  152;  Harvey 

the   precise    amount,  —  which    the  v.  Harvey,  3  Ind.  473;  Reed  v.  Shaw, 

plaintiffs    are  claiming   under    the  1  Blackf.  245;  Jackson  v.  Stackhouse, 

charter-party    to  have  returned   to  1  Cow.  122,  13  Am.  Dec.  514;  Phelps 

them;  and  the  question  is  whether  v.   Johnson,   8  Johns.   54;   Jones  v. 

the  breach  of  the  engagement  to  in-  Quinnipiack     Bank,    29    Conn.     25; 

sure  does  not  so  clearly  entitle  the  Walker    v.    McCuUoch,   4    Me.   421; 

defendant  to  recover  from  the  plaint-  Lane  v.  Owings,  3  Bibb,  247;  Hast- 

iffs  the  precise  sum  which  they  by  ings  v.  Dickinson,  7  Mass.  153,  5  Am. 

their  action  are  seeking  to  recover  Dec.  341;  Shed  v.  Pierce,  17  Mass.  623. 

from  him,  as  to  warrant  the  plea.    If  See  §  6. 

this  had  been  a  contract  of  indem-        ^pond  y,  Clark,  47  Vt.  565;  McNeil 

nitj-,     there    could    have    been    no  v.  Garland,  27  Ark.  343;  Sanfora  v. 

doubt."    Alston  v.  Herring,  11  Ex.  Clark,  29  Conn.  457;  Myers  v.  Davis, 

822.  26  Barb.  367;  Ang.  on  Lim.,  g  138. 
1  Smith  V.  Mapleback,  1  T.  R.  441; 


§  148.]  MUTUAL    CKEDIT.  381 

early  case  a  ship  broker  rocovered  for  his  principal  a  sum  of 
money  for  damages  done  to  his  ship  by  collision;  the  broker 
paid  over  all  but  his  charges  for  services,  and  it  was  held  in  a 
suit  by  the  principal  for  the  reasonable  sum  so  retained  that 
the  defendant  had  a  right  to  it.  The  action  was  for  money 
had  and  received,  and  it  was  said  the  plaintiff  should  not  re- 
ceive more  than  he  was  in  equity  entitled  to,  and  this  could 
not  be  more  than  what  remained  after  deducting  all  just  allow- 
ances which  the  defendant  was  entitled  to  out  of  the  very  sum 
demanded;  it  was  not  in  the  nature  of  a  cross-demand  or  mut- 
ual debt,  but  a  charge  which  makes  the  sum  received  for  the 
plaintiff's  use  so  much  less.^ 

In  conformity  to  a  natural  equity  that  one  debt  shall  com- 
pensate another,  and  for  the  convenience  of  commerce,  the 
courts  favor  liens  and  recognize  them,  first,  where  there  is 
an  express  contract;  second,  where  one  may  be  implied  from 
the  usage  of  trade;  third,  where  it  may  be  implied  from  the 
manner  of  dealing  between  the  parties  in  the  particular  case; 
fourth,  where  the  defendant  has  acted  in  the  capacity  of  a 
factor.^  Where  it  was  part  of  the  contract  between  a  servant 
and  his  master  that  the  former  should  pay  out  of  his  wages 
the  value  of  his  master's  goods  lost  by  his  negligence  it  [226] 
was  an  agreement  that  the  wages  were  to  be  paid  only  after 
deducting  the  value  of  the  things  lost,  and  their  loss  was 
provable  under  the  general  issue. ^  So  where  by  the  custom  of 
the  hat  trade  the  amount  of  injury  done  to  hats  in  dyeing  was 
to  be  deducted  from  the  dyer's  wages,  evidence  of  injury  from 
this  cause  was  admitted  in  reduction  of  damages.'' 

iDale  V.  Sollet,   4    Burr.    2133;  1  ^Le  Loir  v.  Bristow,  4  Camp.  134; 

Chitty's  PI.  563;  Rawson  v.  Samuel,  Cleworth  v.  Pickford,  7  M.  &  W.  314. 

Cr.  &  Ph.  161;  Green  v.  Farmer,  4  ^Bamford  v.  Harris,  1  Stark.  343. 

Burr.  2214;  Patrick  v.  Hazen,  10  Vt.  See  Alder  v.  Keighley,  15  M.  &  W. 

183:  Saltus  v.  Everett,  20  Wend.  267;  119.     In  this  case  the  bankrupt  had 

MuUer  v.  Pondir,  55  N.  Y.  325;  Dres-  given  tlie  defendant  a  bill  drawn  by 

ser  Manuf.  Co.  v.  Waterson,  3  Met.  himself  for  600Z.,  which  the  defend- 

9;  Turpin   v,   Reynolds,  14  La,  473;  ant  agreed  to  discount,  retaining  lOOZ. 

Holbrook  v.  Receivers,  6  Paige,  220.  and  the  discount.  He  never  paid  the 

See  Taft  V.    Aylwin,    14  Pick.    33G;  bankrupt  anything.     The  action  was 

Schermerhorn  v.  Anderson,  2  Barb,  brought  by  the  assignees  for  breach 

584;  Citizens'  Bank  v.  Carson,  32  Mo.  of  the  agreement.     The  jurj'  gave  a 

191.  verdict  for  495/.,  being  the  amount 

-  Id.  of  the  bill,  minus  the  lOOZ.  and  dis- 


382  legal  liquidations  and  reductions.     [§§  149,  150. 

Section  3. 
mitigation  of  damages. 

§  149.  Equitable  doctrine  of.     Mitigation  of  damages  is 
what  the  expression  imports,  a  reduction  of  their  amount;  not 
by  proof  of  facts  which  are  a  bar  to  a  part  of  the  plaintiff's 
cause  of  action,  or  a  justification,  nor  of  facts  which  constitute 
a  cause  of  action  in  favor  of  the  defendant;  but  rather  of  facts       i| 
which  show  that  the  phiintiff's  conceded  cause  of  action  does 
not  entitle  him  to  so  large  an  amount  as  the  showing  on  his 
side  would  otherwise  justify  the  jury  in  allowing  him.     Facts 
[227]  for  mitigation  are  addressed  to  the  equity  of  the  law, 
and  are  admitted  to  assist  in  the  application  of  the  paramount 
rule  that  damages  should  not  exceed  just  compensation  unless 
the  case  calls  for  severity  in  the  form  of  exemplary  damages. 
But  if  a  wrong  is  wilfully  done  courts  are  not  inclined  to  allow 
the  resulting  damages  to  be  mitigated  by  taking  into  account 
lawful  acts  of  the  wrong-doer  which  have  benefited  the  other 
party.^   There  are,  however,  few,  if  any,  exceptions  to  the  rule 
that  any  circumstance  competent  as  evidence  to  reduce  the 
damages  may  be  proven  on  the  trial  for  that  purpose  although 
it  may  not  have  been  effective  until  after  the  suit  was  begun.^ 
§  150.  Absence  of  malice.    Matters  may  be  proved  in  miti- 
gation which  tend  to  excuse  or  justify  the  act  complained  of, 
though  they  are  not  a  full  excuse  or  justification.     Thus,  where 
the  plaintiff  was  taken  into  custody  for  an  offense  not  justify- 
ing an  arrest,  evidence  of  the  offense  was  allowed  to  be  given, 
for  it  was  in  the  nature  of  an  apology  for  the  defendant's  con- 
count.   This  was  held  correct,  though    of  the  bill,  minus  lOOZ.  and  discount, 
the  bill  had  become  worthless  on  ac-    The  bankrupt  would  have  to  receive 
count  of  the  bankruptcy.     Pollock,     that  sum,  and  his  assignees  are  en- 
C.  B.,  said:     "If  this   had  been   an    titled  to  recover  the  same  amount 
action  of  trover  for  the  bill,  no  doubt     which   he  would  be  entitled  to  re- 
it  would  have  been  altogether  a  ques-    ceive,  had  he  continued  solvent,  by 
tion  for  the  jury  as  to  the  amount  of    reason  of  the  breach  of  contract." 
damages.     So,  also,  if  it  had  been  an        ^  Whorton  v.  Webster,  56  Wis.  356, 
accommodation   bill,   or    the   bank-     14  N.  W.  Rep.  280.     See  Ji  155. 
rupt's  own  bill.     But  this  is  not  an        -  Marsh  v.  McPherson.  105  U.  S.  709, 
action   of  trover,  but  of  breach  of    716;  Gabay  v.  Doane,  77  App.  Div. 
contract.    The  defendant   promised    413,  79  N.  Y.  Supp.  312. 
to  deliver  to  the  bankrupt  the  amount 


§  151.] 


MITIGATION   OF   DAMAGES. 


383 


duct.'  In  trespass  for  false  imprisonment  the  void  warrant  of 
arrest  and  proceedings  had  under  it  are  admissible  in  evidence 
to  disprove  malice  and  prevent  the  recovery  of  exemplary  dam- 
ages,^ but  not  to  mitigate  those  which  are  compensatory.^ 

§  151.  Words  as  provocation  for  assault ;  agreements  to 
fight.  Although  it  is  well  settled  that  no  words  of  provoca- 
tion whatever  will  justify  the  offended  party  in  inflicting  a 
blow  upon  the  offender,*  they  generally  constitute  an  excuse 
which  will  mitigate  the  damages,  and  may  be  proved  for  that 
purpose.^  But  such  provocation  must  be  so  recent  as  to  induce 
the  presumption  that  the  violence  was  committed  under  the 
immediate  influence  of  the  passion  thus  excited.^  The  lan- 
guage of  the  parties  is  often  so  immediately  associated  and 
identified  with  the  transaction  that  it  is  impracticable  to  sup- 
press it  in  giving  evidence  of  their  conduct;  and,  indeed,  the 


1  Linford  v.  Lake,  3  H.  &  N.  276; 
Warwick  v.  Foulkes.  12  M.  &  W.  507; 
Wells  V.  Jackson,  3  Munf.  458;  Paine 
V.  Farr,  118  Mass.  74 

^  Woodall  V.  McMillan,  38  Ala.  622; 
Wells  V.  Jackson,  3  Munf.  458. 

3  Lewis  V.  Lewis,  9  Ind.  105.  See 
§.:;  1257,  1258. 

*  Willey  V.  Carpenter,  64  Vt  212, 
23  Atl.  Rep.  630,  15  L.  R.  A.  853. 

5  Prindle  v.  Haight.  83  Wis.  50,  52 
N.  W.  Rep.  1134;  Burke  v.  Melviii, 
45  Conn.  243;  Kiff  v.  Youmans,  86  N. 
Y.  324,  50  Am.  Rep.  543:  Bonino  v. 
Caledonio.  144  Mass.  299, 11  N.  E.  Rep. 
98:  Frazer  v.  Berkeley,  7  C.  &  P.  789; 
Perkins  v.  Vaughan,  5  Scott  N.  R. 
681;  Thrall  v.  Knapp,  17  Iowa.  468; 
Lund  V.  Tyler,  115  Iowa,  236, 88  N.  W. 
Rep.  333;  Cushman  v.  Ryan,  1  Story, 
91:  Avery  v.  Ray,  1  Mass.  12;  Lee  v. 
Woolsey,  19  Johns.  319, 10  Am.  Dec. 
230;  Maynard  v.  Beardsiey,  7  Wend. 
560. 22  Am.  Dec.  595;  Genung  v.  Bald- 
wm,  77  App.  Div.  584,  79  N.  Y.  Supp. 
569;  Rochester  v.  Anderson,  1  Bibb, 
428;  Mc Alexander  v.  Harris,  6  Munf. 
465;McBridev.  McLaughlin,  5  Watts. 
375;  Waters  v.  Brown,  3  A.  K.  Marsh. 
557;  Corning  v.  Corning,  6  N.  Y.  97; 


Currier  v.  Swan,  63  Me.  323;  Mat- 
thews V.  Terry,  10  Conn.  455;  Dele- 
van  V.  Bates,  1  Mich.  97;  Saltus  v. 
Kipp,  12  How.  Pr.  342.  See  g§  162, 
1255. 

6  Corning  v.  Corning.  Rochester  v. 
Anderson,  supra;  Ellsworth  v, 
Thompson,  13  Wend.  658. 

A  provocation  in  the  morning  does 
not  mitigate  an  assault  made  in  the 
afternoon  of  the  same  day.  Kei-ser 
V.  Smith,  71  Ala.  48,  46  Am.  Rep.  342. 
And  so  with  an  assault  made  one 
day  after  the  alleged  cause.  Gronan 
V.  Kuckkuck,  59  Iowa,  18,  12  N.  W. 
Rep.  748;  Carson  v.  Singleton,  23 
Ky.  L.  Rep.  1626.  65  S.  W.  Rep.  821. 

In  Brooks  v.  Carter,  34  Fed.  Rep. 
505,  the  defendant  gave  the  plaintiff 
thirty  minutes  in  which  to  retract 
statements  made  by  him,  and  on  his 
declining  to  do  so  made  an  assault. 
There  was  too  much  deliberation  to 
allow  the  facts  to  mitigate  the  dam- 
ages. 

In  Irwin  v.  Porter,  1  Hawaiia,  159, 
a  provocation  given  on  Saturday 
was  allowed  to  be  proven  in  mitiga- 
tion of  damages  for  an  assault  com- 
mitted the  following  Monday. 


3Si  LEGAL    LIQUIDATIO^'S    AND    EEDUCTIONS.  [§  151. 

suppression  of  it,  if  practicable,  would  only  tend  to  exhibit 
the  transaction  in  false  and  deceitful  colors.^  The  law  mer- 
cifully makes  this  concession  to  the  weakness  and  infirmities 
of  human  nature,  which  subject  it  to  uncontrollable  influences 
[228]  when  under  great  and  maddening  excitement,  superin- 
duced by  insult  and  threats.  But  it  wholly  discountenances 
the  cruel  disposition  which  for  a  long  time  broods  over  hastily 
and  unguardedly  spoken  words,  and  seeks,  when  opportunity 
offers,  to  make  them  an  excuse  for  brutal  behavior.  "With 
such  a  temper  it  has  no  sympathy.^  The  mitigating  effect  of 
a  provocation  in  words  is  spent  when  there  has  been  time  for 
reflection,  and  for  the  passion  excited  by  it  to  cool.  Other 
antecedent  facts,  however,  may  be  proved  in  mitigation, 
where  they  are  connected  with  the  acts  complained  of,  and 
afford  an  explanation  of  the  motives  and  conduct  of  the 
defendant,  and  show  him  less  culpable  than  he  would  other- 
wise appear.  Thus  where  the  injury  is  inflicted  in  an  attempt 
to  prevent  the  execution  of  previous  threats,  the  defendant 
may  prove  such  threats  in  mitigation  of  damages,  as  conduc- 
ing to  show  that  an  excusable  motive  governed  him,  as  well 
as  the  motives  with  which  the  other  acted  in  the  rencounter.^ 
In  a  case  in  Maine  ^  there  was  an  affray  between  the  plaintiff 
and  one  of  the  defendants  in  the  afternoon.  In  the  evening 
of  the  same  day  the  defendant  assaulted  the  plaintiff  at  his 
own  house.  It  was  held  that  the  defendants  might  show  the 
fact  of  the  affray  in  the  afternoon,  but  not  its  details,  in  miti- 
gation of  damages  for  the  last  assault.  "  It  was  to  show  the 
object  and  purpose  of  the  second  assault,  or  the  state  of  mind 
with  which  it  was  done.  Otherwise  there  would  have  been 
been  nothing  to  indicate  to  the  jury  but  that  the  house  was 
entered  for  the  purpose  of  robbery  and  plunder,  or  something 
of  the  kind.  The  fact  of  the  previous  affray  might  have  some 
weight  on  the  question  of  the  amount  of  damages  recoverable, 

1  Cases  cited  in  notes  5  and  6,  p.  383.     rent  of  decisions  in  this  country  for 

2  Carson   v.   Singleton,  23   Ky.   L.     the  past  three-quarters  of  a  century. 
Rep.  1626,  65  S.  W.  Rep.  821,  quoting     Gaither  v.  Blowers,  11  Md.  536. 

the  text    In  Keiser  v.  Smith.  71  Ala.  ^  Waters  v.  Brown,  3  A.  K.  Marsh. 

481,   46   Am.    Rep.  342,  the   text   is  557;  Rhodes  v.  Bunch,  3  McCord,  66; 

quoted,  and  the  rules  stated  are  said  McKenzie  v.  Allen,  3  Strobh.  546. 

to  be  sustained  by  the  uniform  cur-  *  Currier  v.  Swan,  63  Me.  323. 


§  151.]  MITIGATION    OF    DAMAGES.  385 

and  might  legitimately  be  regarded  as  part  of  the  transaction 
to  be  investigated  in  this  suit."  And  in  a  case  in  Wisconsin^ 
it  was  held  in  an  action  for  an  injury  to  the  person,  committed 
in  an  affray,  that  evidence  offered  should  have  been  received 
that  the  plaintiff  for  several  years  had  frequently  tried  to  pro- 
voke a  quarrel  with  the  defendant,  and  on  various  occasions 
tlireatened  his  life,  some  of  these  being  made  to  the  de-  [229] 
fendant,  and  all  of  them  brought  to  his  knowledge  before  the 
occasion  in  question. 

The  defendant  may  show  that  the  parties  fought  by  agree- 
ment;* but,  the  fighting  being  unlawful,  the  consent  of  the 
plaintiff  does  not  defeat  a  recovery,'  Where  a  battery  pro- 
ceeds from  a  dispute  in  which  the  parties  impugn  each  other's 
veracity  courts  have  differed  as  to  whether  the  defendant  may 
prove  in  mitigation  that  his  statement  in  the  altercation  was 
true.  Such  jjroof  has  been  excluded  in  Indiana,*  but  in  Mary- 
land where  the  parties  disputed  and  blows  ensued  from  ques- 
tioning each  other's  veracity  the  defendant  was  allowed  to 
show  that  he  told  the  truth.^  Proof  by  the  plaintiff  in  aggra- 
vation of  damages  that  the  defendant  threatened  to  beat  him 
because  he  had  circulated  slanderous  words  concerning  the 
defendant  does  not  entitle  the  latter  to  give  evidence  that  the 
plaintiff  had  in  fact  circulated  the  slander.^  Some  question 
has  been  raised  as  to  the  extent  to  which  damages  may  be 
mitigated  by  proof  of  provocation  in  words.  Judge  Story 
said  they  might  be  reduced  to  nominal  when  the  words  were 

1  Fairbanks  v.  Witter,  18  Wis.  287,  »  Shay  v.  Thompson,  59  Wis.  540, 18 

86  Am.  Dec.  765.  N.  W.  Rep.  iT3,  48  Am.  Rep.  538;  Bell 

Where  there  lias  been  a  persistent  v.  Hansley,  8  Jones,  131;  Stout  v. 
continuation  and  repetition  of  insults  Wren,  1  Hawks,  420,  9  Am.  Dec.  653; 
for  the  sole  purpose  of  exciting  and  Lund  v.  Tyler,  115  Iowa.  236,  88  N. 
irritating  another,  and  these  have  W.  Rep.  333;  McCue  v.  Klein,  60  Tex. 
been  repeated  from  day  to  day,  the  168,  48  Am.  Rep.  260;  State  v.  Burn- 
case  is  not  to  be  controlled  or  limited  ham,  56  Vt.  445,  48  Am.  Rep.  801. 
by  a  few  hours  or  a  single  day.  Compare  Galbraith  v.  Fleming,  60 
Dolan  V.  Fagan,  63  Barb.  73.  Mich.  408,  27  N.  W.  Rep.  583;  Smith 

-i  Willey  V.  Carpenter,  64  Vt.  212,  v.  Simon,  69  Mich.  481,  37  N.  W.  Rep. 

23  AtL  Rep.   630,  15  L.  R.   A.   853;  518. 

Adams  v.  Waggoner,  33  Ind.  531,  5  *  Butt  v.  Gould,  34  Ind.  552. 

Am.   Rep.  230;  Logan   v.   Austin,  1  5  Marker  v.  Miller,  9  Md.  338. 

Stew.  476;  Barholtv.  Wright,  45  Ohio  *>  Rochester  v.   Anderson,    1   Bibb, 

SL  177,  4  Am  St.  535,  12  N.  E.  Rep.  428. 
185. 

Vol.  1  —  25 


3SG  LEGAL    LIQUIDATIONS    AND    KEDDCTIONS.  [§   151. 

"very  gross  and  reprc4iensible  and  calculated  from  the  cir- 
cumstances to  draw  forth  strong  resentment."  ^  This  has  been 
doubted,-  but  it  seems  to  be  supported  by  authority.  When 
the  wrong  is  done  under  circumstances  arising  without  the 
plaintiff's  fault,  and  these  furnish  a  reasonable  excuse  for 
the  violation  of  public  order,  considering  the  infirmities  of 
human  temper,  there  is  no  foundation  for  exemplary  damages, 
but  the  plaintiff  is  entitled  to  compensation.  But  where  there 
is  a  reasonable  excuse  for  the  violation  of  public  order  arising 
from  the  provocation  or  fault  of  the  plaintiff,  but  not  sufficient 
to  entirely  justify  the  wrong  done,  there  can  be  no  exemplary 
damages  and  the  circumstances  of  mitigation  must  be  applied  to 
the  actual  damages.*  Dixon,  C.  J.,^  said :  "  This  seems  to  fol- 
low as  the  necessary  and  logical  result  of  the  rule  which  per- 
[2»iO]  mits  exemplary  damages  to  be  recovered.  Where 
motive  constitutes  a  basis  for  increasing  the  damages  of  the 
plaintiff  above  those  actually  sustained,  there  it  should,  under 
proper  circumstances,  constitute  the  basis  for  reducing  them 
below  the  same  standard.  If  the  malice  of  the  defendant  is  to  be 
punished  by  the  imposition  of  additional  damages  or  smart 
money,  then  malice  on  the  part  of  the  plaintiff,  by  which  he 
provoked  the  injury  complained  of,  should  be  subject  to  like 
punishment,  which,  in  his  case,  can  only  be  inflicted  by  with- 
holding the  damages  to  which  he  would  otherwise  be  entitled. 
The  law  is  not  so  one-sided  as  to  scrutinize  the  motives  and 
punish  one  party  to  the  transaction  for  bis  malicious  conduct 
and  not  punish  the  other  for  the  same  thing;  nor  so  unwise  as 
not  to  make  an  allowance  for  the  infirmities  of  men  when 
smarting  under  the  sting  of  gross  and  immediate  provocation. 
If  it  were,  then,  as  has  been  well  said,  it  would  frequently  hap- 
pen that  the  plaintiff  would  get  full  compensation  for  damages 
occasioned  by  himself, —  a  result  which  would  be  contrary  to 
every  principle  of  reason  and  justice.  And  so  I  find  the  un- 
interrupted course  of  decision  both  in  England  and  this 
country."  ^      In  opposition  to  this  view  there  are  several  dis- 

1  Cushman  V.  Ryan,  1  Story.  100.        v.    Baldwin,    77  App.    Div.   584,   79 

2  Birchard  v.  Booth,  4  Wis.  67.  N.  Y.  Supp.  569;  Irwin  v.  Porter,  1 
SRobison  v.  Rupert,    33    Pa.    523;     Hawaiia,  159. 

Reed  v.  Bias,  8  W,  &  S.  189;  Ellsworth        *  Moreley  v.  Dunbar,  24  Wis.  183. 
V.  Thompson,  18  Wend.  663;  Genung        ^  Citing  Robison  v.  Rupert,  23  Pa. 


§  151.] 


MITIGATION    OF    DAMAGES. 


387 


sents  including  the  supreme  court  of  Wisconsin  and  other 
courts  of  high  repute.  The  argument  of  Judge  Dixon  seems 
to  the  editor  to  be  fully  answered  by  the  court  of  Vermont* 
which,  like  the  other  courts  that  deny  that  words  of  provoca- 
tion may  mitigate  compensatory  damages,  grant  that   they 


533;  Fraser  v.  Berkeley,  7  C.  &  P. 
621;  Millard  v.  Brown,  35  N.  Y.  297; 
Finnerty  v.  Tipper,  2  Camp.  72; 
Avery  v.  Rae,  1  Mass.  11;  Cushman 
-v.  Ryan,  1  Story,  100;  Gaither  v. 
Blowers,  11  Md.  551,  552;  Child  v. 
Homer,  13  Pick.  503;  Keyes  v.  Dev- 
lin, 3  E.  D.  Smith,  518;  Rochester  v. 
Anderson,  1  Bibb,  428;  Lee  v.  Wool- 
sey,  19  Johns.  319,  10  Am.  Dec.  230; 
Ireland  v.  Elliott,  5  Iowa.  478,68  Am. 
Dec.  715;  Mayuard  v.  Beardsley,  7 
Wend.  560,  22  Am.  Dec.  595:  Waters 
V.  Brown,  3  A.  K.  Marsh.  557;  Pren- 
tiss  V.  Shaw,  56  Me.  427,  96  Am.  Dec. 
475;  Rhodes  v.  Bunch,  3  McCord,  65; 
McKenzie  v.  Allen,  3  Strobh.  546; 
Matthews  v.  Terry,  10  Conn.  459; 
Coxe  V.  Whitney,  9  Mo.  531 ;  Collins 
V.  Todd,  17  Mo.  539;  Corning  v.  Corn- 
ing, 6  N.  Y.  103;  Willis  v.  Forrest,  2 
Duer,  310;  Tyson  v.  Booth,  100  Mass. 
258;  Marker  v.  Miller.  9  Md.  338; 
Bingham  v.  Garnault,  Buller's  N.  P. 
17. 

In  Wilson  v.  Young,  31  Wis.  574, 
the  subject  was  again  under  discus- 
sion, and  a  majoi'ity  of  the  court 
held  to  a  middle  ground  between  the 
doctrine  of  Birchard  v.  Booth  and 
Morely  v.  Dunbar  —  that  in  an  action 
for  assault  and  battery  compensa- 
tory, as  distinguished  from  punitive, 
damages  are  of  two  kinds:  1.  Those 
wliich  may  be  recovered  for  the 
actual  personal  or  pecuniary  Injury 
and  loss,  the  elements  of  which  are 
loss  of  time,  bodily  suffering,  im- 
paired physical  or  mental  powers, 
mutilation  and  disfigurement,  ex- 
penses of  surgical  and  other  attend- 
ance and  the  like.  2.  Those  which 
may  be  recovered  for  injuries  to  the 
feelings  arising  from  the  insult  or 


indignity,  the  public  exposure  and 
contumely,  and  the  like.  That  com- 
pensatory damages  of  the  first  kind 
are  to  be  determined  without  refer- 
ence to  the  question  whether  the  de- 
fendant was  influenced  by  malicious 
motives  in  the  act  complained  of; 
and,  on  the  other  hand,  evidence  of 
threatening  or  aggravating  langiiage 
or  malicious  conduct  on  the  plaint- 
iff's part,  not  constituting  a  legal 
justification  of  the  defendant's  acts, 
cannot  be  considered  in  mitigation 
of  such  damages.  That  compensa- 
tory damages  of  the  second  kind  de- 
pend entirely  upon  the  malice  of  the 
defendant;  and  as  evidence  of  such 
malice  may  be  given  to  increase  that 
kind  of  damages,  so  evidence  of 
threatening  and  malicious  words  or 
acts  on  the  plaintiff's  part,  just  pre- 
vious to  the  assault,  though  not  con- 
stituting a  legal  justification,  should 
be  admitted  to  mitigate  or  even  de- 
feat such  damages.  The  distinction 
above  made  between  the  kinds  of 
compensatory  damages  is  disap- 
proved of  in  Craker  v.  Chicago,  etc. 
R.  Co.,  36  Wis.  657,  17  Am.  Rep.  504. 
There  are  other  Wisconsin  cases 
which  declare  that  "  personal  abuse 
which  may  have  had  something  to 
do  with  inducing  and  bringing 
upon  another  an  assault  may  be  con- 
sidered by  a  jury  in  mitigation  of 
damages.  But  a  man  commencing 
an  assault  and  battery  under  such 
circumstances  is  liable  for  the  actual 
damages  which  result.  "  Fenelon  v. 
Butts,  53  Wis.  344,  10  N.  W.  Rep. 
501;  Corcoran  v.  Harran,  55  Wis.  120, 
12  N.  W.  Rep.  468.  See  Yates  v.  New 
York,  etc.  R.  Co.,  67  N.  Y.  100. 


388  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§   151. 

mitigate  exemplary  damages.  "  If  provocative  words  may 
mitigate,  it  follows  that  they  may  reduce  the  damages  to  a 
mere  nominal  sum  and  thus  practically  justify  an  assault  and 
battery.  But  why,  under  this  rule,  may  they  not  fully  justify  ? 
If  in  one  case  the  provocation  is  so  great  that  the  jury  may 
award  onl}''  nominal  damages,  why,  in  another  in  which  the 
provocation  is  far  greater,  should  they  not  be  permitted  to 
acquit  the  defendant  and  thus  overturn  the  well  settled  rule  of 
law  that  words  cannot  justify  an  assault.  On  the  other  hand, 
if  words  cannot  justify  they  should  not  mitigate.  A  defendant 
should  not  be  heard  to  say  that  the  plaintiff  was  first  in  the 
wrong  by  abusing  him  with  insulting  words,  and  therefore, 
though  he  struck  and  injured  the  plaintiff,  he  was  only  partly 
in  the  wrong  and  should  pay  only  part  of  the  actual  damages. 
If  the  right  of  the  plaintiff  to  recover  actual  damages  were  in 
any  degree  dependent  on  the  defendant's  intent,  then  the 
plaintiff's  provocation  to  the  defendant  to  commit  the  assault 
upon  him  would  be  legitimate  evidence  bearing  upon  that  ques- 
tion, but  it  is  not.  Even  lunatics  and  idiots  are  liable  for 
actual  damages  done  b}''  them  to  the  property  or  person  of 
another,^  and  certainly  a  person  in  the  full  possession  of  his 
faculties  should  be  held  liable  for  his  actual  injuries  to  another 
unless  done  in  self-defense  or  under  reasonable  apprehension 
that  the  plaintiff  was  about  to  do  him  bodily  harm.  The  law 
is  that  a  person  is  liable  in  an  action  of  trespass  for  an  assault 
and  battery,  although  the  plaintiff  made  the  first  assault,  if  the 
defendant  used  more  force  than  was  necessary  for  his  protec- 
tion, and  the  symmetry  of  the  law  is  better  preserved  by  hold- 
ing that  the  defendant's  liability  for  actual  damages  begins 
with  the  beginning  of  his  own  wrongful  act."^ 

The  fact  that  the  offending  person  in  an  action  for  assault 
and  battery  has  been  subjected  to  fine  in  a  criminal  prosecu- 

1  See  §  16.  McBride  v.  McLaughlin,  5  Watts.  375; 

•-«  Goldsmith  v.  Joy,  61  Vt.  488,  499,  Donnelly  v.  Harris,  41  111.  126;  Gizler 

17  Atl.  Rep.  1010,  4  L.  R  A.  500,  15  v.  Witzel,  82  111.    322;     Johnson  v. 

Am.  St  923;  Grace  v.  Dempsey,  75  McKee,    27    Mich.  471;    Prentiss  v. 

Wis.  813,  43  N.  W.  Rep.  1127;  Prmdle  Shaw,  56  Me.  712;  Mangold  v.  Oft,  63 

V.  Haight,  83  Wis.  50,  52  N.  W.  Rep.  Neb.  397,  88  N.  W.  Rep.  507;  Arm- 

1134;    Jacobs  v.  Hoover,  9  Minn.  204;  strong  v.  Rhoades  (Del.),  53  AtL  Rep. 

Cushman  v.  Waddell,  1  Baldwin,  57;  435, 


§  152.]  MITIGATION    OF    DAMAGES.  3S0 

tion  does  not  bar  or  mitigcate  his  liability  to  exemplary*  or 
compensatory  -  damages  in  a  civil  action.  This  question  will 
be  more  fully  considered  in  the  chapter  on  exemplary  damages.' 
The  character  of  the  party  assaulted  cannot  affect  the  damages 
which  he  is  entitled  to  recover;^  nor  can  proof  be  made  of  the 
generally  peaceable  character  of  the  defendant  to  rebut  malice 
or  mitigate  the  damages.* 

Immediately  after  the  civil  war  the  plaintiff,  having  [231] 
publicly  and  indecently  exulted  over  the  assassination  of 
President  Lincoln,  was  arrested,  pursuant  to  a  general  order  of 
the  defendant  as  commander  of  a  military  department.  The 
order  w^as  illegal  but  was  issued  without  malice  and  was  in- 
tended as  a  means  of  preserving  the  public  peace.  The  plaint- 
iff was  held  not  entitled  to  exemplary  damages  for  his  arrest 
and  imprisonment,  but,  having  been  manacled  and  compelled 
to  labor  with  other  prisoners  during  the  time  he  was  held  in 
custody,  these  circumstances  were  held  to  be  good  ground  for 
enhancement  of  the  damages.® 

§  152.  Provocation  in  libel  and  slander.  In  actions  for 
libel  or  verbal  slander  it  may  be  proved  in  mitigation  that 
tbere  was  an  immediate  provocation  in  the  acts  and  declara- 
tions of  the  plaintiff.'  The  defendant  cannot,  however,  prove 
such  acts  and  declarations  done  or  made  at  a  different  time  or 
any  antecedent  facts  which  are  not  fairly  to  be  considered  part 
of  the  same  transaction,  however  irritating  and  provoking  they 
may  be.^     It  has  been  held  that  a  criminatory  retort  made 

iHoodley  v.   Watson,  45  Vt.  289,  ^Reddin  v.  Gates,  52  Iowa,  210,3 

12   Am.   Rep.    197;    Cook  v.   Ellis,   6  N.  W.  Rep.  1079. 

Hill,  406.  41  Am.  Dec.  757;  McWill-  CMcCall  v.  McDowell,  Deady,  233; 

iams  V.  Bragg,  3  Wis.  424;  Brown  v.  Roth  v.  Smith,  54  111.  431. 

S%vineford,  44  id.  282,  28  Am.   Rep.  •?  Miles  v.  Harrington,  8  Kan.  425; 

582;  Wilson  v.  Middleton,  2  Cal.  54;  Jauch  v.  Jauch,  50  Ind.  135;  Beards- 

Corwin  v.  Walton,  18  Mo.  71,  59  Am.  ley  v.  Maynard,  4  Wend.  33G;  Moore 

Dec.    285.      Contra,    Smithwick    v.  v.  Clay,  24  Ala.  235,  60  Am.  Dec.  461 

Ward,  7  Jones,  64,  75  Am.  Dec.  453.  Powers  v.  Presgroves,  38  Miss.  227 

See  §  402  and  ch.  26.  McClintock    v.    Crick,   4  Iowa,  453 

-Id.;  Reddin V.Gates,  52  Iowa, 210,  Duncan  v.  Brown,  15  B.  Mon.  186 

2  N.  W.  Rep.  1079.  Ranger  v.  Goodrich,  17  Wis.  78;  Free- 

3  Ch.  9.  man  v.  Tinsley,  50  111.  497;  Mousler  v. 

-•  Corning  v.  Corning,  6  N.  Y.  97,  Harding,  33  Ind.  176, 5  Am.  Rep.  195. 

104:  Smithwick  V.Ward,  7  Jones,  64;  8  Hamilton  v.  Eno,   81  N.  Y.  116; 

Ward  V.  State,  28  Ala.  53.      See  §  94.  Lee  v.  Woolsey,  19  Johns.  319, 10  Am- 

Dec.  230. 


390  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§   152. 

after  three  days  is  not  part  of  the  same  transaction,  nor  when 
it  has  no  relation  to  the  previous  publication  and  there  is  no 
[232]  perceptible  connection  between  them.^  It  has  also  been 
held  that  where  a  party  is  sued  for  republishing  a  libelous 
article  in  a  newspaper,  and  the  republication  is  accompanied 
by  remarks  tending  to  a  justification  of  the  article,  but  not 
amounting  to  it,  the  defendant  is  not  permitted  to  prove  the 
truth  of  the  remarks  in  mitigation  of  damages  because  the  evi- 
dence would  tend  to  prove  the  charge  well  founded;  that  evi- 
dence in  mitigation  must  be  such  as  admits  the  charge  to  be 
false.^  The  defendant  may  show  that  he  was  drunk  or  insane 
when  he  spoke  the  words.* 

Upon  common  principles  the  general  issue  in  an  action  on 
the  case  for  slander  would  put  in  issue,  not  only  the  speaking 
of  the  slanderous  words,  but  their  alleged  falsity  and  the 
malice.  The  early  adjudications  were  in  harmony  with  this 
view,  but  upon  consultation  of  the  judges  in  England  about 
one  hundred  and  seventy  years  ago  it  was  resolved  that  in  the 
future,  if  the  defendant  intend  to  justify,  he  shall  plead  his 
justification  that  the  plaintiff  may  know  what  he  has  to  meet.* 
The  rule  then  promulgated  has  ever  since  prevailed  in  Eng- 
land and  has  been  followed  in  this  country.^  It  has  also  ensued 
that,  under  the  general  issue  in  such  actions,  the  defendant 
cannot  prove  the  truth  of  the  words  spoken  either  to  rebut 
malice  or  mitigate  damages.^  It  has  been  deemed  as  import- 
ant that  the  plaintifif  should  have  notice  that  the  truth  of  the 

iBeardsley  v.  Maynard,  4  Wend,  lor  v,  Robinson,  29  Me.  323;  Kay  v. 

336.     See  Graves  V.  State,  9  Ala.  448:  Fredrigal,    3  Pa.  221;    Jarnigan   v. 

Maynard  v.  Beardsley,  7  Wend.  560;  Fleming,  43    Mis&    710;    Douge    v. 

Lister  v.  Wright,  2  Hill,  320;  Under-  Pearce.  13  Ala.  127;  Henson  v.  Veatch, 

hill  V.  Taylor,  2  Barb.  348;  Richard-  1   Blackf.  369;  Gilman  v.  Lowell,  8 

son  V.  Northrup,  56  Barb.  105.  Wend.  573;  Wagstaff  v.  Ashton.  1 

2  Cooper  V.  Barber,  24  Wend.  105.  Harr.    503;    Snyder    v.    Andrews,  6 

3  Howell  V.  Howell,  10  Ired.  84;  Barb.  43;  Shirley  v.  Keathy,  4  Cold. 
Gates  V.  Meredith,  7  Ind.  440;  Jones  29;  Barns  v.  Webb,  1  Tyler,  17;  Up- 
V.  Townsend,  21  Fla.  431,  57  Am.  degrove  v.  Zimmerman,  13  Pa.  619; 
Rep.  171.  Contra,  Mix  v.  McCoy,  22  Root  v.  King,  7  Cow.  613;  Swift  v. 
Mo.  App.  488.  Dickerman,  31  Conn.  285. 

*  Underwood  v.  Parker,  2  Strange,        «  Knight  v.  Foster,  39  N.  H.  576; 

1200.  Bailey  v.  Hyde,  3  Conn.  463;  Swift 

5  Bod  well    V.    Swan,  3  Pick.  376;  v.  Dickerman,  31  Conn.  291;  Shepard 

Knight  V.  Foster,  39  N.  H.  576;  Tay-  v.  Merrill,  13  Johns.  475. 


§  152.]  MITIGATION    OF    DAMAGES.  391 

words  is  intended  to  be  proved  when  the  purpose  is  mitigation 
of  damages,  as  when  the  proof  is  intended  for  any  other  ob- 
ject.i  In  some  jurisdictions,  therefore,  the  defendant  has  been 
precluded  from  all  proof  under  the  general  issue  which  [tJ33] 
implies  the  truth  of  the  charge  or  tends  to  prove  it.^  To  get 
the  opportunity  to  adduce  any  such  proof  he  was  required  to 
plead  the  truth  of  the  words  as  a  justification;  then  if  he  suc- 
ceeded he  was  exonerated  from  all  liability;  but  if  he  failed, 
the  plea,  being  a  repetition  of  the  defamatory  words,  aggra- 
vated the  damages,  for  malice  was  conclusively  presumed.' 
In  New  York  by  such  an  unsustained  plea  the  defendant  was 
held  to  admit  the  malice  on  his  part,  and  he  could  not  resort 
to  any  defense  based  on  its  absence.*  While  he  had  technic- 
ally a  right  to  introduce  evidence  in  mitigation,  still  without 
a  plea  of  justification  he  could  establish  no  fact  which  would 
show  that  he  had  good  reason  to  believe  the  charge  to  be  true 
when  the  words  were  spoken,  and  if  he  put  in  the  only  plea 
which  would  give  him  a  right  to  introduce  such  proof  he  lost 
the  benefit  of  it  by  the  stubborn  presumption  of  malice  unless 
his  proof  was  sufficient  to  establish  the  truth  of  the  charge. 
There  was  therefore  very  little  scope  for  mitigation  in  that 
class  of  actions.*  The  injustice  of  such  a  rule  induced  the 
courts  in  some  of  the  states,  as  well  as  in  England,  to  admit 
proof  of  facts  and  circumstances  tending  to  show  the  truth 
of  the  words  spoken,  but  falling  short  of  proving  it;  in  other 
words,  the  defendant  might  show  that  he  had  reason  to  believe 

1  Wolcott  V.  Hall,  6   Mass.  514,  4  an  inference  of  express  malice  the 

Am.  Dec.  173;  Jarnigan  v.  Fleming,  defendant  may  rebut  that  inference 

43  Miss.  710;  Treat  v.  Browning,  4  by  explanatory  evidenca     Reiley  v. 

Conn.  408,  10  Am.  Dec.  156.  Timme.  53  Wis.  63,  10  N.  W.  Rep.  5. 

2 Oilman  v.  Lowell,  8  Wend.  573;  Md.;    Gorman  v.  Sutton,  32    Pa. 

Knight  V.Foster.  39  N.  H.  576;  Moyer  247;    Lamed  v.   Buffinton,  3    Mass. 

V.  Pine,  4  Mich.  409;  Regnier  v.  Cabot,  546,3  Am.  Dec.  185;  Robinson  v.  Drum- 

7  111.  34;  McAlexander  v.  Harris,  6  mond,  24   Ala,   174:  Pool  v.  Devers, 

Munf.  465;  Porter  v.  Botkins,  59  Pa.  30  Ala.  672;   Downing  v.  Brown,  3 

484;    Chamberlin  v.  Vance,  51  Cal.  Colo.  571;    Cavanaugh  v,  Austin,  42 

75;  Pease  v.  Shippen,  80  Pa.  513,  21  Vt  576. 

Am.  Rep.  116;  Wormouth  v.  Cramer,  <  Oilman  v.  Lowell,  8  Wend.  573; 

3  Wend.  395,  20  Am.  Dec.  706;  Mc-  Purple  v.   Horton,  13  id.  9,  27  Am. 

Gee  V.  Sodusky,  5  J.  J.  Marsh.  185,  20  Dec.  167;  Fero  v.  Ruscoe.  4  N.  Y.  162. 

Am.  Dec.  251.  5  See  Bush  v.  Prosser,  11  N.  Y.  347; 

If  the  plaintiff  puts  in  evidence  a  Bisbey  v.  Shaw,  12  id.  67. 
fact  not  pleaded  tending  to  create 


392 


LEGAL    LIQUIDATIONS    AND    EEDUCTIONS. 


[§  152. 


■when  he  uttered  the  words  that  they  were  true.'  Under  this 
rule  it  has  been  allowed  to  be  proved  that  there  were  reports 
[234]  in  the  neighborhood  that  the  plaintiff  had  been  guilty 
of  practices  similar  to  those  imputed  to  him,^  or  that  general 
reports  that  he  was  guilty  of  the  very  offense  were,  previouslj'' 
to  the  speaking  of  the  words,  in  circulation.'^  But  the  defend- 
ant to  mitigate  damages  and  repel  the  presumption  of  malice 
cannot  give  in  evidence  facts  of  which  he  was  ignorant  at  the 
time  of  uttering  the  words  complained  of.*  The  fact  that  re- 
ports were  in  circulation  prior  to  the  uttering  of  the  words, 
to  the  effect  that  plaintiff  was  guilty  of  the  offense  imputed 
to  him  cannot  generally  be  proven  in  mitigation  in  courts 
which  admit  pi'oof  which  is  not  full  justification  but  which 
tends  to  show  the  truth  of  the  words  spoken.-^  The  general 
character  of  the  plaintiff  at  the  time  the  defamatory  words 
were  spoken  is  uniformly  deemed  in  issue,  for  it  is  the  foun- 
dation of  his  claim  for  damages,  and  he  is  at  all  times,  with- 


1  Knobell  v.  Fuller,  Norris'  Peake 

Add.  Cas.  32;  v.  Moor,  1  M.  & 

S.  285;  Leicester  v.  Walter,  2  Camp. 
251;  East  v.  Chapman,  2  C.  &  P.  570; 
Bailey  v,  Hyde,  3  Conn.  463,  8  Am. 
Dec.  202;  Bridgman  v.  Hopkins.  34 
Vt.  532;  Williams  v.  Miner,  18  Conn. 
464;  Haywood  v.  Foster,  16  Ohio,  88; 
Wagner  v.  Holbrunner,  7  Gill,  296; 
Huson  V.  Dale,  19  Mich.  17,  2  Am. 
Rep.  66;  Rigden  v.  Wolcott,  6  Gill  & 
J.  413;  Morris  v.  Barker,  4  Harr.  520: 
Galloway  v.  Courtney,  10  Rich.  414; 
Williams  v.  Cawley,  18  Ala.  206; 
Brown  v.  Brooks,  3  Ind.  518;  Wilson 
V.  Apple,  3  Ohio,  270;  Minesinger  v. 
Kerr,  9  Pa.  312;  Van  Derveer  v.  Sut- 
phin,  5  Ohio  St,  293;  Farr  v.  Rasco, 
9  Mich.  353,  80  Am.  Dec.  88. 

2 V.  Moor,  1  M.  &  S.  285.  See 

oh.  34. 

3  Calloway  v.  Middleton,  3  A.  K 
Marsh.  372,  12  Am.  Dec.  409;  Ken- 
nedy V.  Gregory,  1  Bin,  85;  Treat  v. 
Browning,  4  Conn.  408,  10  Am.  Dec. 
156;  Case  v.  Marks,  20  Conn.  248; 
Bndgman   v.    Hopkins,  34  VL  532; 


Blickenstafif  v.  Perrin,  27  Ind.  527; 
Morris  v.  Barker,  4  Harr.  520:  Hen- 
son  V.  Veatch,  1  Blackf.  369;  Church 
V.  Bridgman,  6  Mo.  190;  Easter  wood 
V.  Quin,  2  Brev.  64,  3  Am.  Dec.  700: 
Shilling  V.  Carson,  27  Md,  175,  92 
Am.  Dec.  632;  Cook  v.  Barkley,  2  N. 
J.  L.  169,  2  Am.  Dec.  343;  Wetherbee 
V.  Marsh,  20  N.  H.  561,  51  Am.  Dec. 
244;  Bowen  v.  Hall,  20  Vt.  232; 
Fletcher  v.  Burroughs,  10  Iowa.  557; 
Sheahan  v.  Collins,  20  111.  325,  71  Am. 
Dec.  271;  Kimball  v.  Fernandez,  41 
Wis.  329.     See  ch.  34. 

4  Bailey  v.  Hyde,  3  Conn.  463,  8 
Am.  Dec.  202;  Hatfield  v.  Lasher,  81 
N.  Y.  246;  Willower  v.  Hill,  72  id. 
36;  Barkly  v.  Copeland,  74  Cal.  1, 15 
Pac.  Rep.  307,5  Am.  St.  413;  Whit- 
ney V.  Janesville  Gazette,  5  Biss.  330; 
Edwards  v.  Kansas  City  Times  Co., 
32  Fed.  Rep.  813. 

5  Anthony  v.  Stephens,  1  Mo.  254; 
Fisher  v.  Patterson,  14  Ohio.  418; 
Wilson  V.  Fitch,  41  CaL  363;  Bush  v. 
Prosser,  11  N.  Y.  347,  361.  See  Bowen 
V.  Hall,  20  Vt.  232. 


§  153.]  MITIGATION    OF    DAMAGES.  393 

out  special  notice  in  the  pleadings,  supposed  to  be  prepared  to 
sustain  it  against  any  attack.^ 

153.  Samo  subject.  It  is  held  in  Michigan  that  where  only 
the  general  issue  is  pleaded  and  evidence  is  offered  in  mitiga- 
tion tending  to  show  the  truth  of  the  words  spoken,  the  offer 
conclusively  admits  that  the  charge  was  false  though  at  the 
time  the  defendant  made  it  he  believed  it  to  be  true.  [235] 
Such  an  offer,  under  such  pleadings,  should  be  treated  as  in- 
volving a  disclaimer  of  the  truth  of  the  words  and  a  conclu- 
sive admission  that  they  were  not  true;  but  not  as  inconsistent 
with  the  idea  that  the  defendant  at  the  time  he  uttered  them 
may  have  believed  them  to  be  true.  He  therefore  has  a  right 
to  introduce  any  facts  and  circumstances  tending  to  show 
grounds  for  such  belief  at  the  time  of  the  speaking  of  the  words.^ 
The  same  doctrine  is  held  in  Ohio.  The  whole  reason  of  the 
rule  for  admitting  such  evidence  is  to  relieve  the  defendant 
from  the  consequences  which  attach  to  malice  in  the  speaking 
of  the  words.  He  may  show  particular  acts  of  the  plaintiff 
which,  unexplained,  gave  him  a  just  reason  to  believe  the  truth 
of  the  declarations  which  he  uttered;  but  which,  when  ex- 
plained and  understood,  may  be  found  to  be  compatible  with 
the  plaintiff's  innocence.  This  is  permitted  upon  the  ground 
that  the  proof  when  introduced  may  serve  to  show  that  the 
defendant  was  mistaken  in  making  the  charge,  that  he  miscon- 
strued the  act  or  conduct  of  the  party  by  supposing  it  to  be 
criminal,  while  in  fact  it  was  not.  When  the  testimony  can 
have  no  other  effect  than  to  make  apparent  the  plaintiff's  guilt 
and  prove  the  truth  of  the  words  spoken,  its  introduction  to 
the  jur}"  must  tend  to  justify  the  speaking;  not  to  mitigate 
damages  by  showing  the  absence  of  malice.  To  be  competent 
for  the  former  purpose  the  facts  relied  on  must  be  pleaded  spe- 

1  Buford  V.  McLuny,  1  N.  &  McC.  well  v.  Swan,  3  id.  376;  McNutt  v. 
2f)S;  Sawyer  v.  Eifert,  2  id.  511,  10  Young,  8  Leigh,  543;  Dewit  v.  Green- 
Am.  Dec,  633;  Douglass  v.  Tousey,  3  field,  5  Oliio,  225;  Fitzgerald  v.  Stew- 
Wend.  353;  Haraer  v.  McFarlin,  4  art.  53  Pa.  343;  Powers  v.  Presgroves, 
Denio,  509;  Pallet  v.  Sargent,  36  N.  38  Miss.  227;  Warner  v.  Lockerby. 
H.  490;  Sanders  v.  Johnson,  6  Blackf.  31  Minn.  421,  18  N.  W.  Rep.  145,  821; 
53;  Rhodes  v.  Ijams,  7  Ala.  574;  Wol  Maxwell  v.  Kennedy,  50  Wis.  645,  7 
cott  V.  Hall,  6  Mass.  514,  4  Am.  Dec.  N.  W.  Rep.  657. 

173;    Moyer    v.    Moyer,  49  Pa.   310;        ^Huson  v.  Dale,  19  Mich.  17,  2  Am. 

Alderman  v.  French,  1  Pick.  1;  Bod-  Rep.  06. 


394  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§   153. 

daily  and  cannot  be  given  in  evidence  under  the  general 
issue.^ 

The  rule  has  been  far  from  universal  that  an  unsustained 
plea  of  justification  shall  in  all  cases  be  deemed  proof  of  malice 
or  have  the  effect  to  exclude  evidence  of  the  absence  thereof. 
Where  a  plea  of  justification  is  interposed  without  any  expecta- 
tion of  sustaining  it,  there  is  no  reason  why  such  deliberate  rep- 
etition of  the  slander  should  not  be  taken  into  consideration  in 
the  assessment  of  damages.  But  it  has  not  been  deemed  just 
to  hamper  a  bona  fide  defense  with  the  hazard  of  such  a  con- 
sequence as  matter  of  law.  Perley,  C.  J.,  said :  "  If  he  believed 
when  he  spoke  the  words  that  they  were  true,  and  makes  a 
honafide  defense  to  the  action  under  the  plea  of  justification, 
[236]  we  do  not  see  why  he  should  make  it  under  the  penalty 
of  being  punished  by  increased  damages  if  he  should  fail  to 
satisfy  the  jury  of  the  fact  any  more  than  in  other  cases  where 
a  defendant  does  not  succeed  in  a  honafide  defense.  We  think 
it  should  be  left  to  the  jury  to  decide  the  weight  and  character 
of  the  evidence  introduced  in  support  of  the  plea  and  the  man- 
ner and  spirit  in  which  the  defense  is  conducted ;  whether  the 
real  object  of  the  plea  and  evidence  was  to  defend  the  action 
with  reasonable  expectation  of  success  or  to  repeat  the  orig- 
inal slander."  ^ 

These  principles  have  now  been  established  by  statute  in 
iriany  states  where  the  harsher  rule  formerly  prevailed.  In 
liTew  York,  as  well  as  in  many  other  jurisdictions  having  codes, 
it  is  provided  that  the  defendant  may  allege  both  the  truth 
of  the  matter  charged  as  defamatory  and  any  mitigating  cir- 
cumstances to  reduce  the  amount  of  damages,  and  whether  he 
prove  the  justification  or  not  he  may  give  evidence  of  such 
circumstances.  This  statute  does  not  mean  that  he  must  con- 
nect them  together,  that  he  cannot  allege  one  without  the 
other ;  but  that  he  should  not  be  prohibited  from  alleging  either ; 

1  Reynolds   v.  Tucker,  6  Ohio  St.  Am.  Dea  212;  Chalmers  v.  Shackell, 

516,  67  Am.   Dec   353;     Wilson    v.  6  C.  &  P.  475;  Sanders  v.  Johnson,  6 

Apple,  3  Ohio,  270;  Dewit  v.  Green-  Blackf.  50,  36  Am.  Dec.  564:  Thomas 

field,  5  Ohio,  225;  Haywood  v.  Foster,  v.  Dunaway,30  111.  373;  Cummerford 

16  Ohio,  88.  V.  McAvoy,  12  111.  311;   Corbley  v, 

2 Pallet  V.  Sargent,  36  N.  H.  496;  Wilson,  71  111.  209,  22  Am.  Rep.  98;. 

Byrkett  v.  Mouobon,  7  Blackf.  88,  41  Rayner  v.  Kinney,  14  Ohio  St.  283. 


§  154.]  MITIGATION    OF   DAMAGES.  395 

accordingly  the  defendant,  without  pleading  the  truth  of  the 
words  spoken,  may  allege  facts  tending  to  establish  their  truth 
and  prove  such  facts  in  mitigation.^  If  a  pica  of  justification 
or  in  mitigation  is  interposed  in  bad  faith,  and  for  the  purpose 
of  injuring  the  plaintiff's  reputation,  the  fact  may  be  consid- 
ered by  the  jury.^ 

§  154.  Mitigating  circumstances  in  trespass  and  other 
actions.  In  trespass  for  levying  on  the  plaintiff's  proporty 
under  an  execution  against  a  third  party  the  defendant  may 
show  in  mitigation  of  damages  on  a  writ  of  inquiry,  after  judg- 
ment by  default,  that  at  and  prior  to  the  levy  the  property  was 
in  his  possession,  or  that  the  plaintiff  was  not  the  owner;  but  he 
is  estopped  by  the  judgment  from  showing  that  the  plaintiff 
had  not  such  interest  as  would  entitle  him  to  maintain  the  suit.' 
Where  a  building  was  blown  up  without  authority  to  [237] 
stay  the  progress  of  a  conflagration,  the  fact  was  allowed  to  be 
shown;  and  the  jury  in  estimating  the  damages,  it  was  held, 
should  consider  the  circumstances  under  which  the  buildintr 
and  its  contents  were  and  their  chance  of  being  saved,  even 
though  not  at  the  time  on  fire,  and  should  determine  the  dam- 
ages with  reference  to  the  peril  to  which  they  were  exposed.* 
So  if  a  landlord  enters  to  make  repairs  which  are  necessary 
and  which  the  tenant  ought  to  have  made,  but  neglected  to 
make,  or  if  he  enters  to  make  repairs  which  he  is  bound  to 
make,  but  which  the  tenant  forbids  him  to  make,  the  damages 
will  be  estimated  with  reference  to  these  circumstances  and 
will  be  less  than  if  the  entry  were  made  without  color  of  ex- 
cuse.* A  person  sued  for  entering  and  cutting  down  trees 
may  show  in  mitigation  a  verbal  license  from  the  plaintiff,^  or, 
when  sued  for  breach  of  a  contract,  that  performance  would 
have  been  useless.''    In  actions  for  false  imprisonment  or  ma- 

iBush  V.  Prosser,  11  N.  Y.  347;  Bis-  Am,  Dec.  506;  Lowell  v.  Parker,  10 

bey  V.  Shaw,  12  N.  Y.  67.  Met.  309,  43  Am.  Dec.  436. 

2Cruikshank  v.  Gordon,  118  N.  Y.  ^parsons   v.  Pettingell,  11   Allen, 

178,  23  N.  E.  Rep.  457;  Distin  v.  Rose,  507;   Reed  v.   Bias,  8  W.  &  S.  189. 

69  N.  Y.  122;  Bennett  v.  Matthews,  See  Workman  v.  Great  Northern  R. 

64  Barb.  410.     See   Doe    v.  Roe,  33  Co..  32  L.  J.  (Q.  B.)  279, 

Hun,  62a  5  Reeder  v.  Purdy,  41  IlL  279. 

3Sterrett  v.  Kaster,  37  Ala.   366;  6  Wallace  v.  Goodall,  18  N.  H.  439. 

Squire  v.  Hollenbeck,  9  Pick.  551,  20  ^  Louisville    &    P.    Canal    Co.  v. 

Rowan,  4  Dana,  606. 


396  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  155. 

licious  prosecution  the  fact  that  the  defendant  acted  under  in- 
structions of  his  employer  will  not  mitigate  damages.^  The  ad- 
vice of  counsel,  if  given  lonajide,  is  a  circumstance  which  may 
be  considered  to  disprove  malice  and  mitigate  exemplary  dam- 
ages,^ if  it  was  given  on  a  full  disclosure  of  the  facts.'  The 
damages  recoverable  for  the  breach  of  a  marriage  promise  are 
not  lessened  because  the  defendant  withdrew  his  affections 
from  the  plaintiff  without  cause."*  Any  act  done,  no  matter 
by  whom,  by  which  the  injury  resulting  from  a  trespass  is  put 
an  end  to  or  mitigated  may  be  proved.^ 

§  155.  Plaintiff's  acts  and  negligence.  The  acts  and  neg- 
ligences of  the  plaintiff  which  have  enhanced  the  injury  re- 
sulting from  the  defendant's  act  or  neglect  may  be  shown  in 
mitigation  of  damacjes.  The  defendant  is  liable  for  the  nat- 
ural  and  proximate  consequences  of  his  violations  of  contract 
and  of  his  unlawful  acts;  but  if  the  plaintiff  has  rendered  these 
consequences  more  severe  to  himself  by  some  voluntary  act 
from  which  it  w^as  his  duty  to  refrain,  or  if  by  his  neglect  to 
exert  himself  reasonably  to  limit  the  injury  and  prevent  dam- 
age, in  the  cases  in  which  the  law  imposes  that  duty,  and 
thereby  he  suffers  additional  injury  from  the  defendant's  act, 
evidence  is  admissible  in  mitigation  to  ascertain  to  what  extent 
the  damages  claimed  are  to  be  attributed  to  such  acts  or  omis- 
sions of  the  plaintiff.^  If  he  omit  to  use  his  opportunities  and 
['i3S]  does  not  reasonably  exert  himself  to  lessen  the  damages 
which  may  result  from  such  act  he  is  not  entitled  to  compensation 
for  the  injury  which  he  might  and  ought  to  have  prevented,  ex- 
cept to  the  extent  of  proper  compensation  for  such  measures 
or  acts  of  prevention  as  the  case  required  and  were  within  his 
knowledge  and  power.'^    The  measure  of  his  duty  in  this  regard 

1  Josselyn  v.  McAllister,  22  Mich.  Co.,  118  Mo.  328,  23  S.  W.  Rep.  159, 
300.  quoting  the  text. 

2  Fox  V.  Davis,  55  Ga.  298;  Bohm  nd.;  Dietrich  v.  Hannibal  &  St. 
V.  Dunphy,  1  Mont.  333.  J.  E.  Co.,  89  Mo.  App.  36;  Kumberger 

3  Shores  v.  Brooks,  81  Ga.  468,13  v.  Congress  Spring  Co.,  158  N.  Y. 
Am.  St.  332,  8  S.  E.  Rep.  429.  See  ch.  339,  345,  53  N.  E.  Rep.  3;  Warren  v. 
25.  Stoddart,   105  U.  S.  224;  Goshen  v. 

4  Richmond  v.  Roberts,  98  III.  472.  England,  119  Ind.  368,  21  N.  E.  Rep. 

5  Alabama  Midland  R.  Co.  v.  Cos-  977,  5L.  K  A.  253;  Louisville,  etc.  R 
kry,  92  Ala.  254,  9  So.  Rep.  202.  Co.  v.  Jones,  108  Ind.  551,  9  N.  E.  Rep. 

•i  Boggess  V.  Metropolitan  Street  R.     476;   Sherman  Center  Town  Co.  v. 


§  155.] 


MITIGATION    OF    DAMAGES. 


)[)7 


is  ordinary  care  and  diligence.'  "  To  require  one  who  has  been 
injured  to  take  "proper  and  immediate  steps  to  prevent  future 
consequences  is  demanding  of  him  a  degree  of  care  and  an  in- 
fallibility of  judgment  which  the  most  skilful  physician  does 
not  possess."^  "  An  injured  person  who,  from  the  circumstances, 
might  reasonably  believe  that  her  injury  was  of  a  character 
that  rest  alone  would  afford  a  speedy  recovery  from,  should 
not  be  required  to  incur  the  heavy  expenses  of  nursing  and 
medical  attendance  as  a  condition  to  her  right  of  recovery  of 
adequate  damages."'  If  an  injured  person  selects  and  uses  all 
reasonably  accessible  means  to  cure  his  hurt  and,  for  a  time 
upon  his  own  judgment  and  without  medical  advice,  adopts 
and  pursues  such  treatment  as  a  physician  of  ordinary  care, 
prudence  and  skill  uses  in  treating  a  similar  injury,  his  duty  is 
fully  discharged,  though  it  appears  that  a  more  skilful  treat- 
ment might  have  produced  a  more  favorable  result.*  The  rule 
which  requires  reasonable  conduct  on  the  part  of  one  whose 


Leonard,  46  Kan.  354,  26  Am.  St.  101, 
26  Pac.  Rep.  717;  Miller  v.  Mariners' 
Cliurch,  7  Me.  51,20  Am.  Dec.  341; 
Mather  v.  Butler  County,  28  Iowa, 
253;  Maynard  v.  Maynard,  49  Vt.  297; 
Arden  v.  Goodacre,  11  C.  B.  371; 
Howard  v.  Daly,  61  N.  Y.  362, 19  Am. 
Rep.  285;  Sutherland  v.  Wyer,67  Me. 
64;  V^illiams  v.  Chicago  Coal  Co.,  60 
111.  149:  Benziger  v.  Miller,  50  Ala. 
206;  Dunn  v,  Johnson,  33  Ind.  54,  5 
Am.  Rep.  177;  Keyesv.  Western  Ver- 
mont Slate  Co.,  34  Vt.  81;  Cook  v. 
Soule,  56  N.  Y.  420;  Campbell  v. 
Miltenberger,  26  La.  Ann.  72;  Par- 
sons V.  Sutton,  66  N.  Y.  92;  Bisher  v. 
Ri(;hards.  9  Ohio  St.  495;  Dobbins  v. 
Duquid,  65  111.  464;  Hayden  v.  Cabot, 
17  Mass.  169;  Emery  v.  Lowell,  109 
Mass.  197;  True  v.  International  Tel. 
Co.,  GO  Me.  9;  Grindle  v.  Eastern 
Exp.  Co.,  67  Me.  317,  24  Am.  Rep.  31; 
Luse  V.  Jones,  39  N.J.  L.  707;  United 
States  V.  Smith,  94  U.  S.  214;  Bey- 
mer  v,  McBride,  37  Iowa,  114;  Le 
Blanche  v.  London,  etc.  R.  Co.,  1  C. 
P.  Div.  286;  Hamlin  v.  Great  North- 
ern R  Co.,  1  H.  «&  N.  408;  Smeed   v. 


Foord,  1  E.  &  E.  602;  Fullerton  v. 
Fordyce,  144  Mo.  519,  44  S.  W.  Rep. 
1053;  Uhlig  v.  Barnum,  43  Neb.  584, 
01  N.  W.  Rep.749;Loomer  v.Thomas, 
38  Neb.  277,  56  N.  W.  Rep.  973; 
Packet  Co.  v.  Hobbs,  105  Tenn.  29, 
45,  58  S.  W.  Rep.  278:  Nashua  Iron 
&  Steel  Co.  V.  Brush,  33  C.  C.  A.  456, 
91  Fed.  Rep.  213,  citing  the  test; 
Friedenstein  v.  United  States,  35 
Ct.  of  Cls.  1;  Bickham  v.  Hutchin- 
son, 50  La.  Ann.  765,  23  So.  Rep.  902; 
Gooden  v.  Moses,  99  Ala.  230,  13  So. 
Rep.  765;  Raymond  v.  Haverhill, 
168  Mass.  382. 47  N.  E.  Rep.  101.  Com- 
pare Wieting  v.  Millston,  77  Wis. 
523,  46  N.  W.  Rep.  879,  which  is  dis- 
approved in  the  Massachusetts  case. 

1  Louisville,  etc.  R  Co.  v.  Falve}', 
104  Ind.  409,  4  N.  E.  Rep.  908. 

2  Fullerton  v.  Fordyce,  144  Mo.  519, 
533,  44  S.  W.  Rep.  1053. 

3  Kennedy  v.  Busse,  60  111.  App. 
440.  See  Williams  v.  Brooklyn,  33 
App.  Div.  539,  53  N.  Y.  Supp.  1007. 

4  Packet  Co.  v.  Hobbs,  105  Tenn. 
29,  44,  58  S.  W.  Rep.  278. 


59S  LEGAL    LIQUIDATIONS    AND    KEDUCTIONS.  [§  155. 

legal  rights  have  been  violated  should  not  be  invoked  by  a  de- 
fendant as  a  basis  for  a  critical  examination  of  the  conduct  of 
the  injured  party,  or  merely  for  the  purpose  of  showing  that 
the  injured  person  might  have  taken  steps  which  were  wiser 
or  more  advantageous  to  the  defendant.  Reasonably  prudent 
action  is  required;  not  that  action  which  the  defendant,  upon 
afterthought,  may  be  able  to  show  would  have  been  more  ad- 
vantageous to  him.' 

In  some  states  contributory  negligence  to  a  certain  extent  is 
not  a  defense  if  the  defendant  was  also  at  fault.  There  such 
negligence  diminishes  the  damages  which  the  plaintiff  may  re- 
cover,^  except  where  the  defendant  has  been  responsible  for  a 
positive,  continuous  tort.^  In  Tennessee  the  plaintiff's  negli- 
gence may  be  considered  in  mitigation  whether  the  defendant's 
conduct  has  been  merely  negligent  or  reckless  and  wanton.^ 
The  rule  requiring  the  wronged  party  to  lessen  the  damage 
done  has  been  held  not  to  apply  to  a  case  of  wilful  injury. 
"  Since  one  who  has  committed  an  assault  and  battery  upon 
another  cannot  urge  in  his  defense  that  the  plaintiff  might,  by 
the  use  of  due  care,  have  avoided  the  battery,  we  think 
where  the  injury  is  intentional  he  should  not  be  permitted  to 
say  in  reduction  of  damages  that  the  plaintiff  might  have  pre- 
vented them  at  least  in  part  by  careful  conduct  on  his  part. 
If  negligence  contributing  to  the  injury  cannot  be  set  up  to 
defeat  the  action  when  the  act  of  the  defendant  was  wilful,  by 
a  parity  of  reasoning,  the  defendant  in  such  a  case  should  not 
ba  permitted  to  say  that,  but  for  the  negligence  of  the  defend- 
ant in  failing  to  avoid  the  consequences  of  the  wrong,  he  would 
have  suffered  no  damage,  or  only  a  part  of  the  damages  for 
which  he  claims  a  recovery."  * 

1  The  Thomas  P.  Sheldon,  113  Fed.  ^Satterfield  v.  Rowan,  83  Ga.  187, 
Eep.  779,  781.  9  S.  E.  Rep.  677. 

2  Atlanta,  etc.  R.  Co.  v.  Wyly,  65  *  Railway  Co.  v.  Wallace,  90  Tenn. 
Ga.  120;  Hardin  v.  Ledbetter,  103  N.  52,  62,  15  S.  W.  Rep.  921. 

C.  90.  9  S.  E.  Rep.  641;  East  Tennes-  *  Galveston,    etc.    R.  Co.  v.   Zant- 

see.  etc.  R.  Co.  v.  Fain,  12  Lea,  35;  zinger,  92  Tex.  365,  44  L.  R.  A.  553, 

Louis%nlle  &  N.  R.  Co.  v.  Conner,  2  48  S,  W.  Rep.   563,  71  Am.  St.  859. 

Bax.  38'2;  East  Tennessee,  etc.  R.  Co.  The  general  subject  of  mitigation, 

V.  Thompson,   12  Lea.  200;  Railway  or    preventable  damages,    has  been 

Co.  V.  Howard,  90  Tenn.  144,  19  S.  considered  in  §§  88-90. 
W.  Rep.  116. 


§  15G.]  MITIGATION    OF   DAMAGES.  399 

§  156.  Measures  of  prevention;  return  of  property;  dis- 
charge of  plaintiff's  debt.  Acts  of  the  plaintifl"  or  the  defend- 
ant, and  in  some  cases  of  third  persons,  by  which  the  jtyr/witi 
facie  loss  or  injury  from  the  act  complained  of  has  been  re- 
duced or  partially  compensated  may  be  shown  in  reduction  of 
damages.  Measures  of  prevention  taken  by  the  plaintiff  to 
prevent  loss  or  to  avert  some  of  the  consequences  of  the  wrong 
complained  of,  and  which  have  had  an  ameliorating  effect,  may 
be  proved:  and  the  damages  will  be  mitigated,  according  to 
the  particular  facts,  to  the  actual  loss.  Where  goods  have 
been  taken  from  the  owner,  and  sold  by  an  officer  who  cannot 
justify  for  want  of  a  plea  or  because  his  writ  would  not  avail 
for  that  purpose,  such  officer  or  any  person  liable  for  his  tort 
may  show  that  the  plaintiff  bought  the  goods  at  the  tortious 
sale  for  less  than  their  value.' 

Whenever  the  owner  recovers  his  property  after  any  [239] 
wrongful  taking  or  detention  the  expense  of  procuring  its  re- 
turn is  the  measure  of  damages,  in  the  absence  of  special  dam- 
age, if  the  property  itself  has  not  been  injured  or  diminished 
in  value.  In  other  words,  the  wrong-doer  is  jprima facie  liable 
for  the  value  of  property  at  the  time  he  tortiously  took  or 
converted  it,  with  interest;  but  if  it  has  been  returned  and 
accepted  by  the  owner  its  value  then,  or,  if  he  has  incurred  ex- 
pense to  recover  it,  then  its  value  less  such  expense,  will  be 
deducted  by  way  of  mitigation  from  the  amount  which  would 
otherwise  be  the  measure  of  damages.^     Where  one  recovers 

1  Forsyth  v.  Palmer,  14  Pa.  96,  53  Pick.  356;  Lucas  v.  Trumbull,  15 
Am.  Dec.  519;  Murray  v.  Burling,  10  Gray,  306;  Perkins  v.  Freeman,  26 
Johns.  175;  Baker  v.  Freeman,  9  111.  477;  Hallett  v.  Novion,  14  Johns. 
"Wend.  36,  24  Am.  Dec.  117;  Ford  v.  273;  Delano  v.  Curtis,  7  Allen.  470; 
Williams,  24  N.  Y.  359;  Baldwin  v.  Cook  v.  Hartle,  8  C.  &  P.  568;  Ben- 
Porter,  12  Conn.  473;  Hurlburt  v.  nett  v.  Lockwood,  20  Wend.  223,  32 
Green,  41  Vt.  490;  Mclnroy  v.  Dyer,  Am.  Dec  532;  Burn  v.  Morris,  2 
47  Pa.  118;  Tamvaco  v.  Simpson,  H.  Cromp.  &  M.  579;  Doolittle  v.  Mc- 
&  R.  374;  Kaley  v.  Shed,  10  Met.  Cullough,  7  Ohio  St.  299;  Wheelock 
317;  Sprague  v.  Brown,  40  Wis.  612;  v.  Wheelwright,  5  Mass.  104;  Cook  v. 
Reynolds  v.  Shuler.  5  Cow.  323.  Loomis,  26  Conn.  483;   Hepburn   v. 

'-i  Leonard  v.  Maginnis,  34  Minn.  Sewell,  5  Har.  &  J.  211,  9  Am.  Deo. 
506,  26  N.  W.  Rep.  733;  Dailey  v.  512;  Sprague  v.  Brown,  40  Wis.  (il 2: 
Crowley,  5  Lans.  301;  Greenfield  Ewing  v.  Blount,  20  Ala.  694;  Hurl- 
Bank  V.  Leavitt,  17  Pick.  1,  28  Am.  burt  v.  Green,  41  Vt.  490;  Johannes- 
JDeo.   268;    Pierce   v.    Benjamin,   14  son   v.   Borschenius,    35    Wis.    131; 


400 


LEGAL    LIQUIDATIONS    AND    KEDUCTIONS. 


[§  156. 


property  which  had  been  unlawfully  taken  he  is  considered  as 
having  accepted  it  in  mitigation  of  damages  upon  the  principle 
that  he  has  thereby  received  partial  compensation  for  the  in- 
jury suffered.^  In  an  action  of  trespass  for  goods  taken  and 
carried  away  it  appeared  that  the  plaintiff,  before  suing,  had 
demanded  their  return,  and  the  defendant  had  promised  to 
return  them,  but  while  preparing  to  do  so  they  were  attached 
on  a  writ  against  the  plaintiff;  it  was  held  that  the  measure 
of  damages  was  the  same  as  though  the  defendant  had  re- 
turned them.-  If  restoration  is  obtained  by  the  offer  and  pay- 
ment of  a  reasonable  reward  this  amount,  with  interest  from 
the  time  of  payment,  is  to  be  deducted  from  the  value  of  the 
property  returned.^  Trouble  and  loss  of  time  may  be  taken 
into  consideration  as  part  of  the  expense  of  obtaining  restora- 
tion.* Where  there  is  a  diminution  in  value  from  any  cause 
[2-1:0]  intermediate  the  taking  or  conversion  and  return,  the 
loss  falls  on  the  wrong-doer,  and  will  lessen  the  mitigation  to 
which  he  is  entitled  because  of  the  return  of  the  property.^  A 
mere  offer  to  return  will  not  lessen  the  damages ;''  nor  will 
the  tender  of  part  of  the  value  by  an  officer  who  has  sold 
under  a  void  process."  A  court  may  in  a  proper  case,  if  the 
action  is  trover  or  trespass  de  honis,  order  the  plaintiff  to  ac- 
cept the  property  in  mitigation  of  damages,  which  will  then 
be  reduced  to  those  actually  sustained  by  the  taking,  with  in- 
tervening: costs  and  losses.^    In  an  action  for  damages  for 


Blewett  V.  Miller,  131  Cal.  149,  63 
Pac.  Rep.  157,  quoting  the  text; 
First  Nat.  Bank  v.  Rush,  29  C.  C.  A. 
333,  85  Fed-  Rep.  539,  citing  the 
text. 

1  Muenster  v.  Fields,  89  Tex.  102, 
33  S.  W.  Rep.  852,  affirming  Fields 
V.  Muenster,  32  S.  W.  Rep.  417,  quot- 
ing the  text;  Kline  v.  McCandless, 
139  Pa.  223,  20  Atl.  Rep.  1045;  Fields 
T.  Williams,  91  Ala.  502,  8  So.  Rep. 
808;  Dodson  v.  Cooper,  37  Kan.  346, 
15  Pac.  Rep.  200,  quoting  the  text; 
Sgrague  v.  Brown,  40  Wis.  612; 
Lazarus  v.  Ely,  45  Conn.  504;  First 
Nat.  Bank  v.  Rush,  29  C.  C.  A.  333, 
85  Fed.  Rep.  539,  citing  the  text;  Mer- 
rill V.  How,  24  Me.  126. 


2  Kaley  v.  Shed,  10  Met  317;  Low- 
ell V.  Parker,  id.  309,  43  Am.  Dec.  436. 

3  Greenfield  Bank  v.  Leavitt,  17 
Pick.  1,  28  Am.  Dec.  268. 

*  Johannesson  v.  Borschenius,  35 
Wis.  131. 

5  Lucas  V.  Trumbull,  15  Gray,  306; 
Perham  v.  Coney,  117  Mass.  102;  Bar- 
relett  v.  Bellgard,  71  IlL  280;  First 
Nat.  Bank  v.  Rush.  29  C.  C.  A.  333, 
85  Fed.  Rep.  539. 

•>  Norman  v.  Rogers,  29  Ark.  365; 
Stickney  v.  Allen,  10  Gray,  352.  See 
Worman  v.  Kramer,  73  Pa.  378;  Dow 
V.  Humbert,  91  U.  S.  294. 

7  Clark  V.  Hallock,  16  Wend.  607. 

8  Yale  V.  Saunders,  16  Vt.  243. 


§  157.]  MITIGATION    OF    DAMAGES.  401 

withhoUling  or  not  conveying  property,  a  tender  of  it  or  a 
part  of  it  or  a  conve3'^ance  of  the  whole  or  a  portion  of  it  may 
be  allowed  at  the  trial  in  mitigation,  if  under  the  circum- 
stances such  a  course  is  reasonable.^  But  this  cannot  be  done 
in  actions  of  assumpsit  for  breach  of  contract.-  By  a  wrongful 
conversion  of  property  a  cause  of  action  arises  which  cannot 
be  discharged  except  by  the  owner's  act.^  And  his  acceptance 
of  a  return  of  it  is  in  general  required  to  relieve  the  wrong- 
doer of  any  part  of  his  liability  for  the  value;  but  as  damages 
in  trover  are  assessed  on  equitable  principles,  as  is  the  allow- 
ance of  mitigations  generally,  if  property  wrongfully  taken 
or  its  proceeds  have  been  applied  to  the  payment  of  the  plaint- 
iff's debts,  or  otherwise  to  his  use,  though  without  his  direc- 
tion or  consent,  such  application  may,  under  certain  circum- 
stances, be  received  in  mitigation.  An  executor  de  son  tort 
may  show  that  he  has  applied  the  proceeds  of  the  property 
with  which  he  intermeddled  in  payment  of  the  debts  of  the 
deceased.* 

§  157.  Same  subject.  Where  a  guardian,  having  no  power 
to  commit  waste  by  cutting  and  removing  timber,  unauthor- 
izedly  gave  a  license  to  another  to  commit  such  waste,  and  the 
latter,  with  the  former's  assent,  applied  the  proceeds  of  the 
timber  to  the  payment  of  taxes  upon  or  debts  against  the  in- 
fant's estate,  such  payments  were  allowed  to  be  shown  by  hira 
in  mitigation.*  But  it  has  been  held  that  a  voluntary  pur- 
chaser from  an  executor  de  son  tort,  when  sued  in  trover  by 
the  rightful  representative,  cannot  show  in  mitigation  of  dam- 
ages that  since  his  purchase  the  executor  de  son  tort  has  paid 
debts  which  the  administrator  was  bound  to  pay  in  due  course  of 
administration.^     A  defendant  in  an  action  of  trespass  de  honis 

1  Towle  V.  Lawrence,  59  N.  H.  501.  »  Probate  Court  v.    Bates,    10  Vt. 

2  Colby  V.  Reed,  99  TJ.  S.  560.  285:  Torry  v.  Black,  58  N.  Y.  185. 

3  Livernaore  v.  Northrup,  44  N.  Y.  ^  Carpenter  v.  Going,  20  Ala.  587. 
107;  Franke  v.  Eby,  50  Mo.  App.  579;  In  this  case  Dargan,  C.  J.,  said:  "But 
Clark  V.  Brott,  71  Mo.  475.  the  question  is,   can   the   purchaser 

*  Mountford  V.  Gibson,  4  East,  441;  from   the  executor  de  son  tort   be 

Saam  v.  Saam,  4  Watts,  432;  Hostler  substituted  to  this  equitable  defense 

V.  Scott,  2  Haywood,  179;  Cook  v.  that  the  executor  de  son  tort  might 

Sanders,  15  Rich.  63,   94  Am.  Dec.  himself  make?    We  think  he  cannot, 

136;   Hanson  v.  Herrick,   100  Mass.  at  least  in  a  court  of  law.     We  do 

323;  Perry  v.  Chandler,  2  Cush.  237.  not  intend  to  deny  the  common  say- 
VOL.  1  —  26 


402 


LEGAL    LIQUIDATIONS    AND    EEDUCTIONS. 


[§  157. 


asportatis  who  is  a  mere  trespasser  cannot  take  any  benefit 
from  the  application  to  the  plaintiff's  use  of  property  seized 
by  him  without  the  latter's  express  or  implied  authority  or 
consent,  although  a  lien  held  by  a  third  party  thereon  is  sat- 
isfied.^ "One  who  has  wrongfully  taken  property  cannot 
mitigate  the  damages  by  showing  that  he  has  himself  applied 
the  property  to  the  owner's  use  without  his  consent;  but  when 
the  property  has  been  so  applied  by  the  act  of  a  third  person 
and  the  operation  of  law,  that  fact  should  be  taken  into  the 
account  in  estimating  the  plaintiff's  damages."^  In  trover  by 
the  mortgagee  of  crops  against  a  purchaser  with  notice,  or  in 
a  special  action  for  damages  in  the  nature  of  trover,  the  un- 
authorized sale  and  conversion  being  admitted,  the  defendant 
cannot  prove  in  mitigation  of  damages  that  a  part  of  the  pro- 
ceeds of  the  sale  received  by  the  mortgagor  was  applied  by 
him  to  the  discharge  of  a  lien  for  rent  which  was  superior  to 
the  mortgage.^ 


\ 


ing  that  trover  is  an  equitable  action 
and  that  the  plaintiff  can  recover 
damages  only  to  the  extent  of  the 
injury  actually  sustained;  as  if  the 
mortgagee  bring  trover  against  the 
mortgagor  he  can  recover  only  the 
amount  of  the  debt;  or  if  the  goods 
be  sold  illegally  to  discharge  a  lien 
the  owner  can  recover  of  the  pur- 
chaser only  the  value  of  the  goods, 
deducting  the  value  of  the  lien.  But 
we  hold  that  this  equity  or  right 
must  be  personal  to  the  defendant 
himself;  that  is,  it  must  have  existed 
in  him  at  the  time  he  became  liable 
to  the  action:  or  if  acquired  after- 
wards it  must  have  been  acquired  by 
his  own  act;  for  at  law  he  cannot  be 
subrogated  to  the  equities  of  an- 
other which  have  sprung  up  after 
the  liability  of  the  defendant  has  be- 
come perfect." 

iBird  V.  Womaclc.  69  Ala.  390; 
McMichael  v.  Mason,  13  Pa.  214 
(wrongful  levy  by  sheriff);  Dallam 
v.  Fitler,  G  W.  &  S.  ;323;  Hundley  v. 
Chadick,  109  Ala.  575.  584. 19  So.  Rep. 
845,  citingthe  text,  and  disapproving 


a  statement  in  City  Nat.  Bank  v. 
Jeffries,  73  Ala.  123,  to  the  effect  that 
if  it  be  shown  that  the  property  at- 
tached has  yielded  its  full  value,  this 
may  be  considered  in  mitigation  of 
damages. 

2  Higgins  v.  Whitney,  24  Wend. 
379. 

3  Keith  V.  Ham,  89  Ala,  590,  7  So. 
Eep.  234.  The  court  say:  Had  this 
action  been  against  the  mortgagor, 
there  would  have  been  more  force  in 
the  position  that  the  damages  should 
be  mitigated,  for  it  was  his  dut}-  to 
discharge  the  landlord's  lien  for 
rent;  or  had  the  case  involved  the 
general  ownership  of  the  property, 
and  it  appeared  that  the  fruits  of 
the  conversion  had  been  applied  by 
the  consent,  express  or  implied^  of 
the  plaintiff,  or  through  legal  pro- 
ceedings, had  at  the  instance  of  a 
third  person,  to  the  payment  of  his 
debt,  or  in  relieving  his  property 
from  a  lien,  the  damages  recoverable 
by  him  in  trover  might  be  mitigated 
by  the  amount  thus  paid.  Bird  v. 
Womack,  69  Ala.  392;  Street  v.  Sin- 


§  157.] 


MITIGATION    OF    DAMAGES. 


40J 


Where  a  tax  collector  became  a  purchaser  at  a  sale  [2-tl] 
made  by  him  the  sale  was  declared  voidable  in  trover  against 
him;  but  as  the  proceeds  were  applied  to  pay  the  plaintiff's 
tax  the  amount  so  paid  was  deducted  from  the  damages. ^  So 
a  sale  by  a  sheriff  without  giving  notice  has  been  held  a  con- 
version, but  the  damages  should  be  only  the  diminution  of 
price  caused  by  such  omission.-  If  goods  are  tortiously  taken 
and  a  creditor  of  the  owner  afterwards  attaches  and  disposes 
of  them  according  to  law,  and  applies  the  proceeds  in  satis- 
faction of  a  judgment  against  the  owner,  such  proceeding  may 
be  shown,  not  as  a  justification  of  the  taking  but  in  mitigation 
of  damages.  This  is  because  it  would  be  palpably  unjust  for 
the  owner  to  receive  the  full  value  of  his  goods  in  their  appli- 
cation to  the  payment  of   his  debts,  and  afterwards  recover 


clair.  71  id.  110.  Or,  had  a  recovery 
been  had  in  favor  of  the  landlord 
against  tlie  defendant,  it  may  be  that 
evidence  of  that  fact  naiglit  go  in  re- 
duction of  the  mortgagee's  damages. 
But  here,  even  concetling  that  the 
payment  was  in  some  sort  to  the  ad- 
vantage of  the  plaintiff,  we  cannot 
conceive  how  that  fact  will  avail  tlie 
defendant  in  this  action,  the  grav- 
amen of  which  is  the  wrongful  pur- 
chase and  possession.  The  wrong 
was  fully  consummated,  the  injury 
resulting  from  it  had  been  sustained, 
and  the  plaintiff's  right  to  sue  had 
attached  before  the  alleged  payment 
to  the  landlord.  The  payment  was 
not  made  by  the  defendant,  but  by 
the  mortgagor.  To  hold  that  he  is 
entitled  to  a  credit  for  the  amount 
would  be  to  subrogate  him  to  an 
equity  created,  if  it  exists  at  all,  by 
an  act  with  which  he  had  no  connec- 
tion and  to  give  him  the  benefit  of 
a  payment  which  he  has  not  made. 
If  personal  property  is  sold  under 
a  condition  that  the  title  shall  be  and 
remain  in  the  vendor  until  a  note 
given  for  the  purchase  price  of  it  is 
fully  paid,  a  purchaser  of  a  part  of 
such    property   who    is    chargeable 


with  notice  of  the  Contract  is  liable 
to  the  original  vendor  for  the  value 
of  the  property  purchased,  and  can- 
not claim  a  mitigation  of  the  dam- 
ages because  the  money  he  paid  his 
vendor  was  by  him  paid  to  the  owner 
and  indorsement  thereof  made  on 
the  note  he  held.  The  person  in 
whom  was  the  title  had  a  right  to 
the  whole  security  until  his  demand 
was  fully  paid.  That  was  not  affected 
by  the  diminution  of  the  debt  by 
payments.  Defendant's  vendor  had 
no  right  to  dispose  of  the  property 
in  order  to  make  a  payment.  The 
wrong  to  the  plaintiff,  resulting  from 
the  sale  and  conversion,  was  to  di- 
minish his  security.  If  the  proceeds 
of  the  property  sold  had  paid  the 
whole  debt,  there  would  be  good  rea- 
son for  mitigating  the  damages,  al- 
though the  sale  took  place  before  the 
debt  was  paid;  but  under  the  facts 
the  mitigation  would  not  benefit  the 
plaintiff  because,  though  the  debt 
due  him  was  lessened,  he  had  lost  an 
equivalent  amount  of  property.  Mor- 
gan v.  Kidder,  55  Vt.  3G7. 

1  Pierce  v.  Benjamin.  14  Pick.  356. 

^Wright  v.  Spencer,  1  Stewart,  576, 
18  Am.  Dec.  76. 


404 


LEGAL    LIQUIDATIONS    AKD    REDUCTIONS. 


[§  157. 


that  value  from  another  who  has  derived  no  substantial  benefit 
from  his  property.  This  rule  is  not  only  in  conformity  with 
justice,  but  has  the  sanction  of  authority.^  It  is  not  the  fact 
[242]  of  the  seizure  that  gives  the  defense,  but  that  it  has  been 
seized  under  such  circumstances  that  the  owner  has  had  or 


1  Scanlan  v.  Gulling,  63  Ark.  540, 
39  S.  W.  Rep,  713;  Curtis  v.  Ward,  20 
Conn.  204 

In  the  last  case  Ward,  an  attaching 
creditor,  and  the  officer  who  exe- 
cuted the  writ,  were  defendants. 
Ward  sued  out  an  attachment  and 
attached  property,  after  which  that 
writ  was  abandoned  and  the  in- 
dorsement of  service  erased.  Sub- 
sequently a  new  attachment  was 
sued  out,  followed  by  judgment  and 
execution,  on  which  the  goods  were 
sold.  The  defendant  in  the  execution 
brought  trover  for  the  original  tak- 
ing. As  the  defendants  could  not 
justify  that  taking  by  any  return 
vipon  the  first  attachment  they  suf- 
fered judgment  by  default,  but  they 
were  allowed  to  show  the  subse- 
quent disposition  of  the  property  in 
mitigation,  on  the  authority  of  pre- 
vious cases  cited.  Baldwin  v.  Por- 
ter, 12  Conn.  473;  Clark  v.  Whitaker, 
19  id.  330.  Referring  to  the  cases  in 
New  York  denying  the  benefit  of 
such  mitigation  to  the  wrong-doer 
when  the  sale  is  made  upon  process 
sued  out  by  his  agency  or  for  his 
benefit,  Waite,  J.,  said:  "We  are  un- 
able to  yield  our  assent  to  the  cor- 
rectness of  that  doctrine  as  applied 
to  a  case  like  the  present,  where 
there  has  been  a  legal  appropriation 
of  the  property.  Ward,  the  defend- 
ant, had  a  legal  right  to  attach  the 
goods  in  question;  and  as  they  were 
subsequently  legally  appropriated  to 
the  payment  of  the  plaintiff's  debt, 
he  has  in  that  way  received  the  full 
value  of  his  property.  The  defend- 
ants admit  that  they  have  commit- 
ted a  trespass  in  taking  the  goods; 
and  that  they  are  liable  to  pay  the 


plaintiff  all  the  damage  he  has  sus- 
tained thereby,  and  no  more.  These 
are  for  the  original  taking  and  de- 
tention until  the  second  attachment. 
Beyond  this  they  have  done  him  no 
wi"ong.  He  has  no  more  right  to 
complain  of  a  second  attachment 
than  he  would  if  made  by  any  other 
creditor,  or  if  there  had  been  no 
previous  taking  of  the  property. 
When  the  goods  were  attached  the 
second  time  the  copy  left  in  service 
with  him  showed  their  situation. 
It  was  then  at  his  option  to  regain 
the  possession  either  by  writ  of  re- 
plevin or  by  the  payment  of  the  debt 
upon  which  they  were  attached,  or 
suffer  them  to  be  applied  in  satisfac- 
tion of  that  debt.  Had  he  obtained 
his  goods  in  either  of  the  former 
modes  it  would  hardly  be  claimed 
that  he  could  afterwards  recover 
their  value  of  the  defendant.  The 
same  result  ought  to  follow  if  he  suf- 
fered them  to  be  applied  in  due  form 
of  law  to  the  payment  of  his  debt." 
See  Wehle  v.  Butler,  61  N.  Y.  245, 
which  was  apparently  a  similar  case, 
in  which  the  New  York  doctrine 
was  applied  and  mitigation  denied. 
See  Bates  v.  Courtwright,  36  111.  518; 
Wannamaker  v.  Bowes.  36  Md.  42; 
Squire  v.  Hollenbeck,  9  Pick.  551, 
20  Am.  Dec.  506. 

The  defendant  in  trespass  for  the 
wrongful  levy  of  an  attachment  may 
show  in  mitigation  that  the  property 
which  he  wrongfully  took  from  the 
plaintiff  has  been  applied  for  the 
benefit  or  advantage  of  the  owner 
thereof,  and  it  is  immaterial  that 
such  defendant  was  not  the  plaintiff 
in  the  attachment  suit.  Grisham  v. 
Bod  man,    111  Ala.   194,  20  So.   Rep. 


I  157.]  MITIGATION-   OF    DAMAGES.  405 

could  have  the  benefit  of  it.^  But  in  Xew  York,  as  the  law  is 
settled,  to  protect  the  wrong-doer  or  to  entitle  him  to  prove 
such  sale  and  application  of  proceeds  in  mitigation  the  seizure 
must  be  at  the  instance  of  a  third  person  and  not  at  the  in- 
stance of  the  wrong-doer  or  upon  process  in  his  favor.^  Where 
the  wrong-doer  is  not  thus  excluded  by  the  policy  of  the  law 
in  reprobation  of  his  tort  from  the  benefit  of  such  mitigation 
it  is  generally  available  to  him.^ 

If  animals  are  killed  through  negligence  it  is  the  duty  of 
their  owner,  if  their  carcasses  are  of  any  appreciable  value  for 
any  purpose,  to  use  such  measure  of  diligence,  as  is  reasonable 
considering  the  circumstances,  to  realize  for  them  all  they  are 
worth.  If  he  fails  to  do  so  their  net  value  must  be  estimated 
and  deducted  from  the  damages  claimed.* 

Where  two  ships  were  injured  in  a  collision,  the  liability  of 
one  for  the  damage  being  admitted,  and  the  injured  ship  was 
dry  docked  for  repairs,  and  while  in  dock  had  her  bottom 
cleaned  and  painted,  and  her  bilge  keels  fitted,  things  the 
doing  of  which  had  been  contemplated,  but  not  decided  upon, 
before  the  collision,  and  the  doing  of  which  in  no  way  delayed 
or  otherwise  interfered  with  the  making  of  the  repairs,  the 
wrong-doer  was  not  entitled  to  a  reduction  of  the  dock  charges 
because  of  these  facts.'*  There  is  no  principle  of  law  which 
requires  a  person  to  contribute  to  an  outlay  merely  because  he 
had  derived  a  material  benefit  from  it."  Nor  is  one  who  has 
been  injured  in  his  right  of  property  to  receive  less  than  com- 
pensation because  he  did  not  contemplate  the  full  use  of  the 
property,  as  where  water  at  a  dam  was  appropriated.'' 

514,  citing  Squire  v.  Hollenbeck,  9  <Case   v.  St.  Louis   R.   Co.,  75  Mo. 

Pick.  551;  Perry  V.  Chandler,  2  Cush.  668;   Dean   v.  Chicago  &   N.  R.  Co., 

037.  43  Wis.  305;  Georgia  Pacific  R  Co.  v. 

iBall  V.  Liney,  48  N.  Y.  6,  8  Am.  Fullerton,  79  Ala.  298;  Illinois  Cen- 

Rep.  511.  tral  R.  Co.  V.  Finnegan.   21   111.  646; 

2  Id.;  Otis  V.  Jones,  31  Wend.  394;  Roberts  v.  Richmond  &  D.  R  Co.,  88 
Lyon  V.  Yates,  52  Barb.  237;  Peak  v.  N.  C.  560;  Harrison  v.  Missouri  Pa- 
Lemon,  1  Lans.  295;  Higgins  v.  Whit-  cific  R.  Co.,  88  Mo.  625. 

ney,  24  Wend.  379;  Sherry  V.  Schuy-  » The  Acanthus,    112    L.    T.    153, 

ler.  2  Hill,  204:  Wehle  v."  Butler,  61  [1903]  Prob.  17. 

N.  Y.  245.  "  Ruabon  Steamship  Co.  v.  London 

3  Howard  v.  Cooper,  45  N.  H.  339;  Assurance,  [1900]  App.  Cas.  6. 
Doolittle  V.  McCuUough,  7  Ohio  St.  'Green  Bay.  etc.  Canal  Co. v.  Kau- 
299;  Montgomery  v.  Wilson,  48  Vt.  kauna   Water    Power  Co.,  112  Wis. 
€16.  323,  87  N.  W.  Rep.  864;  Patterson  v. 


4:06 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


[§  158, 


§  158.  No  niitigation  when  benefit  not  derived  from  de- 
fendant. Generally  there  can  be  no  abatement  of  damages  on 
the  principle  of  partial  compensation  received  for  the  injury 
where  it  comes  from  a  collateral  source,  wholly  independent  of 
the  defendant,  and  is  as  to  him  res  inter  alios  acta}  As  where  a 
man  whose  wife  was  killed  remarries;  the  pecuniary  value  of 
the  services  rendered  by  the  wife  of  the  second  marriage  can- 
not avail  the  party  who  is  responsible  for  the  death  of  the  first 
[24:3]  wife.^  A  man  who  was  working  for  a  salary  was  injured 
by  the  negligence  of  the  carrier;  the  fact  that  the  employer 
did  not  stop  the  salary  of  the  injured  party  during  the 
time  he  was  disabled  was  held  not  available  to  the  defendant 
sued  for  such  injury  in  mitigation;'  nor  does  the  gratuitous 
care  and  nursing  of  an  injured  plaintiff  relieve  the  party  who 
caused  the  injury  from  liability  for  their  worth.*  Nor  will 
proof  of  money  paid  to  the  injured  party  by  an  insurer  or 
other  third  person  by  reason  of  the  loss  or  injury  be  admis- 
sible to  reduce  damages  in  favor  of  the  party  by  whose  fault 
such  injury  was  done.^     The  payment  of  such  mone3^s  not 


Mississippi  Boom  Co.,  98  U.  S.  403; 
Jegon  V.  Vivian,  L.  R.  6  Ch.  A  pp. 
742. 

1  In  an  action  against  a  railroad  com- 
pany and  the  construction  company 
wliich  built  its  road  to  recover  for 
damage  to  adjacent  property  by  ex- 
cavations in  the  streets,  it  was  com- 
petent to  prove  that  the  damage  had 
been  repaired  by  the  city  soon  after 
it  vs^as  done.  Alabama  Midland  R. 
Co.  v.  Coskry,  92  Ala.  254,  9  So.  Rep. 
202. 

2  Davis  V.  Guarniere,  45  Ohio  St. 
470,  4  Am.  St  548,  15  N.  E,  Rep.  350. 

3  Ohio,  etc.  R.  Co.  v.  Dickerson,  59 
Ind.  317.     But  see  ch.  36. 

*  Penn.sylvania  Co.  v.  Marion,  104 
Ind.  239,  3  N.  E  Rep.  874.  In  some 
jurisdictions  neither  of  the  two  pre- 
ceding rules  is  recognized.  See  ch. 
36. 

5  Cunningham  v.  Evansville,  etc. 
R.  Co..  102  Ind.  478,  1  N.  E.  Rep.  800, 
52  Am.  Rep.  683;  Hammond  v.  Schiff, 


100  N.  C.  161,  6  S.  E  Rep.  753:  Balti- 
more &  O.  R,  Co.  V.  Wightman,  29 
Gratt.  431,  26  Am.  Rep.  384:  Pitts- 
burg, etc.  R  Co.  v.  Thompson,  56  111. 
138;  Texas  &  P.  R  Co.  v.  Levi,  59 
Tex.  674:  Hay  ward  v.  Cain,  105  Mass. 
213;  Clark  v.  Wilson,  103  id.  219,  4 
Am.  Rep.  532;  Propeller  Monticello 
v.  MoUison,  17  How.  152:TheYeager, 
20  Fed.  Rep.  653;  Owens  v.  Baltimore 
&  O.  R.  Co.,  35  id.  715;  Weber  v. 
Morris,  eta  R  Co.,  36  N.  J.  L.  213; 
Carpenter  v.  Eastern  Transportation 
Co.,  71  N.  Y.  574:  Briggs  v.  New  York, 
etc.  R  Co.,  72  N.  Y.  26;  Perrott  v. 
Shearer,  17  Mich.  48;  Yates  v.  Whyte, 
4  Bing.  N.  C.  272;  Kingsbury  v.  West- 
fall,  61  N.  Y.  356;  Althorf  v.  Wolfe, 
22  N.  Y.  355;  Port  Glasgow  &  New- 
ark Sailcloth  Co.  v.  Caledonia  R  Co., 
19  Rettie.  608;  Lake  Erie  &  W.  R. 
Co.  V.  Griffin,  8  Ind.  App.  47,  35  N.  E. 
Rep.  396,  52  Am.  St.  465;  Allen  v. 
Barrett,  100  Iowa,  16,  69  N.  W.  Rep. 
272;  Mathews  v.  St.    Louis,   etc.  R. 


§  158.]  MITIGATION   OF   DAMAGES.  407 

being  procured  by  the  defendant,  and  they  not  having  been 
either  paid  or  received  to  satisfy  in  whole  or  in  part  his  lia- 
bility, he  can  derive  no  advantage  therefrom  in  mitigation  of 
damages  for  which  he  is  liable.  As  has  been  said  by  another, 
to  permit  a  reduction  of  damages  on  such  a  ground  would  be 
to  allow  the  wrong-doer  to  pay  nothing  and  take  all  the  bene- 
fit of  a  policy  of  insurance  without  paying  the  premium,^  The 
same  principle  has  been  applied  to  life  insurance  in  recent 
cases.-  In  the  English  case  cited  in  the  note  the  writer  of  the 
opinion  of  the  house  of  lords  said  that  money  provisions  made 
by  a  husband  for  the  maintenance  of  his  widow,  in  whatever 
form,  are  matters  proper  to  be  considered  by  the  jury  in 
estimating  her  loss  by  the  death  of  her  husband,  but  the 
extent,  if  any,  to  which  these  ought  to  be  imputed  in  reduc- 
tion of  damages  must  depend  upon  the  nature  of  the  provis- 
ion and  the  position  and  means  of  the  deceased.  When  the 
deceased  did  not  earn  his  own  living,  but  had  an  annual  in- 
come from  property,  one-half  of  which  has  been  settled  upon 
his  widow,  a  jury  might  reasonably  come  to  the  conclusion 
that,  to  the  extent  of  that  half,  the  widow  was  not  a  loser  by 
his  death,  and  might  confine  their  estimate  of  her  loss  to 
the  interest  which  she  might  probably  have  had  in  the  other 
half.  Very  different  considerations  occur  when  the  widow's 
provision  takes  the  shape  of  a  policy  on  his  own  life  effected 
by  a  man  in  the  position  of  the  deceased,  whose  earnings  were 
|75  a  month,  and  who  left  no  estate.     "  The  pecuniar}"^  ben'efit 

121  Mo.  29S,  336,  24  S.  W.  Rep.  591,25  ing  the  whole  paragraph  of  the  text 

L.  R.  A.  161,  quoting  the  text;  Rolfe  as  it  stood  in  tlie  first  edition. 
V.  Boston  &  M.  R  Co.,  69  N.  H.  476,  45        2  Coulter  v.  Pine  Township,  164  Pa. 

Atl  Rep.  251 ;  Lake  Erie  &  W.  R.  Co.  543,   30  Atl.   Rep.   490;    Harding  v. 

V.  Falk.6iOhioSt.  297,  56  N.  E.  Rep.  Townshend,  43  Vt.  536,  5  Am.  Rej). 

1020;    Lindsay  v.   Bridgewater  Gas  308;  Althorf  v.  Wolfe,  23  N.  Y.  355; 

Co.,  3  Pa.  Dist.   Rep.  716,  citing  the  Terry  v.  Jewett,  17  Hun,  395;  Sher- 

text;  Anderson  V.  Miller,  96Tenn.  35,  lock  v.  Ailing,  44  Ind.  184;  Western 

33  wS.  W.  Rep.  615,  54  Am.  St.  812,  31.  &  A.  R.    Co.    v.   Meigs,   74   Ga.   857; 

L.  R.  A.   604;  Brown   v.    McRae,  17  Grand  Trunk  R.  v.  Beckett,  16  Can. 

Ont.  712;  Chicago,  etc.  R.  Co.  v.  Pull-  Sup.  Ct.  713,  13  Ont.  App.  174;  Grand 

man  Southern  Car  Co.,  139  U.  S.  79,  Trunk  R.  Co.  v.  Jennings,    13  App. 

11  Sup.  Ct.  Rep.  490.  Cas.  (1888),  800;  Clune  v.  Ristine,  94 

iMayne  on  Uam.  (6th  ed.),  p.   115;  Fed.  Rep.  745,  36  C.  C.  A.  450,  citing 

Dillon  V.  Hunt.  105  Mo.  154,  163,  24  the  te.\t.  See  §  1265. 
Am.  St.  374, 16  S.  W.  Rep.  516,  quot 


408  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§   158. 

which  accrued  to  the  respondent  from  his  premature  death 
consisted  in  the  accelerated  receipt  of  a  sum  of  money,  the 
consideration  for  which  had  already  been  paid  by  him  out  of 
his  earnings.  In  such  a  case  the  extent  of  the  benefit  may 
fairly  be  taken  to  be  represented  by  the  use  or  interest  of  the 
money  during  the  period  of  acceleration;  and  it  was  upon  that 
footing  that  Lord  Campbell^  suggested  to  the  jury  that,  in 
estimating  the  widow's  loss,  the  benefit  which  she  derived  from 
acceleration  might  be  compensated  by  deducting  from  their 
estimate  of  the  future  earnings  of  the  deceased  the  amount  of 
premiums  which,  if  he  had  lived,  he  would  have  had  to  pay 
out  of  his  earnings  for  the  maintenance  of  the  policy."  On 
the  same  principle  it  would  be  no  defense  in  an  action  by  an 
annuitant  or  any  other  creditor  that  the  value  of  the  annuity 
had  been  recovered  against  the  plaintiff's  attorney  in  an  action 
for  negligence  in  its  negotiation,  or  that  the  sheriff  had  been 
forced  to  pay  the  debt  in  an  action  for  an  escape.^  And  where 
a  number  of  plaintiffs  sued  for  damages  resulting  from  delay- 
ing their  ship  it  was  no  ground  for  reducing  the  amount  that 
some  of  these  plaintiffs  had  been  benefited  by  getting  an  in- 
crease of  passengers  in  another  ship;  the  result  would  have 
been  the  same  if  there  had  been  only  one  plaintiff  who  owned 
both  ships.'  So  general  benefits  resulting  to  the  plaintiff  from 
the  erection  and  proximity  to  his  property  of  the  defendant's 
mill  are  no  ground  for  a  reduction  of  the  damages  the  plaintiff 
suffers  by  the  overflowing  of  his  land  from  the  defendant's 
[244-]  dam.*  And  in  an  action  by  the  master  for  seduction  of 
his  servant  evidence  that  the  defendant  offered  to  marry  the 
girl  is  not  admissible  in  mitigation.*^     In  an  action  against  one 

1  In  Hicks  v.  Newport,  etc.  R.  Co.,        ^Mayne  on  Dam.  (6th  ed.),  p.  115; 
4  B.  &  S.  403,  n.  Jebsen  v.  East  &  W.  India  Dock  Co.. 

For  a    consideration    of    the    au-  L.  R.  10  C.  P.  300. 

thority  of  this  case  see  Harding  v.  *  See  Francis  v.  Schoelkopf,  53  N. 

Townshend,  43  Vt.  536,  541,  5  Am.  Y.  152;  Marcy  v.  Fries,  18  Kan.  853. 

Rep.  308.     A  contrary  conclusion  has  °Ingersoll  v.   Jones,   5   Barb.  661; 

been  arrived  at  under  a  statute  sim-  First  Nat.  Bank  v.  Rush,   29  C.  C. 

ilar  to  that  under  which  the  English  A.  333,  85  Fed.  Rep.  539,  citing  the 

case  was  ruled.     Althorp  v.  Wolfe,  text.    See  White  v.  Murtland,  71  111 

22  N.  Y.  355.  250,  22  Am.  Rep.  100. 

2  Mayne  on  Dam.  (6th  ed.),  p.  115; 
Hunter  v.  King,  4  B.  &  Aid.  209. 


§  159.]  MITIGATION    OF    DAMAGES.  409 

of  several  co-trespassers  evidence  of  payments  by  any  one  of 
them,  though  not  received  in  full  satisfaction,  is  admissible; 
they  are  payments  made  on  account  of  the  injury  by  those 
primarily  liable;  full  satisfaction  from  either  would  discharge 
all  and  partial  compensation  should  have  this  e&ect pro  tanto} 
An  offer  by  a  wrong-doer  to  purchase  property  which  has  been, 
injured  at  a  price  put  upon  it  by  a  third  person  cannot  be 
proven.^  In  a  suit  to  recover  for  the  breach  of  a  contract  to 
furnish  employment  the  defendant  may  show  that  wages  liave 
been  obtained  from  other  parties.* 

§  159.  Fuller  proof  of  the  res  gestae  in  trespass,  iiegli- 
geucc,  etc.  Mitigation  of  damages  frequently  results  from 
fuller  proof  of  the  res  gestce,  or  the  disclosure  of  some  peculiar 
or  exceptional  feature  pertaining  to  the  particular  case,  mak- 
ing it  apparent  that  the  plaintiff's  injury  is  less  than  it  would 
otherwise  appear  to  be,  or  that  the  defendant  is  less  culpable. 
A  defendant  in  mitigation  of  damages  for  assault  and  battery 
may  rely  on  the  rcs  gestce  although  if  pleaded  it  would  amount 
to  a  justification  and  require  a  special  plea.''  In  an  action  for 
breach  of  a  marriage  promise  it  may  be  shown  that  the  defend- 
ant's family  disapproved  of  the  match  on  the  ground  that  this 
would  diminish  the  happiness  of  the  union,^  and  that  the  de- 
fendant was  afflicted  with  an  incurable  disease  at  the  time  of 
the  breach;^  but  the  jury  cannot  consider  in  mitigation  the 
possible  consequences  of  marrying  the  defendant  arismg  from 
a  want  of  that  love  and  affection  which  a  husband  should  have 
for  his  wife.'' 

In  trespass,  under  a  plea  of  not  guilty,  the  defendant  has 
been  permitted  to  show  title  in  himself  to  confine  the  plaintiff's 
recovery  to  the  quantity  of  his  interest,^  and  in  an  action  to  re- 
cover for  damages  done  by  cattle  it  may  be  shown  that  the 
animals  got  upon  the  plaintiff's  land  by  Reason  of  the  defect- 

1  Chamberlin  v.  Murphy,  41  Vt.  110.  «  Sprague  v.  Craig,  51  111.  586. 

-Mayor  v.  Harris,  75  Ga.  761.  ^ Piper  v.  Kingsbury,  48  Vt.  480. 

3  Owen   V.  Union  Match    Co.,    48  ^  Ballard  v.  Leavell,  5  Call,  531. 

Mich.  348,  13  N.  W.  Rep.  175.  In  trespass  for  killing  a  dog  evi- 

*Byers  v.  Horner,  47  Md.  83;  Rus-  dence  of  his  bad  habits,  other  than 

sell  V.  Barrow,  7  Port.  106.     But  see  such  as  are  pleaded  in  justification, 

Watson  V.  Christie,  2  Bos.  &  P.  224.  may  be  proven  in  mitigation.     Rey- 

5  Irving  V.Greenwood,  1  C.  &  P.  nolds    v.  Phillips,   13  111.   App.  557; 

•!50.  Dunlap  v.  Snyder,  17  Barb.  561. 


410  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  159. 

iveness  of  his  fence,^  An  officer  against  wLom  an  action  is- 
brought  for  entering  the  plaintiff's  house  and  assaulting  him 
may  show  in  mitigation,  but  not  to  prove  the  entry  lawful, 
that  he  entered  for  the  purpose  of  making,  and  did  in  fact 
make,  service  under  an  attachment,  although  the  attachment 
[245]  was  unlawful  by  reason  of  the  writ  not  having  been  re- 
turned into  court.^  Where,  in  consequence  of  the  defendant's 
embankment,  the  flood  waters  of  a  river  were  pent  up  and 
flowed  over  the  plaintiff's  land,  and  it  appeared  that  had  the 
embankment  not  been  constructed  the  waters  would  have 
flowed  a  different  way  but  would  have  reached  his  land  and 
done  damage  to  a  lesser  extent,  the  measure  of  damages  was 
the  difference  between  the  two  amounts;'  and  in  an  action  for 
a  nuisance  in  erecting  mills  and  maintaining  a  steam-engine 
and  furnaces  in  the  vicinity  of  the  plaintiff's  dwelling  the  de- 
fendant was  entitled  to  show  the  general  character  of  the 
neighborhood,  the  various  kinds  of  business  carried  on  there, 
and  the  class  of  tenants  by  whom  the  dwelling-houses  were  in 
general  occupied,  and  also  the  probable  disadvantage  and  loss 
to  the  plaintiff  from  an  inability  to  rent  his  houses,  if,  in  con- 
sequence of  the  destruction  or  removal  of  the  defendant's  mills, 
there  were  no  longer  workmen  to  whom  they  could  be  leased.^ 
The  concurrence  of  other  causes  with  the  defendant's  acts  in 
creating  a  nuisance  may  also  be  shown  in  mitigation.^ 

On  an  assessment  of  damages  after  a  default  in  an  action  for 
negligence,  the  defendant  for  mitigation  and  to  reduce  them 
to  a  nominal  sum  may  show  that  there  was  no  negligence; 
for  this  purpose  it  is  immaterial  whether  the  charge  is  of  in- 
jury to  person  or  property  or  that  the  damages  are  entire  and 
indivisible.^  A  total  or  partial  want  or  failui-e  of  consideration, 
on  the  same  principle,  may  be  shown  in  an  action  upon  con- 
tract,^ or  any  defense  arising  out  of  the  plaintiff's  cause  of  ac- 
tion itself,  as  where  the  action  is  for  the  price  of  labor  or  of  a 

1  Young  V.  Hoover,  4  Cranch  C.  C.  ^  siierman  v.  Fall  River  Iron 
187.  Works,  5  Allen,  213. 

2  Paine  v.  Farr,  118  Mass.  74.  "  Batchelder    v.   Bartholomew,   44 

3  Workman  v.  Great  Northern  R  Conn.  494. 

Co.,  32  L.  J.  (Q.  B.)  279.  '  Darnell  v.  Williams,  2  Stark.  lOG: 

<  Call  V.  Allen,  1  Allen,  137.  See  Simpson  v.  Clarke.  2  Cr..  M.  &  li. 
Francis  v.  Schoellkopf,  53  N.  Y.  152.     342. 


§  160.] 


MITIGATION    OF    DAMAGES. 


411 


comniotlity  and  defects  are  proved.*  And  in  many  English 
cases  this  defense  is  recognized  where,  according  to  the  gen-  [240] 
eral  course  of  American  decisions,  the  broader  defense  of  re- 
coupment would  be  allowed.2 

§  IGO.  Otficial  neglect.  In  actions  for  neglect  of  duty  or 
misconduct  of  ministerial  officers  affecting  parties  entitled  to 
call  on  them  for  service,  or  for  whom  such  officers  are  re- 
quired by  law  to  perform  duties,  as  well  as  in  like  actions  by 
employers  against  agents  and  attorneys,  the  general  rule  is 
that  the  injured  party  is  entitled  to  compensation  commen- 
surate with  his  actual  loss.'  Where  such  neg-lect  or  miscon- 
duct  results  in  a  failure  to  collect  a  debt  or  impairs  an  existing 
security,  and  the  prima  facie  loss  is  the  amount  of  the  debt, 
ordinarily  any  evidence  is  properly  defensive  or  receivable  in 
mitigation  which  negatives  that  loss  either  wholly  or  in  part.* 
A  sheriff  in  an  action  for  escape  or  any  neglect  in  respect  to 
an  execution  may  show  that  the  execution  debtor  was  wholly 
or  partially  insolvent,  that  if  due  diligence  had  been  used 
the  whole  judgment  or  some  part  would  have  remained  unsat- 
isfied.* 


1  Crookshank  v.  Mallory,  3  Greene, 
257;  Basten  v.  Butter,  7  East.  479; 
Farnsworth  v.  Garrard,  1  Camp.  38; 
Denew  v.  Daverell,  3  Camp.  451; 
Baillie  v.  Kell,  4  Bing.  N.  C.  638;  Cut- 
ler V.  Close,  5  C.  &  P.  337;  Sinclair 
V.  Bowles,  9  B.  &  C.  92;  Thornton  v. 
Place,  1  M.  &  Rob.  218:  Kelly  v. 
Bradford,  33  Vt  35;  McKinney  v. 
Springer,  3  Ind.  59;  Allen  v.  McKib- 
bm,  5  Mich.  449;  Wood  v.  Sohettler, 
23  Wis.  501. 

2  Street  v.  Blay,  3  B.  &  Ad.  456; 
Parson  v.  Sexton,  4  C.  B.  899;  Poul- 
ton  V.  Lattimore,  9  B.  &  C.  259;  Mon- 
del  V.  Steel,  8  M.  &  W.  858;  Dawson 
V.  Coll  is,  10  C.  B.  533. 

3  Amy  V.  Supervisors,  11  Wall.  136; 
Swan  V.  Bridgeport,  70  Conn.  143,  30 
AtL  Rep.  110;  Harris  v.  Murfree,  54 
Ala.  161;  Mechem  on  Public  Officers, 
§766. 

*Van  Wart  v.  Woolley,  3  B.  &  G 
439;  Allen  v.  Suydam,  20  Wend.  321, 


32  Am.  Dec.  555;  Russell  v.  Turner, 
7  Johns.  189,  5  Am.  Dec.  254;  Russell 
V.  Palmer,  2  Wils.  325;  Stowe  v. 
Bank  of  Cape  Fear,  3  Dev.  408;  Swan 
V.  Bridgeport,  supra;  Townseud  v. 
Libbey,  70  Me.  163;  Wilson  v.  Stro- 
bach,  59  Ala.  488;  Mechem  on  Public 
Officers,  §  766.  In  §  759  of  Mechem 
it  is  said  that  if  the  escape  is  volun- 
tary the  officer  is  liable  for  the  whole 
amount  of  the  debt  whether  the 
debtor  be  solvent  or  insolvent  (State 
V.  Hamilton,  33  Ind.  503),  while  if  the 
escape  is  the  result  of  negligence, 
though  the  whole  judgment  ispri?na 
facie  the  measure  of  the  damages, 
the  officer  may  show  in  mitigation 
that  the  debtor  had  no  property  with 
which  he  could  have  paid  or  secured 
the  debt  in  whole  or  in  part.  State 
V.  Mullen,  50  Ind.  598. 

s  Kellogg  V.  Manro,  9  Johns.  300; 
Patterson  v.  Westervelt,  17  Wend. 
543;   Hootman   v.  Shriner,  15    Ohio 


413  LEGAL    LIQUIDATIONS    AND    KEDUCTIONS.  [§  IGO. 

There  is  an  apparent  exception  to  the  general  proposition 
that  the  party  injured  shall  only  recover  his  actual  loss  in  the 
case  of  ministerial  officers  through  whose  diligent  action  the 
party  interested  must  realize  a  debt  or  come  into  possession  of 
a  right.  Where  a  sheriff  suffers  an  escape  on  final  process  or 
fails  to  collect  and  return  an  execution,  or  to  perform  a  per- 
emptor}'-  duty  to  levy  a  tax  or  the  like,  the  fact  that  the  debt 
is  still  safe  and  collectible  by  a  repetition  of  the  resort  to  the 
[247]  defendant  officially  is  no  defense;^  otherwise,  as  "Wat- 
son, J.,  said:'^  "If  the  officer  is  sued  for  a  neglect  of  duty  he 
can  say  the  defendant  had  no  property  out  of  which  he  could 
collect  the  mone}^,  and  that,  it  is  conceded,  is  a  good  defense; 
or  he  can  say  he  has  property  out  of  which  you  can  still  col- 
lect it,  and  therefore  nothing  but  nominal  damages  can  be  re- 
covered. The  second  execution  issued  upon  the  same  judg- 
ment would  admit  of  the  same  defense,  and  so  on  as  often  as 
they  might  be  issued,  provided  the  judgment  debtor  did  not 
in  the  meantime  get  rid  of  his  property."'  In  an  action 
against  a  supervisor  of  a  town  who  was  required  by  law  to  as- 
sess the  damages  which  had  been  allowed  the  plaintiff  for 
property  taken  for  public  use,  and  who  had  omitted  to  do  so, 
the  supervisor  was  personally  liable  for  the  whole  amount 
which  the  plaintiff  had  been  unable  to  obtain  by  reason  of  the 
refusal  to  perform  his  duty.*  "It  cannot  be  assumed  that  the 
defendant  would  be  taught  by  the  result  of  one  action  and 
proceed  to  do  his  duty,  and  thus  avoid  another.  The  plaintiff 
is  not  to  be  thus  put  off.  The  defendant's  misconduct  has  de- 
prived him  of  obtaining  his  money,  and  the  defendant  must 

St.  43;  Ledyard  v.  Jones,  7  N.  Y.  550;  logg  v.  Manro,  9  Johns.  300;  Arden 

Brooks  V.  Hoyt,  6  Pick.  468;  Shack-  v.  Goodacre,  11  C.  B.  371;  Moore  v. 

ford  V.  Goodwin,  13  Mass.  187;  Lush  Moore,  25  Beav.  8;  Hemming  v.  Hale, 

V.  Falls,  63  N.  C.  188;  West  v.  Rice,  7  C.  B.  (N.  S.)  487;  Macrae  v.  Clarke, 

9  Met.   564;  State  v.  Baden,  11  Md.  L.  R.  1  C.  P.  403;  Goodrich  v.  Starr, 

317;  State  v.  Mullen,  50  Ind.  598;  Coe  IS  Vt  227;  State  v.  Hamilton,  33  Ind. 

V.  Peacock,  14  Ohio  St.  187;  Cooper  502;  Hodson  v.  Wilkins.  7  Me.  113,  20 

V.  Wolf,  15  id.  523;  Bank  of  Rome  v.  Am.  Dec.  347;  Weld  v.  Bartlett,  10 

Curtiss.  1  Hill,  275;  Pardee  v.  Rob-  Mass.  470. 

ertson,  6  id.  550;  Dunphy  v.  Whipple,        2  Ledyard  v.  Jones,  7  N.  Y.  550. 
25  Mich.  10.  *  But  see  Tempest  v.  Linley,  Clay- 

1  Ledyard   v.   Jones,  7  N.   Y.  550;  ton,  34;  Norris'  Peake,  608;  Stevens 

Bank  of  Rome  v.  Curtiss,  1  Hill,  275;  v.  Rowe,  3  Denio,  327. 
Pardee  v.  Robertson,  6  id.  550;  Kel-        *  Clark  v.  Miller,  54  N.  Y.  52& 


§  160.] 


MITIGATION    OF    DAMAGES. 


413 


answer  to  the  whole  injury  which  he  has  occasioned."*  This 
rigorous  severity  is  exceptional  and  based  on  considera-  ['-2-48] 
tions  of  policy  to  insure  the  active  diligence  of  such  officers; 
it  is  in  fact  punitive  in  its  nature  and  object.     In  the  case  next 


1  In  the  overruled  case  of  Stevens 
V.  Rowe,  3  Denio,  337,  wliich  was  an 
action  against  a  sheriff  for  neglect- 
ing to  return  an  e.xecution,  Beardsley, 
J.,  said:  "At  common  law  no  action 
Jay  for  such  violation  of  duty,  al- 
though the  sheriff  might  be  attached 
and  punished  for  it.  I  admit,  how- 
ever, that  under  thfl  statute  an  ac- 
tion may  be  maintained  for  such 
misconduct,  and  in  which  the  party 
aggrieved  is  entitled  to  recover  '  for 
the  damages  sustained  by  him'  (2  R. 
S.  440,  §  77;  Pardee  v.  Robertson,  6 
Hill,  550).  Tiie  amount  to  be  recov- 
ered is  thvis  prescribed  by  the  statute, 
which  is  'the  damage  sustained  '  by 
such  violation  of  duty,  whatever  the 
amount  may  be.  The  full  amount 
to  be  levied  and  made  on  the  execu- 
tion is  not  necessarily  recoverable, 
although  prima  facie  that  may  be 
the  just  measure  of  reparation  where 
nothing  is  shown  to  induce  a  belief 
that  the  real  loss  of  the  aggrieved 
party  is  less  than  that  amount." 
After  referring  to  the  point  decided 
in  Pardee  v.  Robertson,  supra,  and 
in  Bank  of  Rome  v.  Curtiss,  1  Hill, 
275,  he  continued:  "I  must  say  that 
I  should  find  great  difficulty  in  fol- 
lowing either  of  these  cases  as  au- 
thority, even  where  the  facts  and 
circumstances  were  identically  the 
same;  and  I  am  by  no  means  dis- 
posed to  extend  them  as  authority 
to  cases  which  admit  of  a  plain  dis- 
tinction in  matter  of  fact.  The  de- 
cision in  The  Bank  of  Rome  v.  Curtiss 
was  said  to  be  in  accordance  with 
the  rule  laid  down  in  two  cases  ad- 
judged in  Massachusetts;  but  as  I 
read  those  cases  they  have  no  appli- 
cation to  such  a  state  of  facts  as  was 
shown  to  exist  in  The  Bank  of  Rome 


v.  Curtiss.  In  that  case  it  appeared 
that  the  debt  had  not  been  lost,  al- 
though its  collection  had  been  de- 
layed by  the  neglect  of  the  sheriff; 
for  the  proof  shows  that  the  debt 
was  still  safe  and  collectible.  Yet 
the  court  held  that  the  sheriff  was 
liable  for  the  full  amount  of  the  exe- 
(lution  in  his  hands.  I  am  unable  to 
see  any  such  rule  laid  down  in  either 
of  the  Massachusetts  cases.  In  the 
first  of  these  cases  in  order  of  time 
(Weld  V.  Bartlett,  10  Mass.  474), 
ParUer,  J.,  said  that  where  an  officer 
had  neglected  to  do  his  duty,  so  that 
the  effect  of  thejudgiuent  appears  to 
he  lost,  the  judgment  in  the  suit  so 
rendered  ineffectual  is  prima  facie 
evidence  of  the  measure  of  injury 
which  the  plaintiff  has  sustained; 
but  it  may  be  met  by  evidence  of 
the  inability  of  the  debtor  to  pay.' 
The  other  case  (Young  v,  Hosmer,  11 
Mass.  89)  is  equally  explicit,  and 
makes  the  sheriff  liable  for  the  en- 
tire debt;  because  'the  benefit  of  the 
judgment  to  the  whole  amount  of  it 
is  to  be  presumed  lost  by  the  negli- 
gence of  the  officer.'  This  principle 
can  surely  have  no  bearing  on  a  case 
in  which  it  appears  that  the  judg- 
ment had  not  been  lost,  but  was  still 
safe  and  collectible.  In  Kellogg  v. 
Manro,  9  Johns.  300,  which  was  also 
cited  as  sustaining  The  Bank  of 
Rome  V.  Curtiss,  the  rule  is  stated  as 
in  the  Massachusetts  cases.  It  was 
said  to  be  too  plain  for  discussion 
that  the  plaintiff  might  recover  be- 
yond nominal  damages.  *  He  is  en- 
titled,' say  the  court,  'prima  facie^ 
to  recover  his  whole  debt,  which  is 
presumed  to  be  lost  by  the  escape.'  I 
make  no  objection  to  this  rule  in  any 
action  brought  against  an  officer  for 


414 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


[§  160. 


referred  to,  however,  the  rule  was  applied  to  an  officer  who, 
by  an  error  of  judgment,  omitted  to  assess  a  tax  for  a  sum  due. 
He  omitted  to  do  it  because  he  believed  the  law  requiring  it 
was  unconstitutional.  The  court  say  honest  ignorance  does 
[249]  not  excuse  a  public  officer  for  disobeying  the  law.^  It 
will  exempt  him  from  punitive  damages.  In  a  case  for  escape 
Jarvis,  C.  J.,  said:  "The  rule  might  be  supposed  to  operate 
unjustly  towards  the  sheriff  where  the  execution  debtor  has 
the  means  of  paying  the  debt  at  the  moment  of  the  escape 
and  still  continues  notoriously  in  solvent  circumstances.  In 
this  case  the  value  of  the  custody  was  the  amount  of  the  debt, 
and  the  plaintiff  will  be  entitled  to  recover  substantial  dam- 


the  violation  of  such  a  duty.  Prima 
facie  it  may  well  be  taken  that  the 
whole  debt  has  been  lost  by  the  neg- 
ligence of  the  officer;  and  if  such  be 
the  fact,  it  is  most  just  that  he  should 
pay  the  full  amount.  But  when  the 
proof  shows  that  the  debt  has  not 
been  lost,  although  the  collection  has 
been  delayed,  and  that  it  is  still  safe 
and  collectible,  it  seems  to  me  en- 
tirely clear  that  the  rule  laid  down 
in  the  Massachusetts  cases  and  in 
Kellogg  V.  Manro  is  wholly  inap- 
plicable. ...  In  Pardee  v.  Rob- 
ertson it  was  proved  that  the  sher- 
iff had  actually  collected  the  full 
amount  of  the  execution;  the  money 
still  remainmg  in  his  hands.  But  in 
the  case  now  to  be  decided  the  fact 
was  otherwise.  The  jiroof  showed 
that  the  money  had  not  been  col- 
lected; although,  if  the  judgment  was 
a  lien  on  real  estate  in  the  county  of 
Oswego,  as  the  plaintiff  offered  to 
show,  the  sheriff  might  have  made 
the  amount  as  required  by  the  exe- 
cution. ...  If  the  sheriff  should 
be  compelled  to  pay  the  full  amount 
of  the  execution,  for  the  reason  that 
the  judgment  was  a  lien  on  real 
estate  out  of  which  the  money  might 
have  been  collected,  as  was  offered 
to  be  proved  on  the  part  of  the  plaint- 
iffs, he  would  be  entirely  remediless. 


He  could  not  enforce  the  judgment 
and  execution  for  his  own  indemnity, 
but  must  stand  the  entire  loss.  This 
would  be  too  severe  where  the  debt 
is  still  safe  and  the  only  injury  sus- 
tained has  resulted  from  mere  delay. 
It  is  just  that  the  sheriff  should 
make  the  party  good  by  paying  all 
the  damages  sustained  by  him;  and 
so  is  the  statute  on  which  the  action 
is  founded;  but  to  go  beyond  this 
seems  to  me  quite  too  rigorous. 
Prima  facie  the  sheriff  is  liable  for 
the  full  amount  of  the  execution 
debt,  as  it  is  presumed  to  have  been 
lost  by  his  neglect.  This,  in  my  esti- 
mation, is  not  a  very  violent  pre- 
sumption, but  still  may  be  just  in 
regard  to  the  ofBcer  who  is  in  de- 
fault. But  when  it  is  shown  that 
the  debt  has  not  been  lost,  there  is 
no  room  for  presumption,  and  the 
prima  facie  case  no  longer  exists.  By 
the  statute  the  measure  of  recovery 
is  the  "damages  sustained,' which, 
presumptively,  I  admit  is  the  full 
amount  of  the  execution.  But  the 
sheriff  may  mitigate  the  amount  not 
simply  by  showing  his  inability  to 
collect  the  money,  but  by  proof  that 
the  debt  is  still  safe  and  collectible." 
1  Clark  v.  Miller,  54  N.  Y.  528.  See 
Dow  V.  Humbert,  stated  in  the  text 
of  §  161. 


§  101.]  MITIGATION    OF    DAMAGES.  415 

■ages.  It  is  true  that  the  recovery  of  such  damages  will  not 
satisfy  the  execution,  and  the  debtor  may  be  retaken  by  the 
plaintiff;  for  the  debtor  cannot  take  advantage  of  his  own 
wrong  and  avail  himself  of  the  recovery  against  the  sheriff. 
On  the  other  hand,  the  sheriff  is  not  damnified,  for  he  may  re- 
take the  debtor  or  recover  against  him  by  action  the  amount 
he  has  been  compelled  to  pay."  ^  Where  the  officer  fails  to 
collect  an  execution  from  a  debtor  who  is  "  notoriously  in 
solvent  circumstances,"  and  continues  so,  there  is  no  wrong 
done  the  execution  debtor,  as  in  an  escape,  to  give  the  sheriff 
any  action  against  hira ;  nor  do  the  authorities  in  this  class  of 
actions  proceed  on  the  theory  that  such  a  recovery  against  the 
sheriff  transfers  the  judgment  debt  to  him.  Hence  the  re- 
covery of  the  full  amount  of  the  judgment  or  other  demand 
against  an  officer  who  has  neglected  to  do  some  act  which  [250] 
would  have  enabled  the  party  interested  to  realize  at  once, 
the  debtor  being  still  solvent,  or  the  debt  not  being  wholly 
lost  by  the  default,  is  not  a  measure  of  damages  which  is 
strictly  compensatory.  To  the  extent  of  the  actual  value  of 
the  debt  in  respect  to  which  the  negligence  occurred  at  the 
time  of  the  recovery  against  the  officer,  the  plaintiff  is  over- 
compensated  when  he  has  recovered  from  the  officer  the  full 
amount.  Exclusion  of  proof  of  that  value  in  mitigation  can- 
not rest  on  the  argument  that  its  reception  and  consideration 
would  deprive  the  creditor  of  any  compensation  for  actual 
loss. 

§  161.  Same  subject;  modification  of  the  old  rule.  The 
supreme  court  of  the  United  States- has  limited  the  applica- 
tion of  this  rigorous  rule  against  officers.  The  action  was  for 
neglect  of  duty  by  the  defendants  as  supervisors  in  refusing  to 
place  upon  the  tax  list  as  required  by  a  statute  the  amount  of 
two  judgments  recovered  by  the  plaintiff.  The  debtor  being 
a  township,  it  was  presumed  that  its  taxable  property  con- 
tinued the  same  as  when  the  levy  should  have  been  made. 
Miller,  J.,  said:  "The  single  question  presented  is  whether 
these  officers,  by  the  mere  failure  to  place  on  the  tax  list  when 
it  was  their  duty  to  do  so,  the  judgment  recovered  by  the 
plaintiff  against  the  town,  became  thereby  personally  liable  to 

■I  Ardea  v.  Goodacre.  11  C.  B.  371.  2  Dow  v.  Humbert,  91  U.  S.  294 


416  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§   162. 

the  plaintiff  for  the  whole  amount  of  said  judgment  without 
producing  any  other  evidence  of  loss  or  damage  growing  out 
of  such  failure.  It  is  not  easy  to  see  upon  what  principle  of 
justice  the  plaintiff  can  recover  from  the  defendants  more  than 
he  has  been  injured  by  their  misconduct.  If  it  were  an  action 
of  trespass  there  is  much  authority  for  saying  that  the  plaintiff 
would  be  limited  to  actual  and  compensatory  damages  unless 
the  act  were  accompanied  with  malice  or  other  aggravating 
circumstances.  How  much  more  reasonable  that  for  a  failure 
to  perform  an  act  of  official  duty,  through  mistake  of  what 
that  duty  is,  that  the  plaintiff  should  be  limited  in  his  recovery 
to  his  actual  loss,  injury  or  damage.  Indeed,  where  such  is  the 
almost  universal  rule  for  measuring  damages  before  a  jury 
[251]  there  must  be  some  special  reason  for  a  departure  from 
it.  .  .  .  The  expense  and  cost  of  the  vain  effort  to  have 
the  judgment  placed  on  the  tax  list,  the  loss  of  the  debt,  if  it 
had  been  lost,  any  impairment  of  the  efficiency  of  the  tax  levy, 
if  such  there  had  been,  in  short,  any  conceivable  actual  dam- 
age,—  the  court  would  have  allowed  if  proved.  But  plaintiff, 
resting  solely  on  his  proposition  that  defendants  by  failing  to 
make  the  levy  had  become  his  debtors  for  the  amount  of  his 
judgment,  asked  for  that,  and  would  accept  no  less."  The  court 
reached  the  conclusion  "that  in  the  absence  of  any  proof  of 
actual  damage  .  .  the  defendants  were  liable  to  nominal 
damages  and  to  costs,  and  no  more."  In  a  later  case,  which 
Avas  very  aggravated,  the  defendants  having  refused  to  obey  a 
mandamus  to  collect  the  amount  of  a  judgment  by  adding  it 
to  the  tax  roll,  the  court  allowed  the  plaintiff  his  counsel  fees 
and  costs.^ 

[252]  §  162,  Plaintiff's  consent.  The  previous  consent  of 
the  plaintiff  to  the  act  which  he  complains  of,  though  not 
given  in  a  form  to  bar  him  or  support  a  plea  of  justification, 
ma}'  yet  be  proved  in  mitigation  of  damages.  Thus  in  tres- 
pass for  an  alleged  injury  to  the  plaintiff's  wall  by  inserting 
joists  in  it,  evidence  that  the  wall  was  so  used  by  the  defend- 
ant in  the  erection  of  an  adjoining  building  under  an  express 
[253]  parol  agreement  with  the  plaintiff  is  admissible  under  the 

1  Newark  Savings  Inst.  v.  Panhorst,  7  Biss.  99.   See  Branch  v.  Davis,  29  Fed. 
Rep.  888. 


R  1G3.1  MITIGATION    OF    DAMAGES.  417 

general  issue  in  mitigation.'  So  it  may  be  proved  that  the 
injury  in  question  was  inflicted  in  a  fight  by  mutual  consent.^ 
In  a  suit  by  several  heirs  at  law,  who  are  cotenants,  to  recover 
forinjury  to  their  interests  by  cutting  timber  on  the  estate,  the 
consent  of  one  of  them  is  a  good  defense;  all  suing  in  the  same 
riirht,  they  must  all  be  entitled  to  recover  or  none  can.' 

§  1G3.  Injuries  to  character  and  feelings.  Any  exceptional 
conduct  or  character  of  the  plaintiff  which  impairs  his  title  to 
compensation  or  diminishes  the  injury  in  question  is  provable 
in  mitigation.  In  those  actions  where  the  wrong  complained 
of  involves  injury  to  character  the  defendant  may  show,  in 
order  to  reduce  damages,  the  general  bad  character  of  the 
plaintiff.^  The  weight  of  New  York  authority  favors  the 
proposition  that  in  an  action  by  a  female  for  an  indecent 
assault,  the  injury  to  her  feelings  being  an  element  of  dam- 
ages, specific  acts  of  lewdness  with  others  than  the  defendant 
may  be  shown  in  mitigation  without  being  specially  pleaded.'^ 
Evidence  that  the  plaintiff's  marriage  with  his  reputed  [254] 
wife  was  void  is  admissible  in  an  action  for  seduction  of  his 
reputed  daughter  to  rebut  the  presumption  of  actual  service 
by  showing  that  the  plaintiff  was  not  legally  entitled  thereto 
and  in  mitigation  of  damages.^  In  an  action  for  criminal  conver- 
sation it  may  be  shown  that  the  plaintiff  was  wanting  in  affec- 
tion for  his  wife  to  support  the  inference  that  his  loss  was 
trifling,'^  or  that  there  was  but  slight  intercourse  between 
them;^  and  in  an  action  for  breach  of  promise  of  marriage 
that  the  plaintiff  was  utterly  unHt  to  appreciate  the  person  to 

1  Hamilton  v.  Windolf,  36  Md.  301,  Evans  v.  Waite,  83  Wis.  286,  53  N. 
11  Am.  Rep.  491.  W.  Rep.  445.     See  §  151. 

2  Adams  v.  Waggoner,  33  Ind.  531,  3  Lowery  v.  Rowland,  104  Ala.  420, 
5   Am.   Rep.    230;   g   151;  Cooley  on  16  So.  Rep.  88. 

Torts  (2d  ed.),  pp.  187, 188.    Compare  *  Fitzgibbon  v.  Brown,  43  Me.  169. 

Bishop  on  Non-Contract  Law,  §  196.  See  §  152. 

For  cases  holding  that  consent  bars  '^Guilerette  v.  McKinley,  27  Hun. 

an  action  for  a  tort,  see  Goldnamer  320.   reviewing  the    cases    in   New 

V.  O'Brien,  98  Ky.  569,  33  S.  W.  Rep.  York;  Young  v.  Johnson,  46   Hun, 

831,  56  Am.  St.  378,  36  L.  R.  A.  715;  164. 

Courtney  v.   Clinton,   18  Ind.   App.  ^  Howland  v.  Howland,  114  Mass. 

620,  48  N.    E.   Rep.  799.      The   only  517,  19  Am.  Rep.  381. 

effect  of  consent  is  to  confine  the  ■?  Bromley  v.  Wallace,  4  Esp.  237. 

recovery  to  compensatory  damages.  »  Calcraft  v.  Harborough,  4  C.  & 

P.  499. 
Vol.  1  —  27 


413  LEGAL    LIQUIDATIONS    AND    EEDDCTIONS.  [§  164. 

whom  he  engaged  himself.^  Declarations  by  the  plaintiff, 
pending  the  action,  that  she  would  not  marry  the  defendant 
except  for  his  money  have  been  admitted.^  The  fact  of  a 
female  plaintiff  having  had  an  illegitimate  child,  though 
known  to  the  defendant  at  the  time  of  the  promise,  may  be 
proved,'  and  her  intercourse  with  another  man  before  and 
after  the  promise.*  In  actions  for  seduction  proof  of  the 
plaintiff's  careless  indifference  to  the  defendant's  opportunities 
for  criminal  intercourse  with  her  daughter  may  be  shown  in 
mitigation;  ^  actual  connivance  by  the  plaintiff  would  be  a  bar.® 
§  164.  Reduction  of  loss  or  benefit.  Whatever  diminishes 
the  loss  of  the  injured  party,  or  where  the  recovery  is  influ- 
enced by  the  amount  of  benefit  derived  from  the  act  com- 
plained of  by  the  defendant,  whatever  decreases  the  value  of 
that  benefit  may  be  proved  in  mitigation,  where  the  matter 
diminishing  the  loss  in  the  former  case,  or  impairing  the  bene- 
fit in  the  other,  is  part  of  the  transaction.  Thus  in  an  action 
against  a  contractor  for  failing  to  fulfill  his  contract  he  may 
show  that  the  agreed  price  has  not  been  paid.^  And  where  A. 
took  wrongful  possession  of  premises  on  the  2d  of  June,  and 
[255]  a  sum  of  money  became  due  for  ground  rent  on  the  24th 
for  the  month  ending  on  that  day,  which  A.  paid,  it  was  held 
in  an  action  for  mesne  profits  that  he  was  entitled  to  deduct 
the  money  so  paid  from  the  damages.  In  that  case  the  pay- 
ment of  the  ground  rent  diminished  the  value  of  the  occupa- 
tion to  the  defendant,  and  having  paid  what  the  plaintiff 
must  otherwise  have  paid,  his  injury,  for  which  mesne  profits 
were  compensation,  was,  to  the  amount  paid,  mitigated.^  So 
a  tenant  has  a  right  to  deduct  from  rent  all  expenses  or  taxes 
which  he  has  been  compelled  to  pay  for  the  lessor.^  If  a 
mortgagee  who  has  brought  an  action  for  damage  done  to  the 

1  Leeds  v.  Cook,  4  Esp.  256.  106;  Smith  v.  Hasten,  15  Wend.  270; 

2  Miller    v.   Rosier,    31  Mich.   475.  Sherwood  v.  Titraan,  55  Pa.  77. 
Contra,   Miller  v.   Hayes,   34  Iowa,  ■?  Reedy  v.  Tuskaloosa,  6  Ala.  327; 
496,  11  Am.  Rep.  154.  Gabay  v.  Doane,  77  App.  Div.  413, 

3  Denslow  v.  Van  Horn,  16  Iowa,  79  N.  Y.  Supp.  312. 

476.  8  Doe  v.  Hare,  2  Cr.  &  M.  145. 

4  Burnett  v.  Simpkins,  24  111.  264.  »  Sapsford  v.  Fletcher,  4  T.  R  511; 
sZerfing  v.  Mourer,  2  Greene,  520;  Taylor  v.  Zamira,  6  Taunt  534;  Car- 
Parker  V.  Elliott,  6  Munf.  587.  ter  v.  Carter,  5  Bing.  40& 

6  Bunnell  v.   Greathead,  49  Barb. 


§  1G5.]  MITIGATION    OF    DAMAGES.  419 

mortgaged  premises  by  a  removnl  of  fixtures  has  sold  the 
premises  intermediate  the  injury  and  the  action  for  more 
than  enough  to  pay  his  debt  and  all  prior  incumbrances,  this 
fact  may  be  proven  in  mitigation  of  damages.' 

The  immediate  landlord  is  bound  to  protect  his  tenant  from 
all  paramount  claims,  and  when,  therefore,  the  tenant  is  com- 
pelled, in  order  to  protect  himself  in  the  enjoyment  of  the 
land  in  respect  to  which  the  rent  is  payable,  to  make  payments 
which  ought,  as  between  himself  and  his  landlord,  to  have 
been  made  by  the  latter,  he  is  considered  as  having  been  au- 
thorized by  the  landlord  so  to  apply  his  rent  due  or  accruing 
due.-  Of  this  nature  are  not  only  payments  of  ground  rent 
to  the  superior  landlord,  but  interest  due  upon  a  mortgage 
prior  to  the  lease,^  an  annuity  charged  upon  the  land,*  and 
rates  and  taxes.'^  But  where  the  payment  of  the  ground  rent 
or  other  like  charge  gives  no  right  of  action  against  the  party 
suino-  for  the  rent,  this  ri<rht  of  deduction  does  not  exist.® 

§  165.  Pleading  in  mitigation.  It  has  sometimes  been 
held  as  a  general  rule  that  matters  which  would  have  gone  in 
bar  of  the  action  cannot  be  given  in  evidence  to  reduce  dam- 
ages unless  pleaded.  Lord  Abinger,  C.  B.,  said :  ^  "  It  is  a 
principle  as  old  as  my  recollection  of  Westminster  Hall  that 
matter  of  justification  cannot  be  given  in  evidence  in  an  action 
in  order  to  mitisi'ate  damag'es."  The  case  was  an  action  for 
wrongfully  discharging  the  plaintiff  from  the  defendant's 
service;  the  latter  pleaded  only  payment  of  money  into 
court.  It  was  contended  in  his  favor  that  he  should  be  al- 
lowed to  show  in  mitigation  that  the  discharge  was  for  mis- 
conduct, as  under  this  issue  there  was  merely  an  inquiry  of 
damages;  that  the  same  evidence  was  admissible  as  [256] 
upon  a  writ  of  inquiry  after  a  judgment  by  default.  It  was 
held  properly  rejected.  Alderson  B.,  said:  "The  question  is 
whether  it  is  competent  to  the  defendant  in  mitigation  of 
damages  to  ffive  evidence  to  contradict  a  fact  admitted  on  the 
record.  If  it  were  the  grossest  injustice  might  be  done,  be- 
cause the  other  party  does  not,  of  course,  come  prepared  to 

1  King  V.  Bangs,  120  Mass.  514.  ^  Baker  v.  Davis,  3  Camp.  474;  An- 

2  Graham  v.  Allsopp,  3  Ex.  186.  drew  v.  Hancock,  1  B.  &  B.  37. 
s  Johnson  v.  Jones,  9  A.  &  E.  809.        «  Graham  v.  Allsopp,  stqira. 

*  Taylor  v.  Zamira,  6  Taunt.  524.  7  Speck  v.  Phillips,  5  M.  <&  W.  279. 


420  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  165. 

prove  the  fact  so  admitted."  And  Maule,  B.,  said:  "ISTo 
question  was  made  that  the  plaintiff  was  wrongfully  dis- 
charged; and  1  think  it  was  not  competent  to  the  defendant 
to  give  evidence  to  negative  that  which  is  admitted  by  the 
plea.  If  it  were,  the  consequence  would  follow  that  no  de- 
fendant would  ever  plead  specially;  he  would  pay  a  shilling 
into  court  and  set  up  as  many  defenses  as  he  pleased,  and  suc- 
ceeding in  an}'-  one  of  them,  would  get  a  verdict  and  his  costs. 
This  would  be  setting  aside  not  only  the  new  rules,  but  all  the 
old  rules  which  required  special  pleadings  in  actions  of  this 
nature."  ^ 

In  trespass  against  a  constable  for  arresting  the  plaintiff  and 
imprisoning  him,  the  declaration  stated  it  to  have  been  without 
reasonable  or  probable  cause;  the  court  said  a  constable  may 
justify  an  arrest  for  reasonable  cause  on  suspicion  alone ;  and 
in  this  respect  he  stands  on  more  favorable  ground  than  a  pri- 
[257]  vate  person,  who  must  show,  in  addition  to  such  cause, 
that  a  felony  was  actuall}''  committed;  that  the  difficulty  was 
to  determine  whether  circumstances  of  suspicion  which  might 
have  been  pleaded  in  justification  were  competent  to  go  to  the 
jury  under  the  general  issue  in  mitigation.  They  say  the  ob- 
jection rests  on  the  rule  which  requires  matter  of  justification 

1  In  Watson  v.  Christie,  2  B.  &  P.  it  on  any  ground ;  that  much  evil 
224,  tried  before  Lord  Eldon,  C.  J.,  beyond  tiie  mere  act  had  been  actu- 
the  action  was  for  assault  and  bat-  ally  suffered,  which  evil  had  been 
tery,  and  not  guilty  pleaded.  It  was  occasioned  by  a  cause  which  the  de- 
offered  to  be  shown  that  the  beating  fendant  admitted  he  could  not  jus- 
was  given  by  way  of  punishment  for  tify;  that  in  his  lordship's  judg- 
rnisbehavior  on  shipboard.  The  jury  ment,  therefore,  the  evil  actually 
were  directed  that  the  only  questions  suffered  in  consequence  of  what 
for  their  consideration  were  whether  was  not  justified  ought  to  be  com- 
the  defendant  was  guilty  of  the  beat-  pensated  for  in  damages;  that  the 
ing,  and  what  damages  the  plaintiff  jury  should  give  damages  to  the  ex- 
had  sustained  in  consequence  of  it  ;  tent  of  the  evil  suffered  without  les- 
that  although  the  beating  in  ques-  sening  them  on  account  of  the  cir- 
tiou,  however  severe,  might  possibly  cumstances  under  which  it  was  in- 
be  justified  on  the  ground  of  the  fiicted;  that  if  they  gave  damages 
necessity  of  maintaining  discipline  beyond  compensation  for  the  injury 
on  board  the  ship,  yet  such  a  de-  actually  sustained  they  would  give 
fense  could  not  be  resorted  to  unless  too  much;  but  if  they  gave  less  they 
put  upon  the  record  in  the  shape  of  would  not  give  enough.  See  Pujo- 
a  special  justification;  that  the  de-  las  v.  Holland,  3  Irish  C.  L.  533;  Gel- 
fendant  had  not  said  on  the  record  ston  v.  Hoyt,  13  Johns.  561. 
that  this  was  discipline,  or  justified 


§  160.]  MITIGATIOX    OF    DAMAGES.  421 

to  be  pleaded  specially.  At  the  first  blush  one  woukl  not 
perceive  a  reason  to  preclude  a  party  who  had  waived  the 
benefit  of  a  full  defense  from  showing  the  purity  of  his  mo- 
tives to  shield  him  from  exemplary  damages;  and  there  is  in 
truth  none  except  that  the  plaintiff  is  not  apprised  by  the 
pleadings  of  the  defendant's  intention.  Yet  where  the  de- 
fendant is  not  at  liberty  to  apprise  him  by  pleading  in  justifica- 
tion the  matter  is  for  that  very  reason  allowed  to  be  given  in 
evidence.  But  whatever  inconsistency  there  may  seem  to  be 
in  point  of  principle  the  defendant  when  charged  with  making 
an  arrest  without  probable  cause  may  rebut  the  charge.^ 

§  IGG.  Same  subject.  In  actions  for  slander  this  rule  was 
adopted  long  ago  and  has  since  been  generally  adhered  to  for 
special  reasons.  These  have  more  or  less  force  in  other  ac- 
tions where  the  matter  sought  to  be  proved  in  mitigation 
would  be  a  serious  surprise  to  the  plaintiff  if  introduced  at  the 
trial  without  any  notice  in  the  pleadings.  Under  the  common- 
law  system  matter  of  mitigation  which  could  not  be  used  in 
bar  of  the  plaintiff's  cause  of  action,  nor  of  any  severable  part 
of  it,  was  for  that  reason  provable  without  being  pleaded.  But 
under  this  rule  matter  which  could  have  been  made  available 
in  bar  by  plea  was  not  necessarily  admissible  in  mitigation. 
The  admission  of  such  defense  was  not  within  the  reason  and 
necessity  of  that  rule.  Courts  may  therefore  properly  exer- 
cise a  discretion  to  require  notice  of  some  sort  as  they  do  of 
defenses  by  way  of  recoupment.  It  is  believed,  however,  not 
to  be  a  general  rule,  at  least  in  this  country,  except  in  actions 
for  libel  and  slander,  that  matter  which  might  be  set  up  in 
bar  and  is  not  so  pleaded  cannot  be  proved  in  mitigation.  The 
existence  of  such  rule  has  been  denied  in  New  York.-  Judge 
Selden  said:  "It  was  never  any  objection  to  evidence  in  miti- 
gation that  under  a  different  state  of  the  pleadings  it  [258] 
would  amount  to  a  full  defense."  And  again:  "It  seems  to 
have  been  supposed  that  there  was  some  sound  legal  objection 
to  admitting  proof  of  facts  under  the  general  issue  in  mitiga- 
tion merely  which,  if  specially  pleaded,  would  amount  to  a  full 
defense.     But  there  is  not,  and  never  was,  any  such  objection.* 

1  Russell  V.  Shuster,  8  W.  &  S.  398.        » In  McKyring  v.  Bull,  16  N.  Y.  297, 

2 Bush  V.  Prosser,  11  N.  Y.  347,362,     304,  the  same  judge  said:  "As  the 

365.  code  contains  no  express  rule  on  the 


422  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§   1G6. 

In  Yermont  it  has  been  held  in  trover,  after  a  default,  that 
matter  which  shows  that  the  plaintiff  had  no  right  to  recover, 
and  which  might  have  been  given  in  evidence  under  the  gen- 
eral issue,  may  avail  in  mitigation  of  damages.^  In  a  case  in 
Connecticut,  in  a  hearing  for  the  ascertainment  of  damages 
after  a  default  in  an  action  for  negligence  in  setting  a  fire  by 
which  property  of  the  plaintiff  was  injured  to  the  amount  of 
$400,  the  defendants  wore  allowed  to  introduce  evidence,  for 
the  purpose  of  reducing  the  damages  to  a  nominal  sum,  that 
they  were  guilty  of  no  negligence  whatever.  The  plaintiff 
objected  to  the  reception  of  the  evidence  on  the  ground  that 
the  defendants  by  their  neglect  to  traverse  the  declaration  and 
by  suffering  a  default  conclusively  admitted  that  they  were 
guilty  of  negligence  sufficient  for  the  plaintiff  to  maintain  hi^ 
action,  and  that,  in  a  case  of  damage  to  property  incapable  of 
division,  the  least  sum  the  court  could  assess  as  damages,  con- 
sistent with  the  declaration,  was  the  actual  damage  done.  The 
court  said:  "From  a  time  early  in  the  history  of  the  jurispru- 
dence of  this  state  the  law  has  been  that  where,  in  an  action  on 
the  case  for  the  recovery  of  unliquidated  damages,  the  defend- 
[259]  ant  has  suffered  a  default,  that  is,  has  omitted  to  make 
any  answer,  the  assessment  of  damages  has  been  made  by  the 
court  without  the  intervention  of  a  jury ;  also  that  by  his  omission 
to  deny  them  the  defendant  is  held  to  have  admitted  the  truth  of 
all  well-pleaded  material  allegations  in  the  declaration,  and  the 
consequent  right  of  the  plaintiff  to  a  judgment  for  a  limited 
sum  for  nominal  damages  and  costs,  without  the  introduction 
of  evidence.  The  defendant  standing  silent,  the  law  imputes 
the  admission  to  him;  but  it  does  it  with  this  limitation  upon 
its  meaning  and  effect,  it  does  it  for  this  special  purpose  and 

subject  of  mitigation,  except  in  a  the  plaintiff  had  in  truth  no  claina 

single  class  of  actions,  this  question  whatever.   It  was  not  necessarily  an 

cannot  be  properly  determined  with-  objection  to  matter  offered  in  miti- 

out  a  recurrence  to  the  principles  of  gation   that   if  properly  pleaded  it 

the  common  law.     By  those  princi-  would  have  constituted  a  complete 

pies  defendants  in  actions  sounding  defense."    See  Smithies  v.  Harrison, 

in  damages  were  permitted  to  give  1  Ld.  Raym.  727;  Abbot  v.  Chapman, 

In  evidence  in  mitigation,  not  only  2  Lev.  81;  NichoU  v.  Williams,  2  M. 

matters  having  a  tendency  to  reduce  &  W.  758. 

the  amount  of  the  plaintiff's  claim,  ^  Collins  v.  Smith,  16  Vt.  9. 
but  in  many  cases  facts  showing  that 


§  160.]  MITIGATION   OF   DAMAGES.  423 

no  other;  and  our  courts  have  repeatedlj'  explained  that  the 
admission  founded  on  a  default  is  not  an  admission  of  which 
the  writers  upon  the  law  of  evidence  treat.  The  silent  defend- 
ant, having  been  subjected  to  a  judgment  for  nominal  damages 
from  which  no  proof  can  relieve  him,  the  default  has  practi- 
cally exhausted  its  effect  upon  the  case;  for  if  the  plaintiff  is 
unwilling  to  accept  this  judgment,  evidence  is  received  on  his 
part  to  raise  the  damages  above  and  on  the  part  of  the  defend- 
ant to  keep  them  down  to  that  immovable  base  of  departure, 
the  nominal  point,  precisely  as  if  the  general  issue  had  been 
pleaded;  and  although  the  evidence  introduced  by  the  latter 
has  so  much  force  that  it  would  have  reduced  them  to  nothing- 
but  for  the  barrier  interposed  by  the  default,  it  cannot  avail 
to  deprive  the  plaintiff  of  his  judgment;  in  keeping  that  the 
law  perceives  that  he  has  all  that  the  truth  entitles  him  to  and 
therefore  refuses  to  hear  any  objection  from  him.  .  .  . 
The  plaintiff  argues  that  his  case  differs  from  ...  all 
others  which  have  gone  before  it,  in  that  his  damages  are  en- 
tire and  indivisible  and  arise  from  a  single  act  of  the  defend- 
ants. But  the  destruction  of  a  life  would  seem  to  be  an  entire 
and  indivisible  wrong  ^  in  as  complete  a  sense  as  the  destruc- 
tion of  the  plaintiff's  grass,  fence  and  wood;  a  single  blow 
killed  the  man,  a  single  spark  fired  the  grass.  The  rule  can- 
not be  at  all  affected  by  the  question  as  to  whether  the  injury 
is  inflicted  upon  person  or  property.  In  either  case,  at  the 
outset,  the  damages  are  uncertain;  in  both  they  are  made  cer- 
tain by  the  same  tribunal,  governed  by  the  same  rules,  informed 
by  evidence  of  the  same  character,  received  in  the  same  order. 
An  injury  to  the  person  may  be  the  breaking  of  a  finger  or  the 
tearing  of  both  arms  from  the  body;  an  injury  to  prop-  [260] 
erty  may  be  the  destruction  of  a  tree  or  of  a  forest.  It  is  of 
course  a  much  more  difficult  and  delicate  task  to  reduce  to  the 
standard  of  coin  the  value  of  a  leg  or  an  arm  than  to  deter- 
mine the  market  price  for  a  cord  of  wood,  or  for  a  standing 
tree  of  given  dimensions;  nevertheless,  probably  in  every  week, 
some  one  of  the  numerous  courts  of  the  country  find  for  some 
plaintiff,  presumably  the  money  value  of  a  lost  limb.     The 

1  Carey  v.  Day,  36  Conn.  152. 


424  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.       [§§  167,  168. 

judicial  sj^stera  has  but  one  balance;  in  this  is  weighed  every  loss, 
even  that  of  life." ' 

In  IVfarjland  it  has  been  held  in  trespass  for  an  injury  to  the 
plaintiff's  wall  by  inserting  joists  into  it  that  evidence  was  ad- 
missible under  the  general  issue  of  a  previous  license  in  miti- 
gation, which  would  have  been  a  bar  if  specially  pleaded;* 
also,  that  a  defendant  in  mitigation  for  assault  and  battery 
may  rely  on  the  res  gestm,  although  if  pleaded  it  would  amount 
to  a  justification  and  require  a  special  plea.'  In  Virginia,  in 
trespass  for  taking  a  slave  from  the  plaintiff's  close,  on  a  plea 
of  not  guilty  evidence  was  received  in  mitigation  that  the  title 
to  the  slave  was  in  the  defendant/ 

§  167.  Payments.  Payments  made  either  before  or  after 
suit  brought  may  be  proved  in  mitigation,  but  not  in  bar  with- 
out plea  nor  under  the  general  issue.'*  And  the  same  rule  is 
held  in  California  under  the  code.^  If  full  payment  is  made 
[261]  after  suit  brought  and  is  accepted  for  the  debt  and  costs, 
the  defendant  will  be  entitled  to  a  verdicf  It  is  necessary 
that  the  payment  be  made  to  cover  the  costs  which  have  ac- 
crued,* and  it  should  be  pleaded  to  the  further  maintenance  of 
the  action.^ 

Section  4. 

recoupment  and  countee-claim. 
§  168.  Definition  and  history  of  recoupment.    The  term 
recoupment^  derived  from  the   French  word  recoujjer^  to  cut 
again,  signifies  in  the  law  a  cutting  off  and  keeping  back  a 

1  Batchelder  v.  Bartholomew,  44  after  a  verdict  for  the  plaintiff  in 
Conn.  494;  Saltus  v.  Kipp,  12  How.  trover,  the  goods  were  seized  in  the 
Pr.  343.  hands  of    the   defendant    for   rent 

2  Hamilton  v,  Windolf,  36  Md.  301,  which  the  plaintiff  was  liable  to 
11  Am.  Rep.  491.  P^y;  t.he  defendant  having  paid  the 

3  Byers  v.  Horner,  47  Md.  28.  rent,  the  court  allowed  him  to  de- 
i  Bullard  v.    Lea  veil,   5  Call,  531.     duct  the  amount  from  the  verdict. 

See  Moore  v.  McNairy,  1  Dev.  319.         But  see  Buell  v.  Flower,  39  Conn. 


5  Dana  v.  Sessions,  46  N.  H.  509 
Shirley  v.  Jacobs,  2  Bing.  N.  C.  88 
Lediard  v.  Boucher,   7   C.   &  P.   1 


462,  12  Am.  Rep.  414. 

•>  Wetmore  v.   San   Francisco,  44 
Cat  294,  300. 


Britton  v.  Bishop,  11  Vt.  70;  Bischof  7  Thame  v.  Boast.   12  Q.    B.   808; 

v.  Lucas,  6  Ind.   26;   Moore  v.   Mc-  Beudit  v.  Annesley,  27  How.  Pr.  184. 

Nairy,  1  Dev.  319;  NichoU  v.  Will-  8  Belknap  v.  Godfrey,  23  Vt.  28a 

lams,  2  M,  &  W.  758.     See  McKyring  ^  Thame  v.  Boast,  supra;  Dana  v. 

V.  Bull,  16  N.  Y.  297.  Sessions,   46    N.    R   509;    Bank    v. 

In  Plevin  v.  Henshall,  10  Bing.  24,  Brackett,  4  id.  558. 


II 


§  1G8.]  KKCOUPMKNT    AND    COUNTER-CLAIM.  425 

part  of  the  plaintiff's  claim  in  satisfaction,  by  set-off,  of  cross- 
demands  of  the  defendant  growing  out  of  the  same  contract 
or  transaction  on  which  the  claim  is  founded.  The  same 
thing  is  meant  by  defalcation  and  discount.  Literally  under- 
stood, recoupment  would  include  mere  mitigation  of  damages, 
and  the  instances  of  this  defense  in  the  old  books  are  mostly 
•of  that  nature.^  In  the  endeavor  to  reduce  the  controversy 
to  a  single  point  or  issue  very  little  scope  was  given  by  the 
early  common  law  to  defenses  which  rested  on  the  principle 
of  allowing  cross-claims  in  favor  of  the  defendant. 

At  one  time  it  was  doubted  that  in  an  action  on  a  quantum 
meruit  for  services  the  defendant  was  entitled  to  reduce  the 
damages  by  showing  that  the  work  had  not  been  well  done.^ 
The  allowance  of  such  defenses  was  the  result  of  a  con-  [262] 
sultation  of  the  judges  in  England.  In  an  action  of  that  char- 
acter Lord  Ellenborough  said:  "  This  is  an  action  founded  on 
a  claim  for  meritorious  services.  The. plaintiff  is  to  receive 
what  he  deserves.  It  is  therefore  to  be  considered  how  much 
he  deserves,  or  if  he  deserves  anything.  If  the  defendant  has 
derived  no  benefit  from  his  services  he  deserves  nothin":,  and 
there  must  be  a  verdict  against  him.  There  was  formerly  con- 
siderable doubt  on  this  point.  Mr.  Justice  BuUer  thought 
(and  I,  in  deference  to  so  great  an  authority,  have  at  times 
ruled  the  same  way)  that  in  cases  of  this  kind  a  cross-action 
for  the  negligence  was  necessary;  but  that  if  the  work  be 
done  the  plaintiff  must  recover  for  it.  I  have  since  had  a  con- 
ference with  the  judges  on  the  subject,  and  now  I  consider 
this  as  the  correct  rule:  that  if  there  has  been  no  beneficial 
service  there  shall  be  no  pay;  but  if  some  benefit  has  been 
derived,  though  not  to  the  extent  expected,  this  shall  go  to 
the  extent  of  the  plaintiff's  demand,  leaving  the  defendant  to 

1  Dyer,     2;    8    Vin.    Abr.    556-7;  proof  under  the  general  issue  of  mit- 

Croke's    Eliz.   631;   Taylor  v.   Beal,  igating     circumstances    connected 

Croke's    Eliz.    222;    Shetelworth  v.  with  or  growing  out  of  the  transac- 

Neville,  1  T.  R.  454.  tion  upon  which  the  plaintiff's  claim 

The  Illinois  court  must  have  had  is  based,  showing  that  it  would  be 
in  mind  the  older  meaning  of  the  contrary  to  equity  and  good  con- 
word  when  it  said  that  "  recoup-  science  to  suffer  the  plaintiff  to  re- 
nieut,  in  its  strict  common-law  cover  the  full  amount  of  his  claim." 
sense,  is  a  mere  reduction  of  the  Wadhams  v.  Swan,  109  111.  46.  62. 
-damages  claimed  by  the  plaintiff  by        ^farnsworth  v.Garrard.l  Camp.38. 


42G  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  108.. 

his  action  for  the  negligence.'"  He  also  remarked  that  where 
a  specific  sum  has  been  agreed  to  be  paid  by  the  defendant 
"  the  phxintiff  may  have  some  ground  to  complain  of  surprise 
if  evidence  be  admitted  to  show  that  the  work  and  materials 
provided  were  not  worth  so  much  as  was  contracted  to  be 
paid  because  he  may  only  come  prepared  to  prove  the  agree- 
ment for  the  specified  sum  and  the  work  done,  unless  notice 
be  given  to  him  that  the  payment  be  disputed  on  the  ground 
of  the  inadequacy  of  the  work  done.  But  where  the  plaintiff 
comes  into  court  upon  a  quantum  raeridt  he  must  come  pre- 
pared to  show  that  the  work  done  was  worth  so  much,  and 
therefore  there  can  be  no  injustice  in  sufi'ering  the  defense  to 
be  entered  into  even  \vithout  notice."  ^  The  right  to  make 
such  defenses  is  no  longer  in  question;  the  plaintiff  must  show 
his  performance  of  a  condition  precedent  as  a  basis  of  the  re- 
covery either  of  an  agreed  sum  or  on  a  quantum  Tneruit,  and 
there  is  included  in  the  mere  right  to  make  a  defense  the  right 
to  rebut  the  evidence  of  performance,  and  where  the  value 
is  not  fixed  by  agreement  the  amount  reasonably  due  for  such 
performance.  In  such  cases,  to  the  extent  that  the  plaintiff's 
[263]  recovery  proceeds  on  proof  of  performance  or  its  rea- 
sonable value,  the  defendant,  if  he  dispute  either  as  shown  by 
the  plaintiff,  must  defend,  or  lose  all  right  to  contest  the  con- 
clusions so  arrived  at  or  to  redress  for  the  deficiencies  of  the 
performance.^  The  direct  defense  by  negativing  the  facts 
which  the  plaintiff  assumes  to  prove  to  measure  his  compensa- 
tion, or  those  which,  on  the  theory  of  his  action,  enter  into 
the  price  and  fix  the  amount  of  damages,  is  not  recoupment,* 
nor  is  a  defense  which  consists  of  a  denial  of  facts  which  the 
plaintiff  must  prove  to  maintain  his  action,  as  the  perform- 
ance  of   a   condition    precedent.^     The  defense  which   is  al- 

1  Basten  v.  Butter,  7  East,  479.  Ass'n,  68  N.  H.  437,  36  Atl.  Rep.  13, 

"The  doctrine  of  recoupment  is  in  73  Am.  St.  610. 

general  applicable  whenever  in  the  ^  Basten  v.  Butter,  supra. 

trial  of  the  plaintiff's  action  an  in-  3  Xellogg  v.  Denslow,  14  Conn.  411; 

vestigation  of  the  facts  on  which  the  Davis  v.  Tallcot,  12  N.  Y.  184 

claim  of  the  defendant  depends  is  *  Steamboat  Wellsville  v.  Geisse,  8 

necessary.     The  law  does  not  com-  Ohio  St.  333. 

pel    parties    to    bring   two  actions  ^  Thompson  v.  Richards,  14  Mich, 

when,  with  equal  convenience,  their  178;  Stoddard  v.  Tread  well,  26  Cal. 

rights  can  be  settled  in  one."    John-  294 
son  V.  White    Mountain   Creamery 


§  161).]  RECOUPMENT    AND    COUNTEE-CLAIM.  427 

lowed  under  the  name  of  recoupment  is  not  a  keeping  back  a 
part  of  the  \>lamt\ff's2J?'i}nufacie  damage  on  the  case  he  seeks 
to  establish  by  evidence  of  the  character  explained  under  the 
title  "  mitigation  of  damages,"  but  a  reduction  of  the  plaint- 
iff's recovery  by  the  allowance  against  him  in  his  action  of 
damages  due  the  defendant  on  a  substantive  cause  of  action  in 
his  favor,  growing  out  of  the  same  transaction  on  which  the 
plaintiff's  claim  or  demand  arises. 

§  IGl).  Same  subject.  Until  near  the  close  of  the  eight- 
eenth century  the  strict  rules  of  the  common  law  as  to  the  in- 
dependency of  covenants  and  the  entiret}'  of  conditions  were 
rigidly  enforced.  A  defendant  sustaining  damages  from  the 
breach  of  any  counter  or  reciprocal  obligation  in  the  contract 
sued  upon  was  put  to  his  cross-action,  unless  he  had  made  the 
performance  of  such  obligation  strictly  a  condition  precedent 
to  iiis  undertaking  to  the  plaintiff.^  These  rules  were  often  at- 
tended with  hardship,  as  where  the  plaintiff  was  insolvent  and 
unable  to  respond  afterwards  or  in  a  separate  action.  Thus, 
in  an  action  for  breach  of  a  covenant  to  recover  unliquidated 
damages  the  defendant  pleaded  set-off  of  like  damages  for  the 
plaintiff's  breach  of  his  covenants  in  the  same  instrument. 
This  defense  was  urged  on  grounds  which  now  support  recoup- 
ment. It,  however,  was  rejected  without  any  allusion  to  the 
right  of  recoupment  because  the  statute  of  set-offs  only  applied 
to  mutual  debts,  which  did  not  include  demands  for  un-  [264] 
liquidated  damages.^  Until  this  species  of  defense  had  become 
firmly  established  the  severe  adherence  to  the  old  practice  was 
in  no  cases  more  marked  than  in  actions  between  landlord  and 
tenant; —  the  former  was  allowed  to  collect  his  rent,  notwith- 
standing his  covenant  to  repair  remained  unperformed,  even  if 
he  was  himself  insolvent.'  The  doctrine  of  recoupment  has 
attained  its  growth  since  the  revolution;  but  the  courts  of  this 
country  and  of  England  have  not  given  it  the  same  expansion ; 
nor  has  it  made  the  same  progress  in  all  the  states  of  the 
Union.* 

In  New  York  the  defense  was  at  first  admitted  in  mitiga- 

17  Am.  L.  Review,  392.  *See  Johnson  v.  White  Mountain 

2  Howlet  V.  Strickland,  1  Cowp.  56.  Creamery  Ass'n,  68  N.  H.  437,  36  AtL 

s Taylor's  Landlord  &  T.,  g  373;  7  Rep.  13,  73  Am.  st  610. 
Am.  L.  Review,  393. 


428  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  170. 

tion  of  damages  where  there  was  fraud  in  respect  to  the  con- 
sideration ;  ^  next  where  there  was  breach  of  warranty  with- 
out fraud.2  At  this  time  it  elicited  increased  discussion  and 
received  more  emphatic  judicial  recognition.  Marcy,  J.,  said: 
"  From  an  examination  of  the  cases  I  am  satisfied  that  in  those 
where  the  damages  arising  from  a  breach  of  warranty  in  the 
sale  of  chattels  have  been  allowed  to  be  given  in  evidence  by 
the  defendant  to  reduce  the  amount  of  recovery  below  the 
stipulated  price,  the  decisions  of  the  court  have  not  proceeded 
upon  the  ground  that  the  express  contracts  were  void  by  rea- 
son of  fraud,  and  a  recovery  had  upon  a  quantum  meruit  or 
quantum  valehat  upon  implied  contract;  but  upon  a  principle 
somewhat  different  from  those  adverted  to  in  this  case  in  the 
court  below;  upon  a  principle  which  has  of  late  years  been 
gaining  favor  with  courts  and  extending  the  range  of  its  opera- 
tions. Such  a  defense  is  admitted  to  avoid  circuity  of  ac- 
tion." Hence  he  insisted,  and  the  court  decided,  that  dam- 
ages arising  from  breach  of  warranty  should  be  allowed  to 
reduce  the  recovery  as  well  where  there  was  no  fraud  as  where 
there  was.  So  true  was  it  that  this  new  principle  of  avoiding 
circuity  of  action  "  was  gaining  favor  with  the  courts  and  ex- 
tending the  range  of  its  operations,"  that  the  discrepancies  at 
any  given  time  to  be  noticed  between  the  decisions  of  courts 
['i65]  of  different  states  have  indicated  a  relative  progress 
rather  than  a  permanent  disagreement.' 

§  170.  Nature  of  defense.  This  defense  is  founded  on  the 
natural  equity  that  mutual  demands  growing  out  of  the  same 
transaction  should  compensate  each  other  by  deducting  the 
less  from  the  greater  and  treating  the  difference  as  the  sum 
justly  due.*  It  is  also  founded  on  the  policy  and  convenience 
of  settling  an  entire  controversy  in  one  action  where  it  can  be 
justly  done,  thus  saving  needless  delay  and  litigation.  By 
proper  pleading,  in  the  application  of  the  doctrine  of  recoup- 

1  Becker  v.   Vrooman,    13    Johns,  is  now  universally  in   force  either 
303.  by  statute  or  otherwise:  though  in 

2  Spalding  v.  Vanclercook,  2  Wend,  some  states,  in  controversies  at  law 
431;  McAllister  v.  Reab,  4  Wend.  483.  where  title  to  real  estate  is  involved, 

3  The  principle  of  recoupment,  un-  the  doctrine  is  not  applied. 

der  various  names,  has  been  adopted  *  Green  v.  Farmer,  4  Burr.  2214, 
in  the  general  jurisprudence  of  this  2320;  Reab  v.  McAlister,  8  Wend.  109, 
country.     And  it  is  believed  that  it    115;  Myers  v.  Estell,  47  Miss.  4, 17-21. 


A 


§   ITO.]  RECOUPMENT    AND    COUNTER-CLAIM.  429 

mcnt,  the  court  may  look  through  the  whole  contract,  treating 
it  as  an  entirety,  and  the  things  done  and  stipulated  to  be 
done  on  each  side  as  the  consideration  for  the  thinirs  done 
and  stipulated  to  be  done  on  the  other.  "When  either  party 
seeks  redress  for  the  breach  of  stipulations  in  his  favor 
the  grievances  on  each  side  are  summed  up,  instead  of 
those  only  on  the  plaintid's  side;  a  balance  is  struck,  and 
the  plaintiff  can  recover  only  when  that  balance  is  in 
his  favor.'  Some  confusion  has  arisen  from  treatinir  this 
defense  as  one  of  failure  of  consideration.'  In  an  Ala- 
bama case^  the  plaintiff  sued  on  a  note  which  had  been  given 
for  a  clock  sold  by  him  to  the  defendant  with  warranty  that 
it  would  keep  good  time.  The  clock  was  shown  to  be  worth- 
less as  a  time-piece;  but  the  case  alone  was  worth  more  than  a 
nominal  sum,  and  it  was  held  that  the  plaintiff  might  claim 
an  abatement  on  the  note  to  the  amount  of  damage  that  he 
had  sustained.  Having  kept  the  clock,  however,  judgment 
must  go  against  him  for  what  it  was  actually  worth.  [200] 
By  this  decision  the  breach  of  warranty  avoided  the  special 
contract  and  recovery  proceeded  on  a  quantum  meruit.^     This 

1  Lixf burrow  v.  Henderson,  30  Ga.  the  consideration  for  the  defendant's 

482;  Myers  v.  Estell,  47  Miss.  4.  promise."    Keegan  v.  Kinnare,    123 

2 The  courts  of  Illinois  indorse  the  111.  280.  14  N.  E.  Rep.  14;  Lyon  v. 
view  of  Mr.  Freeman  as  expressed  in  Bryant,  54  111.  App.  331.  See  Wat- 
his  note  to  Van  Epps  v.  Harrison,  40  kins  v.  Hopkins,  13Gratt.  743.  Corn- 
Am.  Dec.  323:  "In  its  modern  appli-  pare  Perley  v.  Balch,  23  Pick.  283,  34 
cation  the  foundation  of  recoupment  Am.  Dec.  56;  Comparet  v.  Johnson, 
is  failure  of  consideration.  The  de-  6  Blackf.  59;  Herbert  v.  Ford,  29  Me. 
fendant  in  effect  admits  his  failure  546;  Drew  v.  Towle,  27  N.  H.  412,  59 
to  perform  the  contract  upon  which  Am,  Dec.  380;  V^heat  v.  Dotson,  12 
he  issued,  and  seeks  to  extenuate  Ark.  699;  Van  Buren  v.  Dig<^es,  11 
his  default  by  showing  that  the  How.  461;  Van  Epps  v.  Harrison,  5 
plaintiff  iias  failed  in  some  particu-  Hill,  63;  Withers  v.  Greene.  9  How. 
lar  to  do  that  which  was  the  consid-  213;  Wynn  v.  Hiday,  2  Blackf.  123: 
eration  of  the  defendant's  promise,  Elminger  v.  Drew,  4  McLean,  388; 
and  to  tliat  extent,  therefore,  the  Washburn  v.  Picot,  3  Dev.  390;  Pul- 
plaintiff  has  no  right  to  hold  the  de-  sifer  v.  Hotchkiss,  12  Conn.  234; 
fendant  liable;  hence  it  is  essential  Avery  v.  Brown,  31  Conn.  398;  Peden 
that  the  wrong  of  which  the  defend-  v.  Moore,  1  Stew.  &  Port.  71. 
ant  complains  should  in  some  way  3  Davis  v.  Dickey,  23  Ala.  848; 
impair  the  consideration  of  his  con-  Grisham  v.  Bodman,  111  Ala.  104,  20 
tract  —  in  other  words,  it  must  ap-  So.  Rep.  514. 

pear  that  the   express    or    implied  ^  Harman  v.  Sanderson,  6  Sm.  &  M. 

promise  broken  by  the  plaintiff  was  41,  45  Am.  Dec.  272, 


430  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§   170. 

is  in  accordance  with  the  English  rule;  the  damages  are  re- 
duced b}'  showing  how  much  less  the  article  is  worth  by  rea- 
son of  the  breach  of  warranty;  in  other  words,  the  plaintiff 
having  failed  to  perform  the  agreement  which  was  the  con- 
sideration of  the  defendant's  promise,  the  judicial  inquiry  is 
what  is  the  property  or  service  which  the  defendant  has  re- 
ceived worth.  Thus,  A.  sold  13.,  for  95^.,  two  pictures,  repre- 
senting them  to  be  "a  couple  of  ponsins;  "  they  were  in  fact 
not  originals,  but  very  excellent  copies.  B.  did  not  offer  to 
return  them,  and  it  was  held  that  if  the  jury  thought  that  he 
believed  from  the  representation  of  A.  that  they  were  origi- 
nals, he  was  not  bound  to  pay  the  price  agreed;  but  that,  as  he 
kept  them,  he  was  liable  to  pay  such  sum  as  the  jury  might 
consider  to  be  their  value.^  In  an  English  case  ^  Parke,  B., 
said :  "  Formerly  it  was  the  practice  where  an  action  was 
brought  for  an  agreed  price  of  a  specific  chattel  sold  with  a 
warranty,  or  of  work  which  was  to  be  performed  according  to 
contract,  to  allow  the  plaintiff  to  recover  the  stipulated  sura, 
leaving  the  defendant  to  a  cross-action  for  breach  of  the  war- 
ranty or  contract;  in  which  action,  as  well  the  difference  be- 
tween the  price  contracted  for  and  the  real  value  of  the  arti- 
cle or  of  the  work  done,  as  any  consequential  damage,  might 
have  been  recovered;  and  this  course  was  simple  and  consist- 
ent. In  the  one  case,  the  performance  of  the  warranty  not 
being  a  condition  precedent  to  the  payment  of  the  price,  the 
defendant  who  received  the  chattel  warranted  has  thereby  the 
property  vested  in  him  indefeasibly,  and  is  incapable  of  re- 
turning it  back;  he  has  all  he  stipulated  for  as  the  condition 
of  pajnng  the  price,  and  therefore  it  was  held  that  he  ought  to 
pay  it  and  seek  his  remedy  on  the  plaintifif's  contract  of  war- 
ranty. In  the  other  case  the  law  appears  to  have  construed 
the  contract  as  not  importing  that  the  performance  of  every 
portion  of  the  work  should  be  a  condition  precedent  to  the 
[267]  payment  of  the  stipulated  price,  otherwise,  the  least  de- 
viation would  have  deprived  the  plaintiff  of  the  whole  price; 
and  therefore  the  defendant  is  obliged  to  pay  it,  and  recover 
for  any  breach  of  contract  on  the  other  side.     But  after  the 

iLomi  V.  Tucker,  4  C.  &  P.  15;  De    259;  Street  v.  Blay,  3  B.  &  Ad.  456; 
Sewhanbery  v.  Buchanan,  5  C.  &  P.     Mondel  v.  Steel,  8  M.  &  W.  858. 
343;  Poulton  v.  Lattimore,  9  B.  &  C.         ^  Mondel  v.  Steel,  supra. 


§  170.]  KECOUPMEXT    AND    COUNTER-CLAIM.  431 

■case  of  Basten  v.  Butter,'  a  different  practice,  which  had  been 
partially  adopted  before  in  the  case  of  King  v.  Boston,-  began 
to  prevail,  and  being  attended  with  much  practical  conven- 
ience has  been  since  generally  followed;  and  the  defendant  is 
now  permitted  to  show  that  the  chattel,  by  reason  of  the  non- 
compliance with  the  warranty  in  the  one  case,  and  the  work 
in  consequence  of  the  non-performance  of  the  contract  in  the 
•other,  were  diminished  in  value.'  The  same  practice  has  not, 
however,  extended  to  all  cases  of  work  and  labor,  as  for  in- 
stance that  of  an  attorney,^  unless  no  benefit  whatever  has 
been  derived  from  it;  nor  in  an  action  for  freight.*  It  is  not 
so  easy  to  reconcile  these  deviations  from  the  ancient  practice 
with  principle  in  those  particular  cases  above  mentioned  as  it 
is  in  those  where  an  executory  contract,  such  as  this,  is  made 
for  a  chattel  to  be  manufactured  in  a  particular  manner  or 
goods  to  be  delivered  according  to  a  sample;®  where  the  party 
may  refuse  to  receive  or  may  return  in  a  reasonable  time  if  the 
article  is  not  such  as  bargained  for;  for  in  these  cases  the  ac- 
ceptance or  non-return  affords  evidence  of  a  new  contract 
on  a  quantum  valebat;  whereas,  in  a  case  of  delivery  with  a 
warranty  of  a  specific  chattel  there  is  no  power  of  returning 
and  consequently  no  ground  to  imply  a  new  contract;  and  in 
some  cases  of  work  performed  there  is  difficulty  in  finding  a 
reason  for  such  presumption.  It  must,  however,  be  consid- 
ered that  in  all  these  cases  of  goods  sold  and  delivered  with  a 
warranty,  and  work  and  labor,  as  well  as  the  case  of  goods 
agreed  to  be  supplied  according  to  a  contract,  the  rule  which 
has  been  found  so  convenient  is  established;  and  that  it  is  com- 
petent for  the  defendant  in  all  of  these  not  to  set  off,  by  a 
proceeding  in  the  nature  of  a  cross-action,  the  amount  of  dam- 
ages which  he  has  sustained  by  breach  of  the  contract,  but 
simply  to  defend  himself  by  showing  how  much  less  the  sub- 
ject-matter of  the  action  was  worth  by  reason  of  the  breach 
of  contract;  and  to  the  extent  that  he  obtains  or  is  ca-  [268] 
pable  of  obtaining  an  abatement  of  price  on  that  account  he 
must  be  considered  as  having  received  satisfaction  for  the 

1 7  East,  479.  *  Templer  v.  McLachlan,  2  N.  IL 136. 

27  East.  481,  nota  sSheels  v.  Davies.  4  Camp.  119. 

3  Kist  V.    Atkinson,   3   Camp.    63;  6  Germaine  v.  Burton,  3  Stark.  32. 
Tliornton  v.  Place,  2  M.  &  Rob.  218. 


432 


LEGAL    LIQTJIDATIONS    AND    REDUCTIONS. 


[§  170. 


contract  and  is  precluded  from  recovering  in  another  action 
to  that  extent,  but  no  more."  The  defendant  was  not  entitled 
to  show  damages  resulting  from  such  breach  nor  the  breach 
of  any  other  stipulation.^ 


1  Francis  v.  Baker,  10  Ad.  &  E.  642; 
Bartlett  v.  Holmes,  13  C.  B.  630;  Da- 
vis V.  Hedges,  I^  R.  6  Q.  B.  687. 

In  McAllister  v.  Eeab,  i  Wend.  490, 
the  theory  of  recoupment  is  thus  dis- 
cussed by  Marcy,  J.:  "Upon  what 
principle  are  the  damages  for  the 
breach  of  warranty  allowed  in  a  case 
where  there  is  fraud  to  be  given  in 
evidence  to  reduce  the  recovery  be- 
low the  stipulated  price?  Not  on  the 
ground  of  (statutory)  set  off,  because 
these  damages  are  unliquidated.  Is 
it  upon  the  ground  that  the  contract 
is  destroyed  by  the  fraud  ?  If  it  is 
rendered  void,  upon  what  principle 
can  the  vendor  recover  at  all?  I 
know  it  has  been  said  he  recovers 
upon  a  quantum  ineruit  or  qiiantutn 
valebat;  but  if  there  was  no  contract 
by  reason  of  his  fraud,  there  was  no 
sale:  no  passing  of  title.  Can  an  im- 
plied sale  be  set  up  in  lieu  of  the  ex- 
press one  ?  This,  I  think,  may  well 
be  doubted,  although  the  express 
contract  may  be  void.  Tlie  case  of 
Beecker  v.  Vrooman  (13  Johns.  302) 
seems  to  have  been  put  on  the  ground 
that  the  sale  is  valid.  The  language 
of  the  court  does  not  countenance 
the  idea  that  the  question  in  that 
case  was  the  mere  value  of  the  horse. 
It  is  there  intimated  that  a  different 
rule  now  prevails  from  what  for- 
merly governed,  which  ^commends 
itself  to  the  court,  because  it  is  cal- 
culated to  do  final  and  complete  jus- 
tice between  the  parties,  most  expe- 
ditiously and  least  expensively:  but 
if  the  parties  were  proceeding  with- 
out regard  to  the  express  contract 
upon  an  implied  one,  and  were  only 
establishing  the  true  value  of  the 
horse,  there  was  no  new  rule,  and 
the  language  of  the  court  was  not 


very  appropriate  to  the  question  be- 
fore them.  In  the  case  of  Leggett 
V.  Cooper  (2  Starkie  N.  P.  103),  where 
the  counsel  for  the  defendant  re- 
sisted the  recovery  on  the  contract 
for  the  sale  of  hops  on  account  of 
fraud,  Lord  Ellenborough  said,  'if 
there  is  no  contract  for  the  sale  of 
the  goods  at  the  stipulated  price, 
there  is  no  contract  upon  the  quan- 
tum meruit  for  goods  sold  and  de- 
livered.' The  action  in  the  case  of 
Frisbee  v.  Hoffnagle  (11  Johns.  50) 
was  on  a  note  for  the  consideration 
of  a  deed  with  warranty  for  land.  The 
defense  was  that  the  vendor  had  no 
title,  and  it  was  allowed  to  prevail, 
not  upon  the  ground  that  the  con- 
tract of  sale  was  invalid  by  reason 
of  fraud,  but  for  the  purpose  of 
avoiding  circuity  of  action.  The 
decision  in  the  case  of  Spalding  v. 
Vandercook  (2  Wend.  431)  does  not, 
I  apprehend,  proceed  on  the  ground 
of  fraud  alone.  The  consideration 
of  the  note  was  the  fulfillment  of  the 
contract  to  deliver  barrels.  If  the 
whole  contract  was  cut  up  by  the 
fraudulent  conduct  of  the  plaintiff, 
the  note  was  entirely  without  con- 
sideration; but  it  was  not  so  con- 
sidered. So  in  the  case  of  Burton  v. 
Stewart  (3  Wend.  236,  20  Am.  Dec. 
692),  there  was  fraud  in  the  sale  of 
the  horse,  yet  the  note  given  on  the 
sale  was  not  adjudged  to  be  without 
consideration.  The  contract  was 
broken,  but  it  had  a  valid  existence; 
and  the  court  entertained  no  doubt 
in  that  case  that  if  there  had  been  a 
proper  notice  the  amount  of  recov- 
ery would  have  been  greatly  abated 
by  the  proof  of  what  was  offered;  it 
was,  however,  rejected  for  the  want 
of  such  notice."     He  concludes  that 


d 


?§  171,  172.]       RECOUPMENT   AND    COUNTER-CLAIM.  433 

§  171.  Same  subject.  It  is  true  that  the  plaintiff's  [2G0] 
breach  of  stipulations  in  favor  of  the  defendant  impairs  the 
consideration  of  his  agreement  in  favor  of  the  plaintiff;  but  the 
defense  of  recoupment  is  not  based  on  the  principle  of  treating 
the  defendant  as  relieved  from  his  obligation  to  perform  [270] 
his  undertaking  because  the  consideration  is  impaired.  On  the 
contrary,  it  is  based  on  the  opposite  principle,  namely,  the  en- 
forcement of  the  contract  on  both  sides,  and  that  the  damages 
which  the  plaintiff  has  sustained  from  the  breach  of  the  en- 
gagements in  his  favor  shall,  in  whole  or  in  part,  be  [271] 
compensation,  by  allowance  in  favor  of  the  defendant,  and 
application  thereto  of  such  damages  as  he  has  suffered  from 
the  infraction  of  the  correlative  duties  and  stipulations  of  the 
plaintiff  which  were  the  consideration.  The  law  will  [272] 
cut  off  so  much  of  the  plaintiff's  claim  as  the  cross-damages 
may  come  to.^  Wherever  recoupment,  strictly  such,  is  allowed, 
distinct  causes  of  action  are  set  off  against  each  other.^  It  is 
not  a  bar  to  the  plaintiff's  action  like  the  technical  plea  in 
avoidance  of  circuity  of  action,  but  in  pursuance  of  the  same 
policy  of  the  law  it  seeks  to  satisfy  and  discharge  the  whole  or 
a  part  of  the  plaintiff's  claim  with  damages  for  which  he  is 
liable  in  respect  of  the  same  transaction.^ 

§  172.  Constituent  features  of  recoupment.  For  the  pur- 
pose of  discussing  the  principal  constituent  features  of  recoup- 
ment the  following  propositions  are  sufficiently  comprehensive: 
1.  The  claim  or  demand  for  which  the  defendant  seeks  to  re- 
coup must  be  a  valid  cause  of  action  upon  which  a  separate 
suit  might  be  maintained  against  the  party  beneficially  inter- 
ested in  the  plaintiff's  action,  or  his  assignor.  2.  It  must  arise 
from  the  same  subject-matter  or  spring  out  of  the  same  contract 
or  transaction  on  which  the  plaintiff  relies  to  maintain  his 
action.     3.  It  is  immaterial  whether  it  be  in  itself  or  is  set  up 

the  recovery  of  the  plaintiff  is  based  483;  Reab  v.  McAlister,  8  Wend.  109; 

on  the   express    contract,    and  the  Batterman  v.  Pierce,  3  Hill,  171. 

amount  of  it  reduced  by  the  allow-  2  Minnaugh   v.   Partlin,   67    Mich, 

ance  of  damages  on  the  defendant's  391,  34  N.  W.   Rep.   717;    Grant  v. 

cross-claim  to  save  a  multiplicity  of  Button,  14  Johns.  377;    Gilleypie  v. 

actions,   and  as  a  substitute  for  a  Torrance,  25  N.  Y.  306,  309,  82  Am. 

cross-action  by  the  defendant.  Dec.  355;   Price's  Ex'rs  v.  Reynolds, 

1  Ives  V.  Van  Epps,  22  Wend.  155,  39  N.  J.  L.  171. 

15t>;  McAllister  v.   Reab,  4  Wend.  » McCullough  v.  Cox,  6  Barb.  387. 
Vol.  1  —  28 


434  LEGAL    LIQUIDATIONS    AND    KEDUCTIONS.       [§§  173,  174. 

as  a  defense  against  a  claim  for  liquidated  or  unliquidated 
damages.  Nor  is  it  necessary  that  the  claims  on  both  sides  be 
of  the  same  nature.  4.  Generally  it  is  available  onh^  as  defense, 
for,  except  by  statute,  it  can  have  no  further  effect  than  to 
answer  the  plaintiff's  damages  in  whole  or  in  part;  the  defend- 
ant cannot  recover  any  balance  or  excess.'  5.  A  defendant  has 
an  election  to  use  such  a  cross-demand  as  a  defense  or  bring  a 
separate  action  upon  it;  but  he  will  not  have  the  election  to  set 
up  his  claim  by  way  of  recoupment  unless  it  would  be  just  and 
practicable  to  adjust  it  in  the  plaintiff's  action.  6.  When  made 
the  subject  of  recoupment  the  defendant  assumes  the  burden  of 
proof  in  respect  to  it,  and  the  same  rule  or  measure  of  damages 
applies,  subject 'to  the  limitation  just  stated,  as  would  be 
applicable  if  the  defendant  had  brought  a  separate  action. 
7.  When  submitted  as  a  subject  of  recoupment  the  judgment 
will  be  a  bar  to  any  other  suit  or  recoupment  upon  it. 
[273]  §  173.  Remedy  by  counter-claim.  The  counter-claim 
of  the  code  includes  recoupment  and  is  more  comprehensive; 
and  the  remedy  by  both  has  been  made  more  useful  and  com- 
plete by  statutory  provision  against  voluntary  discontinuance 
of  the  action  by  the  plaintiff  without  the  defendant's  consent 
after  this  defense  has  been  interposed,  and  for  judgment  on 
the  adverse  claim,  if  any  amount  is  established  after  satisfying 
the  plaintiff's  claim,  or  where  no  claim  in  favor  of  the  plaintiff 
is  adjudged. 

§  174.  Talidity  of  claim  essential.  The  claim  or  demand 
to  be  recouped  must  be  a  valid  cause  of  action  for  which  a 
separate  suit  could  be  maintained.^     Hence  it  is  essential  that 

1  An  exceptional  view  is  held  in  Fuller,   80   N.    Y.    312;    Lennon    v. 

New  Hampshire,  the  defendant  being  Smith,  124  N.  Y.  578,27  N.  E.  Rep. 

permitted  to  recover  an  affirmative  243;  Peck  v.  McCormick  Harvesting 

judgment  against  the  plaintiff  if  he  Machine  Co.,  94  111.  App.  586.  196  liL 

sliowsthat  he  is  entitled  to  it.     John-  295,  63  N.  E.    Rep.   731;   Osgood  v. 

son   V.    White   Mountain  Creamery  Bauder,  82  Iowa,  171,  47  N.  W.  Rep. 

Ass'n,  68N.  H.  437,  36  AtL  Rep.  13,  1001:    Howell   v.   Dimock,    15  App. 

73  Am.   St.   610.     This  is    perfectly  Div.  102,  44  N.  Y.  Supp.  271;  Cincin- 

logical  on   the  theory  of  avoiding  nati  Daily  Tribune  Co.  v.  Brack,  61 

circuity  of  action.  Ohio  St.  489,  76  Am.  St.  433,  56  N.  K 

2Reilly    v.  Lee,   85   Hun,   315,   32  Rep.  198;  Harper  v.  Moffat  Cycle  Co.. 

N.  Y.   Supp.  967,   affirmed   without  151  111.  84,  100,  37  N.  E.  Rep.  656; 

opinion,   155  N.   Y.  691;  Walker  v.  George  H.  Hess  Co.  v.  Dawson,  149  III. 

Millard,  29  N.  Y.  375;  Woodward  v.  138,  36  N.  E.  Rep.  557;  Davidson  v. 


d 


§  174.]  EECOCPMENT    AND    COUNTER-CLAni,  4:35 

the  subject  of  it  be  such  as  the  court  in  whicli  it  is  pleaded 
has  jurisdictioQ  of;^  that  the  damages  set  up  were  not  incurred 
through  the  defendant's  fault  or  negligence;-  that  the  contract 
sued  upon  and  out  of  which  the  claim  arises  is  valid;'  that  the 
plaintiff  is  a  party  subject  to  suit;^  that  the  allowance  of  the 
counter-claim  will  not  deprive  the  plaintiff  of  the  exemptions 
given  him  by  statute.^ 

Keduction  of  damages  may  often  be  claimed  upon  facts 
which  do  not  constitute  a  cause  of  action  in  favor  of  the  de- 
fendant. Of  this  class  and  nature  are  those  provable  in  mit- 
igation of  damages.  The  distinction  is  important;  for  it  is 
necessary  to  use  the  latter  in  defense;  the  benefit  of  such 
facts  will  be  lost  if  they  are  not  then  introduced.  But  if  the 
defense  consists  of  a  substantive  cause  of  action  it  will  not  be 
lost  or  barred  by  the  defendant  failing  to  put  it  forward  when 
there  is  an  opportunity  to  make  it  available.  The  fact  that 
the  defendant  has  the  option  to  avail  himself  of  matter  of  re- 
coupment or  bring  a  cross-suit  upon  it  necessarily  implies 
that  such  matter  constitutes  a  cause  of  action.^  In  an  action 
to  recover  for  labor,  if  the  benefit  of  the  labor  is  lost  by 
causes  for  which  the  plaintiff  would  be  answerable  in  a  cross- 
action,  the  same  matter  which  would  support  a  cross-action 
may  be  given  in  evidence  in  defense  of  the  suit  to  recover 

Rountree,  69  Wis.  655,  34  N.  W.  A  defendant  cannot  plead  a 
Rep.  906;  Sj'lte  v.  Nelson,  26  Minn,  counter-claim  against  the  state 
105,  1  N.  W.  Rep.  811;  Rhymney  R.  without  its  consent.  State  v.  Brad- 
Co.  V.  Rhymney  Iron  Co.,  25  Q.  B.  ley,  87  La.  Ann.  623;  People  v.  Den- 
Div.  146;  Barnes  v.  McMullins,  78  nison,  84  N.  Y.  272;  Battle  v.  Tliomp- 
Mo.  260;  Widrig  v.  Taggart,  51  Mich,  son,  65  N.  C.  406. 
103,  16  N.  W.  Rep.  251,  and  cases  A  set-off  cannot  be  maintained  or 
cited  to  this  section.  a   debt  contracted  by  the  plaintiff 

1  Cragin  v.  Lovell,  88  N.  Y.  258.  during  infancy  and  not  ratified  by 

2  Provenzano    v.    Tlaayer    Manuf.  him  after    becoming    of    full    age. 
Co.,  9  Daly,  90.  Rawley  v.  Ravvley.  1  Q.  B.  Div.  460; 

3  Ryan  v.   Dumphy,  4  Mont.   342,  Widrig  v.  Taggart,  51  Midi.  103,  16 
354.  N.  W.  Rep.  251. 

*  A  tax  is  not  a  debt  or  obligation  *  Bauer  v.  Teasdale,  25  Mo.  App.  25; 

to  pay  money   founded    upon   con-  Curlee  v.  Thomas,  74  N.  C.  51;  Wil- 

tractand  cannot  be  counter-claimed  son  v.  McElroy.  32  Pa.  82. 

against.     Gatling  v.  Commissioners,  ^  Brown  v.  Gallaudet,  80  N.  Y.  413; 

92  N.  C.  536,  53  Am.  Rep.  432;  Cobb  Gillespie  v.  Torrance,  25  id.  309.     See 

V.  Elizabeth  City,  75  N.  C.  1;  Finne-  Houston  v.  Young,  7  Ind.  200;  Clark 

gan  V.  Fernandina,  15  Fla.  379.  v.  Wiidridge,  5  id.  176. 


436  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  175. 

payment.^  "  That  doctrine  (of  recoupment)  does  not  rest  on 
the  nature  of  the  right  which  the  plaintiff  has  in  the  contract 
which  he  seeks  to  enforce,  nor  on  the  fact  that  his  interest  in 
it  is  the  same  at  the  time  of  suit  brought  as  when  it  was  origi- 
nally entered  into.  The  essential  elements  on  which  its  appli- 
cation depends  are  two  only.  The  first  is  that  the  damages 
wiiich  the  defendant  seeks  to  set  off  shall  have  arisen  from  the 
same  subject-matter  or  sprung  out  of  the  same  contract  or 
transaction  as  that  on  which  the  plaintiff  relies  to  maintain 
[274]  his  action.  The  other  is  that  the  claim  for  damages 
shall  be  against  the  plaintiff,  so  that  their  allowance  by  way 
of  set-off,  or  defense  to  the  contract  declared  on,  shall  operate 
to  avoid  circuity  of  action,  and  as  a  substitute  for  a  distinct 
action  against  the  plaintiff  to  recover  the  same  damages  as 
those  relied  on  to  defeat  the  action."  ^ 

§  175,  Parties.  The  cause  of  action  set  up  for  recoupment 
must  be  one  against  the  party  beneficially  interested  in  the 
plaintiff's  action;  a  claim  against  the  nominal  plaintiff  person- 
ally, when  he  sues  in  a  fiduciary  capacity  or  for  the  benefit  of 
another,  is  not  available.  Thus,  where  property  attached  by 
an  officer  upon  'mesne  process  was  replevied  from  him,  and 
on  the  failure  of  the  plaintiff  in  that  suit  to  comply  with  the 
judgment  for  return  of  the  property  suit  was  brought  on  the 
bond  by  the  officer,  the  other  party  could  not  recoup  the  dam- 
ages adjudged  in  his  favor  against  such  officer  for  false  return 
on  the  process  upon  which  he  originally  attached  the  property 
because  the  damages  recovered  by  the  officer  on  the  bond 
would  be  held  in  trust  for  the  benefit  of  the  attaching  creditor 
and  his  debtor,  and  the  damages  sought  to  be  recouped  were 
assessed  against  him  personallj''  for  a  wrong  committed  by 
him.^  So  in  action  by  executors,  as  such,  for  the  recovery  of 
purchase-money  of  land  sold  by  them,  the  purchaser,  making 
no  offer  or  attempt  to  rescind  the  contract,  cannot  avail  him- 
self of  false  and  fraudulent  representations  made  by  them  at 
the  time  of  the  sale  in  respect  to  the  subject-matter  either  as  a 
defense  or  by  way  of  recoupment  or  counter-claim.  His  rem- 
edy, if  he  has  any,  is  against  the  executors  personally.* 

»  Austin  V.  Foster,  9  Pick.  341.  *  Westfall  v.  Dungan,  14  Ohio  St 

^  Sau-yer  v.  Wiswell,  9  Allen,  39,  276;  Cumberland  Island  Co.  v.  Bunk- 

sWriglit   V.   Quirk,   105   Mass,   44,  ley,  108  Ga.  756,  83  S,  E.  Rep.  183. 

See  Beokraan  V.  Maulove,  18  Cal,  388.  A  plaintiff  who  sues  an  assignee 


§  175.]  KECOUPMENT   AND    COUNTER-CLAIM.  437 

It  is  not  essential  to  the  exercise  of  the  right  of  recoupment 
that  the  suit  in  which  the  right  is  asserted  should  be  brought 
in  the  name  of  the  part}'-  who  is  lial)le  for  the  cross-claim, 
nor  need  it  be  against  the  party  who  is  entitled  to  the  benefit 
of  such  claim.  It  is  enough  that  the  suit  is  substantially  be- 
tween them;  that  the  claim  sued  on  is  subject  to  this  defense, 
or  that  the  proceeding  be  of  such  a  nature  that  the  mutual 
claims  can  be  adjusted  in  it;  that  whatever  is  recovered  is  en- 
forcible  against  the  property  of  the  party  seeking  to  re-  [275] 
coup,  and  whatever  is  deducted  upon  the  cross-claim  properly 
inures  to  his  benefit.^  By  the  water-craft  law  of  some  states 
demands  of  certain  descriptions  are  liens  upon  and  enforcible 
against  the  water-craft,  which  may  be  discharged  by  bond  or 
some  form  of  undertaking  in  behalf  of  the  owners  conditioned 
for  the  payment  of  amounts  found  to  be  liens.  In  actions 
upon  such  security,  or  against  the  water-craft  not  bonded,  any 
matter  of  recoupment  in  respect  to  the  demand  alleged  to  be 
a  lien  may  be  set  up.-  The  surety  of  a  principal  entitled  to  re- 
coupment may,  as  a  general  rule,  avail  himself  of  that  defense 
because  of  the  natural  equity  that  mutual  debts  and  liabilities 
growing  out  of  the  same  transaction  shall  compensate  each 

for  the  benefit  of  creditors  to  recover  recoupment  was  allowed.    Baltimore 

the  price  of  goods  is  not  subject  to  a  United  Oil  Co.  v.  Barber,  2  Mackey 

counter-claim  for  damages  resulting  (D.  C),  4 

from  the  malicious  prosecution  by  If,  contemporaneously  with  the  ex- 
him  of  a  former  suit  for  the  same  ecution  of  notes  for  the  purchase- 
cause  of  action  unless  it  is  shown  money  of  land,  the  parties  agree  in 
tliat  his  cestuis  que  trust  participated  writing  that  the  vendor  sliall  furnish 
in  or  approved  his  wrongful  act.  the  vendee  a  complete  chain  of  title 
Gelshenen  v.  Harris,  26  Fed.  Rep.  680.  to  the  land  purcliased,  for  the  per- 

If  the  beneficial  interest  in  a  claim  formance  of  which  it  is  stipulated 

or  demand  remains  in  the  assignor  that  the  notes  shall  be  bound,  the 

the  assignee  cannot  set  it  off  against  damages  resulting  from  the  non-per- 

the  debtor.     Olmstead  v.   Scutt,  55  formance  of   such   agreement  may 

Conn.  125,  10  Atl.  Rep.  519.  be   recouped  against   the  notes  al- 

Un  an  action  by  A.  against  B.  and  though  the  latter  were,  at  the  ven- 

C.    they    sought  to  recoup   his  de-  dor's    request,   made    payable  to  a 

mand.     It  appeared   that    D.,    who  third  party,  no  consideration  moving 

was  not  a  party  to  the  record,  was  from  him.     Hooper  v.  Armstrong,  69 

a  partner  of  the  defendants  in  the  Ala.  'M3.    See  last  note, 

original  contract,  was  interested  in  2  steamboat  Wellsville  v.  Geisse,  3 

the   reduction    of    A.'s    claim    and  Ohio  St.   333:   Ward  v.   Wilison,  3 

suffered  in  common  with  them  the  Mich.  1. 
damages  sought  to  be  recouped.     A 


438  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  175. 

other.^  In  Xevv  York,  however,  this  application  of  recoup- 
ment is  refused ;  ^  and  so  under  a  Tennessee  statute  unless  the 
principal  gives  consent.'  The  prevailing  view  is  that  a  coun- 
ter-claim or  cross-claim  must  be  against  all  the  plaintiffs  and 
them  only  and  in  favor  of  all  the  defendants  and  no  others.* 
In  an  action  upon  a  contract  a  balance  due  the  defendant  upon 
an  unsettled  partnership  account  between  the  parties,  the  firm 
having  been  dissolved  prior  to  the  commencement  of  the  ac- 
tion, is  a  proper  counter-claim.^  If  some  of  the  defendants  set 
up  that  the  contract  sued  upon  was  made  with  them  they  may 
plead  a  counter-claim  though  the  other  defendants  have  no  in- 
terest in  it.^  Where  the  plaintiff's  conduct  indicates  that  he 
considered  the  defendants  as  the  parties  with  whom  he  was 
dealing  and  he  has  sued  them  both  he  cannot  controvert  their 
right  to  establish  a  counter-claim.''  In  an  action  brought  by  an 
executor  or  administrator  upon  a  contract  made  by  him  after 
the  death  of  his  testator  or  intestate  or  to  recover  assets  be- 
longing to  the  estate  in  the  hands  of  a  third  person  a  claim 
due  from  the  deceased  to  the  defendant  cannot  be  counter- 
claimed.  "The  reason  of  the  rule  is  that  in  all  such  cases 
the  allowance  of  such  set-off  or  counter-claim  would  neces- 
sarily destroy  the  equal  and  just  distribution  of  the  assets  be- 

1  Reeves  v.  Chambers,  67  Iowa,  81,  Crow,  13  Colo.  397,  22  Pac.  Rep.  779; 
24  N.  W.  Rep.  602;  McHardy  v.  Roberts  v.  Donovan,  70  CaL  108,  9 
Wadsworth,  8  Mich.  349;  Waterman  Pac.  Rep.  180, 11  id.  599;  City  Coun- 
V.  Clark,  76  111.  428.  See  Hobbs  v.  oil  of  Montgomery  v.  Montgomery 
Duff,  23  Cal.  596.  Water-works,  79  Ala.  233;  Copeland 

2  Lasher  v.  Williamson,  55  N.  Y.  v.  Young,  21  S.  C.  275;  Casey  v.  Han - 
619;  Gillespie  v.  Torrance,  25  id.  306.  rick,  69  Tex.  44,  6  S.  W.  Rep.  405; 

3  Phoenix  Iron  Works  Co.  v.  Rhea,  King  v.  Wise,  43  Cal.  628. 

98  Tenn.  461,  40  S.  W.  Rep.  482.  An  individual  demand  cannot  be 

*  Brown  v.  Morris.  83  N.  C.  221;  used  as  a  counter-claim  to  a  joint  in- 

Sloteman  v.  Thomas  &  W.  Manuf.  debtedness  unless  the  insolvency  of 

Co.,  69  Wis.  499,  34  N.  W.  Rep.  225;  the  plaintiff  is  shown.     Collier  v.  Er 

Chase  v.  Evoy,  58  Cal.  348;  Jenkins  win,  3  Mont.  142;  Kemp  v.  McCor 

V.  Barrows,  73  Iowa,  438,  35  N.  W.  mick.  1  id.  420. 

Rep.  510;  Hopkins  v.  Lane,  81  N.  Y.  5  Waddell  v.  Darling.  51  N.  Y.  327 

501;  McCulloch  V.  Vibbard,  51  Hun,  See  Pen dergast  v.  Greenfield,  40  Hu a 

227,  4  N.  Y.  Supp.  202;  Tomlinson  v.  494. 

Nelson,  49  Wis.  679,  6   N.   W.   Rep.  «  Clegg  v.  Cramer.  32  Hun,  162. 

366;  Kirby  V.  Spiller,  83  Ala- 481,  3  So.  'Drew  v.  Edmunds,  60  Vt.  401,  6 

Rep.  700:    Wood   v.    Brush,   72  Cal.  Am.  St,  122,  15  AtL  Rep.  100. 
224,  13  Pac.  Rep.  627;  Thalheimer  v. 


§  170.]  EECOUPMENT    AND    COUNTEK-OLAIM.  439 

longing  to  the  estate  among  the  creditors  in  every  case  where 
the  assets  were  insufficient  to  pay  all  the  debts  of  the  de- 
ceased." ^  x\n  administrator  who  is  sued  upon  a  personal  claim 
cannot  counter-claim  a  debt  which  is  due  from  the  plaintiff  to 
him  in  his  representative  capacity.-  Under  a  statute  which 
provides  that  in  an  action  brought  by  an  executor  or  adminis- 
trator in  his  representative  capacity  a  demand  against  the  de- 
cedent belonging  at  the  time  of  his  death  to  the  defendant  may 
be  set  up  as  a  counter-claim,  the  wrongful  acts  of  an  executor 
cannot  give  the  defendant  a  right  to  counter-claim  against  a 
demand  owing  to  the  testator  in  his  life-time.' 

§  176.  Same  subject.  The  question  arose  in  Newfoundland 
V.  Newfoundland  R.  Co.*  whether  a  rio-ht  of  set-off  existing: 
in  favor  of  the  government  was  available  against  such  of  the 
plaintiffs  as  were  assignees  of  the  original  corporation.  The 
facts  were  that  the  plaintiff  was  incorporated  for  the  pur- 
pose of  constructing  and  working  a  railway  in  pursuance  of  a 
contract  with  the  government,  for  which  the  latter  was  to 
pay  a  subsidy  and  grant  lands.  The  assignees  took  what- 
ever right  the  company  had  to  the  subsidy  and  the  grants  of 
land  in  respect  to  a  particular  portion  of  the  road.  The  con- 
tention of  the  plaintiff  was  that  the  government  was  bound 
to  pay  a  certain  amount  of  subsidy  and  to  make  grants  of 
land  for  a  completed  portion  of  the  road,  though  it  was  not 
finished  as  a  whole.  This  was  disputed,  but  if  such  liability 
existed  it  was  asserted  that  the  government  could  set  up 
counter-claims  against  the  company  for  its  breach  of  contract 
in  not  completing  the  road.  It  was  held  by  the  privy  council 
that  the  counter-claim  was  good  as  against  the  assignees  of 
the  company,  it  and  the  claim  having  their  origin  in  the  same 

1  Per  Taylor,  J.,  in  McLaughlin  v.  543:    Wrout  v.    Dawes,   25  id.    369; 

Winner.  03  Wis.  120,  124,  53  Am.  Rep.  Root  v.  Taylor.  20  Johns.  137;  Steel 

273,  23  N.  W.   Rep.    402,   citing  Al-  v.    Steel,    12    Pa.    64;     Shipman   v. 

drich  V.  Campbell,  4  Gray,  284;  Smith  Thompson,  Willes,  103.    Thompson  v. 

V.  Boyer,   2  Watts,   173;    Aiken   v.  Whitmarsh,  100  N.  Y.  36,  2N.  E.  Rep. 

Bridgman,  37  Vt.  249;  Woodward  v.  173,  is  to  the  same  effect. 

McGaugh,  8Mo.  161;  Newhall  v.  Tur-  ^  Qouriey  v.  Walker,  69  Iowa,  80, 

ney.  14  111.  338;  Patterson  v.  Patter-  28  N.  W.  Rep.  444. 

son,  59  N.  Y.  574,  17  Am.  Rep.  384;  sWakeman  v.   Everett,   41    Hun, 

Lawrence  v.  Vilas,  20  Wis.  381,  389-  278. 

391;   Lombarde  v.   Older,   17  Beav.  <  12  App.  Cas.  199. 


440  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  177. 

portion  of  the  contract  and  the  obligations  which  gave  rise  to 
them  being  closely  intertwined.  "The  claim  of  the  govern- 
ment does  not  arise  from  any  fresh  transaction  freely  entered 
into  by  it  after  notice  of  assignment  by  the  company.  It  was 
utterl}''  powerless  to  prevent  the  company  from  inflicting  in- 
jury on  it  by  breaking  the  contract.  It  would  be  a  lamentable 
thing  if  it  were  found  to  be  the  law  that  a  party  to  a  contract 
may  assign  a  portion  of  it,  perhaps  a  beneficial  portion,  so  that 
the  assignee  shall  take  the  benefit,  wholly  discharged  of  an}'' 
counter-claim  by  the  other  party  in  respect  of  the  rest  of  the 
contract,  which  may  be  burdensome.  There  is  no  universal 
rule  that  claims  arising  out  of  the  same  contract  may  be  set 
against  one  another  in  all  circumstances.  But  their  lordships 
have  no  hesitation  in  saying  that  in  this  contract  the  claims  for 
subsidy  and  for  non-construction  ought  to  be  set  against  one 
another."  ^  "Where  the  plaintiff  sues  an  assignee  and  is  not 
entitled  to  protection  as  a  hona  fide  holder  of  negotiable  paper, 
his  action  is  subject  to  any  defense  by  way  of  recoupment 
which  would  be  good  against  the  party  to  whom  the  plaintiff's 
demand  accrued.^  AVhere  a  note  for  the  price  of  property  sold 
was  made  payable  to  the  vendor's  wife,  and  no  portion  of  the 
consideration  moved  from  her,  the  note  was  subject  to  the 
same  defense  by  way  of  recoupment  for  the  vendor's  fraud  in 
the  sale  as  if  it  had  been  made  payable  to  himself.^ 

§  177.  Maturity  of  claim  or  demaiid  ;  statute  of  limita- 
tions. Must  the  matter  of  recoupment  be  a  mature  cause  of 
action  at  the  time  of  the  commencement  of  the  plaintiff's 
action,  or  Avill  it  be  sufficient  that  it  is  such  at  the  time  of 
pleading?  Campbell,  J.,'' said :  "The  purpose  of  recoupment 
[276]  would  be  defeated  if  the  party  cannot  be  allowed  to 
plead  what  he  might,  at  the  time  of  pleading,  have  declared 
upon.  The  object  of  this  practice  is  to  diminish  litigation  by 
consolidating  controversies  into  one  action.   The  whole  doctrine 

ilf  the  party  who  agrees  to  per-  2  Wood  v.   Brush,  72  Cal.    224,    13 

form  makes  an   assignment  of  tlie  Pac.  Rep.  627;  McKnightv.  Devlin, 

entire  contract  before  anj'  money  is  52  N.  Y.  399,  11  Am.  Rep.  715;  Hins- 

due  under  it  the  other  party  may  re-  dell  v.  Weed,  5  Denio,  172;  Rockwell 

coup  his  damages  for  a  breach  there-  v.  Daniels,  4  Wis.  432. 

of  by  the  assignors.     Smith  v.  Wall,  ^  Kelly  v.  Pember,  35  Vt.  183. 

12  Colo.  363,  21  Pac.  Rep.  42.  *  In  Piatt  v.  Brand,  26  Mich.  lib. 


^  177.]  EECOUPMENT   AND    COUNTER-CLAIM:.  44:1 

is  one  of  the  equitable  outgrowths  of  the  improvement  of  legal 
practice,  and  no  obstacle  should  be  thrown  in  the  wa}--  of  its 
encouragement.  Our  legislation  has  indicated  this  design  by 
enlarging  the  defense  and  permitting  defendants  to  recover 
damages  be^^ond  the  plaintiff's  claim.  We  do  not  feel  disposed 
to  accept  any  technical  doctrines  which  would  prevent  its  full 
efficacy  unless  compelled  by  a  weight  of  authority  which  we 
do  not  find  here."  But  it  was  said  by  Jarvis,  C.  J.,*  "It  seems 
to  me  we  should  carry  the  doctrine  respecting  the  avoidino-  of 
circuity  of  action  very  much  further  than  any  case  has  yet 
carried  it  if  we  were  to  hold  that  the  damages  may  be  reduced 
by  showing  a  breach  of  the  contract  on  the  plaintiff's  part 
subsequently  to  the  commencement  of  the  plaintiff's  action. 
There  are  many  cases  where  circumstances  existing  before 
action  brought  have  been  allowed  to  be  given  in  evidence  to 
mitigate  or  reduce  the  damages;  but  none  that  I  am  aware  of 
where  matters  arising  after  action  brought  have  been  so  re- 
ceived." Under  the  English  judicature  act  of  1873  ^  relief 
can  be  given  on  a  counter-claim  in  respect  of  a  cause  of  action 
accrued  to  the  defendant  subsequently  to  the  issue  of  the  writ 
in  the  original  suit.^  It  had  previously  been  ruled  otherwise.* 
The  later  case  is  rested  on  the  generality  of  the  language  of 
the  statute,  the  orders  made  pursuant  thereto  and  the  nature 
of  a  counter-claim  which  had  been  before  spoken  of  as  being 
an  wholly  independent  suit  from  the  claim.^  It  is  now  settled 
in  England  that  a  counter-claim  must  be  treated  as  if  it  were 
a  proceeding  in  an  action,  though  it  is  not  the  latter  because  it 
is  not  commenced  by  a  writ  or  summons,  and  that  the  plaintiff 
cannot  after  a  counter-claim  has  been  delivered  discontinue  his 

1  In  Bartlett  v.  Holmes,  13  C.  B.  ing,  and  as  the  said  courts  I'espect- 
G30.  ively,  or  any  judge  thereof,  might 

2  Sec.  24,  subsec.  3:  "The  said  have  granted  in  any  suit  instituted 
courts  respectively,  and  every  judge  for  that  purpose  by  the  same  de- 
thereof,  shall  also  have  the  power  to  fendant  against  the  same  plaintiff  or 
grant  to  anj'  defendant  in  respect  of  petitioner." 

any    equitable    estate    or  right,   or  *  Beddall  v.  Maitland,  17  Ch.  Div. 

otiier  matter  of  equity,  and  also  in  174. 

respect  of  any  legal  estate,  right  or  *  Original  Hartlepool  Collieries  Co. 

title  claimed  or  asserted  by  him,  all  v.  Gibb,  5  Ch.  Div.  713. 

such  relief  against  any  plaintiff  or  ■''  Winterfield  v.  Bradnum,  3  Q.  B. 

petitioner  as  such   defendant  shall  Div.  324;  Stooke  v.  Taylor,  5  id.  j09. 

■have  properly  claimed  by  his  plead- 


442  LEGAL   LIQUIDATIONS    AND    REDUCTIONS.  [§  177- 

action  so  as  to  prevent  the  defendant  from  enforcing  his  cause 
of  action.^  The  weight  of  authority  in  America  is  that  a  de- 
mand which  is  not  due  at  the  time  the  action  was  brought 
cannot  be  counter-claimed  or  set  off.-  The  codes  of  some  states 
express  that  the  right  to  counter-claim  must  exist  at  the  com- 
mencement of  the  action.'  This  means  that  it  must  then  exist 
in  the  hands  of  those  who  plead  it.^  In  New  York  in  an  action 
for  rent  the  tenant  cannot  recoup  his  damages  for  a  breach  of 
covenant  on  the  part  of  the  plaintiff  after  the  commencement 
of  the  suit.*  But  in  a  later  case  the  court  of  appeals  affirmed 
a  judgment  on  a  counter-claim  for  conversion  of  property  after 
the  commencement  of  the  action."  The  court  say:  "Strictly 
speaking,  the  act  of  the  plaintiff  in  procuring  and  serving  the 
injunction  would,  ordinarily,  be  an  act  at  or  after  the  com- 
mencement of  the  action,  and  therefore  one  the  damages  for 
which  could  not  be  set  up  as  a  counter-claim  in  a  pleading 
which  is  presumed  to  state  the  claims  of  the  parties  as  existing 
at  the  time  of  bringing  the  suit;  but  as  the  act  of  the  plaintiff' 
related  to  the  very  property  which  was  the  subject  of  the 
action  and  materially  affected  the  defendant's  rights  and  de- 
fense therein,  I  do  not  see  why  it  could  not  have  been  set  up  in 
a  subsequent  or  supplemental  answer  and  have  thus  been  ren- 
dered effectual  to  the  defendant." 

The  connection  betw^een  a  plaintiff's  cause  of  action  and  a 
defendant's  cross-claim  is  so  close  that  until  the  former  is 
barred  by  the  statute  of  limitations  the  latter  is  available.^ 
"  Not  only  does  the  bringing  of  an  action  stop  the  operation 
of  the  statute  as  to  a  proper  matter  of  set-off,  but  it  also  seems 
that  it  revives  a  claim  which  is  actually  barred  out,  which  is 
the  proper  subject  of  recoupment  in  the  action,  as  damage 

1  McGowan  v.  Middleton,  11  Q.  B.  s  Davis  v.  Frederick,  6  Mont.  300, 
Div.   464.    overruling    Vavasseur  v.     12  Pac.  Rep.  664 

Krupp,  15  Ch.  Div.  474.  *  Mayo  v.  Davidge,  44  Hun,  342. 

2  Ellis  V.  Cothran,  117  III  458,  3  N.  5  Harger  v.  Edmonds,  4  Barb.  256. 
E,  Rep,  411;  Orton  v.  Noonan,  29  ^  Ashley  v.  Marshall,  29  N.  Y.  494. 
Wis.  541;  Simpson  v,  Jennings,  15  ^  Beecher  v.  Baldwin,  55  Conn^ 
Neb.  671,  19  N.  W.  Rep.  473;  Tessier  419,  12  Atl.  Rep.  401,  3  Am.  St.  57; 
V.  Bnglehart,  18  Neb.  167,  24  N.  W.  Brumble  v.  Brown,  71  N.  C.  513; 
Rep.  734;  Hogan  v.  Kirkland,  64  N.  Stillwell  v.  Bertrand,  22  Ark.  375;. 
C.  250;  Lee  v.  Eure,  93  id.  5,  9.  Eve  v.  Louis,  91  Ind.  457;  Walker  v.. 

Clements,  15  Q.  B.  1046. 


§   178.]  RECOUPMENT    AND    COUNTEE-CLAIII,  443. 

growing  out  of  the  same  transaction.  Thus,  in  an  action  to 
recover  the  price  of  goods  sold,  unsoundness  may  be  set  up  b}' 
way  of  defense  although  an  action  to  recover  damages  is 
barred."'  In  an  action  on  a  note  a  total  failure  of  consider- 
ation and  a  parol  warranty  of  the  property  for  which  the  ob- 
ligation was  given  were  pleaded  in  defense,  and  the  latter  was 
sustained,  although  the  period  for  bringing  an  action  upon  the 
parol  agreement  had  passed.-  If  a  contract  is  not  satisfacto- 
rily performed,  the  right  to  recover  under  it  is  qualified.  To 
the  extent  that  the  contractee  has  been  injured  by  the  method 
of  the  contractor's  performance  or  by  his  neglect  to  perform 
he  may  defeat  the  latters  demand.  If  the  statute  of  limita" 
tions  does  not  bar  the  contractor  the  other  part}''  may  plead  a 
counter-claim.  The  statute  is  tolled  by  the  coraraenceraent  of 
an  action,  and  though  the  counter-claim  is  not  pleaded  until 
more  than  the  statutory  period  fixed  for  bringing  an  action 
on  the  contract  has  gone  by,  it  is  in  time  if  it  is  pleaded  within 
the  period  fixed  for  answering  the  complaint.^  In  Pennsylva- 
nia the  running  of  the  statute  is  not  stopped  until  the  defend- 
ant pleads  his  set-olf  or  gives  the  plaintiff  notice  of  it.* 

§  178.  Cross-claim  must  rest  on  contract  or  subject-mat- 
ter of  action.  It  must  arise  from  the  same  subject-  [-77] 
matter,  or  spring  out  of  the  same  contract  or  transaction  on 
which  the  plaintiff  relies  to  maintain  his  action.'*  The  same 
thing  is  substantially  necessary  to  constitute  one  branch  of 
the  counter-claim  of  the  modern  codes  in  which  it  is  required 
that  it  arise  out  of  the  same  transaction  set  forth  in  the  com- 
plaint as  the  foundation  of  the  plaintiff's  claim  or  be  con- 
nected with  the  subject  of  the  action.'' 

1  Wood's    Lim.,    §   282;   Riddle  v.  73  Me.  214;  Washington  v.  Timber- 

Kreimbricht,  12  La.   Ann.  297;  La-  lake,  74  Ala.  259;  Keegan  v.  Kinnare, 

strapes  v.  Rocquet,  23  id.  68.  123  111.  280,  14  N.  E.  Rep.  14;  Forrest 

morrow  V.  Hanson,  9  Ga.  398,  54  v.  Johnson,  100  Mich.  321,  58  N.  W. 

Am.  Dec.  34G.  Rep.  1005. 

3  Herbert   v.   Dey,  15  Abb.   N.  C.        ^Xenia    Branch    Bank  v.   Lee,   7 

(N.  Y.)  172.  Abb.  Pr.  372;   Epperly  v.  Bailey,  3 

*  Gilmore  v.  Reed,  76  Pa.  462.  Ind.    72;  Slayback  v.  Jones,  9  Ind. 

s Sawyer  v.  Wiswell,  9  Allen,  39;  472;   Barhyte  v.  Hughes,   33   Barb. 

Logie  V.  Black,  24  W.  Va.  1,  20;  Bo-  320;  Bazemore  v.  Bridgers,  105  N.  C. 

zartb  V.  Dudley,  44  N.  J.  L.  304,  43  191,  10  S.  E.  Rep.  888;  Demartin  v. 

Am.  Rep.  373;  Gilchrist  v.  Partridge,  Albert.  68  Cal.  277,  9  Pac.  Rep.  157; 


444: 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


[§  no. 


§  179.  Recoupment  for  fraud,  breach  of  warranty,  neg- 
ligence, etc.  If  a  party  in  negotiating  a  contract  commits  an 
actionable  fraud  upon  the  other  contracting  party  touching 
the  subject  of  their  negotiation  the  latter,  though  he  has  not 
exercised  his  privilege  to  repudiate  the  contract  on  the  dis- 
covery of  the  fraud,  may  recoup  his  damages  therefor  in  any 
action  brought  by  the  guilty  part}--  upon  the  contract.  Such 
a  cross-claim  docs  not  grow  out  of  the  contract,  but  it  is  part 
of  the  same  transaction  and  is  connected  vrith  the  subject  of 
the  action.^     A.  executed  in  February  a  memorandum  under 


Allen  V.  Coates,  29  Minn.  46.  11  N. 
W.  Rep.  132;  Schmidt  v.  Bickeubacli, 

29  Mian.  122,  12  N.  W.  Rep.  349; 
Standley  v.  Northwestern  Mut.  L. 
Ins.  Co.,  95  Ind.  254;  Lee  v.  Eure, 
93  N.  C.  5;  Wilkerson  v.  Farnham, 
82  Mo.  673;  Clark's  Cove  Guano  Co. 
V.  Appling,  33  W.  Va.  470,  10  S.  K 
Rep.  809;  Logie  v.  Black,  24  W.  Va. 
1;  Wigmore  v.  Buell,  116  Cal.  24,  47 
Pac.  Rep.  927. 

If  the  plaintiff  fails  to  prove  the 
contract  upon  which  he  sues  the 
defendant  cannot  prove  another  and 
different  contract  and  recoup  dam- 
ages for  the  breach  thereof.  Hal  de- 
man  V.  Berry,  74  Mich.  424,  42  N.  W. 
Rep.  57;  Morehouse  v.  Baker,  48 
Mich.  335, 12  N.  W.  Rep.  170;  Holland 
V.  Rea,  48  Mich.  218,  12  N.  W.  Rep. 
1(57;  Brighton  Bank  v.  Sawyer,  132 
Mass.  185;  Bozarth  v.  Dudley,  44  N. 
J.  L.  304.  43  Am.  Rep.  373;  The  Zou- 
ave. 29  Fed.  Rep.  296;  Tlie  C.  B.  San- 
ford,  22  id.  863. 

1  Barbour  v.  Flick,  126  Cal.  628,  59 
Pac.  Rep.  122;  Bell  v.  Sheridan,  21 
D.  C.  370;  Johnson  v.  St.  Louis 
Butchers'  Supply  Co.,  60  Ark.  387, 

30  S.  W.  Rep.  429;  Walker  v.  France, 
112  Pa.  203,  5  Atl.  Rep.  208;  Dow- 
agiac  Manuf.  Co.  v.  Gibson,  73  Iowa, 
525,  6  Am.  St.  697,35  N.  W.  Rep.  603; 
Birdsey  v.  Butterfield,  34  Wis.  52; 
Van  Epps  v.  Harrison,  5  Hill,  63; 
Myers  v.  Estell,  47  IMiss.  4,  17,  21; 
Estell  V.  Myers,  54  id.  174,  56  id.  800; 


Kelly  V.  Pember,  35  Vt.  183;  Ken- 
nedy V.  Crandall,  3  Lans.  1;  Rotan 
V.  Nichols,  22  Ark.  244;  Perley  v. 
Balch,  23  Pick.  283,  34  Am.  Dec.  56; 
Timmons  v.  Dunn,  4  Ohio  St.  680; 
Avery  v.  Brown,  31  Conn.  398;  Cald- 
well V.  Sawyer,  30  Ala.  283;  Cage  v. 
Phelps,  38  Ala.  383;  Moberly  v.  Alex- 
ander, 19  Iowa,  162;  Johnson  v. 
Miln,  14  Wend.  195;  President,  etc. 
V.  Wadleigh,  7  Blackf.  102,  41  Am. 
Dec.  214;  Light  v.  Stoever,  12  S.  &  R 
431;  Haynes  v.  Harper,  25  Ark.  541; 
Warden  v.  Fosdick,  13  Johns.  325.  78 
Am.  Dec.  383;  Brown  v.  Tuttle,  66 
Barb.  169;  Hogg  v.  Card  well,  4 
Sneed,  151;  Nelson  v.  Johnson,  25 
Mo.  430;  Withers  v.  Greene,  9  How. 
213;  Estep  v.  Fenton,  66  111.  467; 
Saw3'er  v.  Wiswell,  9  Allen,  39; 
Bradley  v.  Rea,  14  id.  20;  Mixer  v. 
Coburn,  11  Met.  561,  45  Am.  Dec. 
230;  Westcott  v.  Nims,  4  Cush.  215; 
Cook  V.  Castner,  9  Cush.  266;  Har- 
rington v.  Stratton,  22  Pick.  510; 
Hall  V.  Clark,  21  Mo.  415;  Rawley  v. 
Woodruff,  2  Lans.  419;  More  v.  Rand, 
60  N.  Y.  208;  Price  v.  Lewis,  17  Pa. 
51,  55  Am.  Dec.  536;  Graham  v.  Wil- 
son, 6  Kan.  489;  Allen  v.  Shackelton, 
15  Ohio  St.  145;  Sumpter  v.  Welsh,  2 
Bay.  558:  Wheat  v.  Dotson.  12  Ark. 
699;  Tunno  v.  Fludd,  1  McCord,  121 
Abercrombie  v.  O wings,  2  Rich.  127 
Adams  v.  Wylie,  1  Nott  &  McC.  78 
McFarland  v.  Carver,  34  Mo.  195 
Christy  v.  Ogle,  33  III  295;  Reynolds 


§  179.]  KECOUPMENT    ANT)    COUNTER-CLAIM,  445 

seal  stating-  that  he  had  hired  of  W.  a  certain  lot  for  one  [278] 
year  from  the  1st  of  May  following,  at  a  rent  of  $1,000.  He 
was  induced  to  make  the  contract  by  the  fraudulent  represen- 
tations of  W.  that  the  lot  embraced  a  certain  other  parcel  of 
land  which  belonged  to  the  corporation.  A.  discovered  the 
fraud  before  the  1st  of  May,  and  on  that  day,  having  obtained 
a  lease  of  the  parcel  owned  by  the  corporation,  took  posses- 
sion of  the  whole  and  occupied  it  during  the  year.  It  was 
held  in  an  action  by  "W.  for  the  rent  that  A.  was  entitled  to  a  de- 
duction by  reason  of  the  fraud  of  at  least  what  he  wasobli^-ed 
in  good  faith  to  pay  for  the  corporation  Icase.^  And  in  action 
for  fraudulent  representations  made  on  the  exchange  of  prop- 
erty the  defendant  was  allowed  to  recoup  his  damages  result- 
ing therefrom.^  Where  an  action  was  brought  to  recover  a 
balance  due  on  a  contract  of  sale  of  two  separate  patented 
processes,  described  and  contracted  for  in  a  single  written 
agreement  for  an  entire  sum  payable  in  instalments,  tlie  ven- 
dee was  entitled  to  set  off  damages  arising  out  of  the  vendor's 
fraudulent  representations  as  to  one  of  the  processes,  althouo-h 
the  other  proved  to  be  more  valuable  than  the  amount  paid 
for  both.''  If  several  distinct  purchases  are  made  at  the  same 
time,  though  by  different  instruments,  they  will  be  regarded 
for  the  purposes  of  recoupment  as  being  connected.*  So,  in 
actions  for  the  price  of  property  sold,  damages  for  breach  of 
any  warranty  made  b}^  the  vendor  of  the  property,  whether 
it  be  express  or  implied,  may  be  recouped,^  so  far  as  he  is  not 

V.  Cox,  11  Ind.  262;  Cox  v.  Reynolds,  Holton  v.  Noble,  83  Cal.  7,  23  Pac, 

7  id.  257;  House  v.  Marshall,  18  Mo.  Rep.  58. 

369;    Shute    v.   Taylor,   5    Met    61;  2  Carey  v.  Guillow,  105  Mass.  18,  7 

Owens  V.  Rector,  44  Mo.  389;  James  Am.  Rep.  494;  Chandler  v.  Childs,  42 

V.  Lawrenceburgh  Ins.  Co.,  6  Blackf.  Mich.  128,  3  N.  W.  Rep.  297. 

525;  Burton  v.  Stewart,  3  Wend.  236;  3  Rawley  v.  Woodruff,  2  Lans.  419. 

20  Am.  Dec.  692;  Hammatt  v.  Emer-  *  Benjamin  v.  Richards,  51  Mich. 


son,  27  Me.  308,   46   Am.  Dec.  598 

White    V.    Sutherland.  64    111.  181 

Gibson    v.    Marquis,    29    Ala.  668 

Isham    V.    Davidson,  52   N.   Y.  237 


110,  16  N.  W.  Rep.  255. 

5  Wilson  V.  Hughes,  94  N.  C.  182; 
Bitting  V.  Thaxton,  72  id.  541;  Walsh 
V.  Hall,  66  id.  233:  Hurst  v.  Everett, 


Simmons  v.   Cutreer,   12  Sm.  &  M.  91  id.  399;  Dushane  v.  Benedict.  120 

584;  Holton  v.  Noble,  83  Cal.  7,  23  U.  S.  630.  7  Sup.  Ct.  Rep.  690;  Si)ald- 

Pac.  Rep.  58.  ing    v.   Vandercook.   2   Wend.   431; 

'Allaire  v.  Whitney,  1  Hill,  484;  Hoover  v.  Peters,  18  Mich.  51;  Mc- 

Whitney    v.    Allaire,   1   N.   Y.   305;  AUister  v,  Reab,  4  Wend.  483;  Reab 


446 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


[§  1T9. 


otherwise  reimbursed  for  bis  loss,  as  by  insurance  paid  in  con- 
sequence of  the  destruction  of  the  property.^ 

If  there  is  a  sale  and  delivery  of  property  in  presenti  which 
is  expressly  warranted  and  the  warranty  is  not  true,  the  ven- 
dee does  not  lose  his  right  to  recoup  the  damages  by  receiving 
and  using  the  property."     In  JSTew  York,  where  the  contract 


V.  McAlister,  8  Wend.  109;  Herbert 
V,  Ford,  29  Me.  546;  Kellof?g  v.  Dens- 
low,  14  Conn.  411;  Hitchcock  v. 
Hunt,  28  Conn.  343;  Mercer  v.  Hall, 
2  Tex.  284:  Hears  v.  Nichols,  41  111. 
207,  89  Am.  Dec.  381;  Miller  v.  Smith, 
1  Mason,  437;  Love  v.  Oldham,  22 
Ind.  51;  Getty  v.  Rountree,  2  Pin. 
379;  McAlpin  v.  Lee,  12  Conn.  129, 
30  Am.  Dec.  609;  Withers  v.  Greene, 
9  How.  214;  Van  Buren  v.  Digges,  11 
id.  461;  Fisk  v.  Tank,  12  Wis.  276,  78 
Am.  Dec.  737;  Deen  v.  Herrold.  37 
Pa.  150;  Ketchum  v.  Wells,  19  Wis. 
25;  Steigleman  v.  Jeffries,  1  S.  &  R. 
477,  7  Am.  Dec.  626;  Murphy  v.  Gay, 
37  Mo.  535;  Barth  v.  Burt,  43  Barb. 
628;  Brown  v.  Tuttle.  66  Barb.  169; 
Westcott  V.  Nims,  4  Cush.  215;  Miller 
V.  Gaither,  3  Bush,  152;  Culver  v. 
Blake,  6  B.  Mon.  528;  McMillion  v. 
Pigg,  3  Stew,  165;  Lemon  v.  Trull, 
13  How.  Pr.  248;  Plant  v.  Condit,  22 
Ark.  454:  Jemison  v.  Woodruff,  34 
Ala.  143;  Hoe  v.  Sanborn,  3  Abb.  Pr. 
(N.  S.)  189;  Harman  v.  Sanderson,  6 
Sm.  &  M.  41,  45  Am.  Dec.  272;  Rum- 
sey  v.  Sargent,  21  N.  H.  .397;  Will- 
iams T.  Miller,  21  Ark.  469;  Goodwin 
V.  Morse,  9  Met.  278;  Harrington  v. 
Stratton,  22  Pick.  510:  Flint  v,  Lyon, 
4  Cal.  17;  Dennis  v.  Belt,  30  Cal.  247; 
Hodgkins  v.  Moulton,  100  Mass.  309; 
Burnett  v.  Smith,  4  Gray,  50;  Allen 
V.  Furbish,  id.  504.  64  Am.  Dec.  87; 
Stacy  V.  Kemp,  97  Mas-s.  166;  Darnell 
V.  Williams,  2  Stark.  166;  Parish  v. 
Stone,  14  Pick.  198;  Judd  v.  Denni- 
son,  10  Wend.  513;  Murray  v.  Carlin, 
07  111.  286:  Owens  v.  Sturge.s,  id.  366; 
Nixon  V.  Carson,  38 Iowa,  338:  Walker 
V.  Hoisington,  43  Vt.  608;  Parker  v. 


Pringle,  2  Strobli,  242;  Babcock  v. 
Trice,  18  III.  420. 

If  several  suits  are  brought  in  an 
inferior  court  on  notes  given  for 
property  which  is  not  of  the  quality 
bargained  for,  the  defendant  may  set 
up  the  breach  of  warranty  in  each 
suit  until  the  damages  are  neutral- 
ized, and  on  appeal  and  consoli- 
dation of  the  actions  the  whole  dam- 
age suffered  may  bei'ecouped.  Hurst 
V.  Everett,  91  N.  C.  399. 

1  Eureka  Fertilizer  Co.  v.  Balti- 
more Copper  Smelting  &  Rolling  Co., 
78  Md.  179,  27  Atl.  Rep.  1035. 
2  Getty  v.  Rountree,  2  Pin.  379;  Fisk 
V.  Tank,  12  Wis.  276,  78  Am.  Dec. 
737:  Dailey  v.  Green,  10  Pa.  118;  Pol- 
hemus  v.  Heiman,  45  Cal.  573;  War- 
der v.  Fisher,  48  Wis.  334,  4  N.  W. 
Rep.  470;  Vincent  v.  Lelaud,  100 
Mass.  432;  Lewis  v.  Rountree,  78  N. 
C.  323;  Gurney  v.  Atlantic,  etc.  R. 
Co.,  58  N.  y.  358:  Day  v.  Pool,  52  id. 
416,  11  Am.  Rep.  719. 

In  Locke  v.  Williamson,  40  Wis. 
377,  the  property  was  accepted  with 
knowledge  that  it  was  not  such  as 
the  contract  called  for.  The  buyer 
set  up  the  defect  in  the  quality  and 
the  court  said:  "We  have  concluded 
to  hold  this  rule  in  respect  to  an  ex- 
ecutory contract,  that  when  the  de- 
fects in  the  goods  are  patent  and 
obvious  to  the  senses,  when  the  pur- 
chaser has  a  full  opportunity  for 
examination  and  knows  of  such  de- 
fects, he  must,  either  when  he  re- 
ceives the  goods  or  within  a  reason- 
able time  thereafter,  notify  the  seller 
that  the  goods  are  not  accepted  as 
fulfilling    the    warrantv,   otherwise 


§  180.]  KEOOUPMENT   AND    COUNTER-CLAni.  4-i7 

of  sale  is  oxecutoiy  and  a  time  is  agreed  upon  for  making  a 
test  of  the  property  which  is  the  subject  of  the  contract,  the 
acceptance  and  use  of  it  after  the  test  has  been  made  waives 
the  right  to  claim  a  breach  of  the  warranty.'  This  is  not  the 
rule  in  Illinois.'^  If  goods  are  warranted  the  purchaser  may, 
after  he  has  admitted  that  they  correspond  with  the  contract 
and  promised  to  pay  the  purchase  price,  recoup  any  damages 
resulting  from  a  breach  of  the  warranty,  or  he  may,  after 
paying  the  price,  recover  such  damages  in  a  separate  suit.' 
Giving  a  renewal  note  after  knowledge  of  the  breach  of  a  war- 
ranty is  presumptive,  but  not  conclusive,  evidence  of  a  waiver 
of  the  claim  for  damages.*  In  suits  for  labor  or  goods  the 
warranty  of  either  is  not  a  matter  altogether  collateral;  [279] 
it  forms  an  essential  portion  of  the  consideration  for  the  de- 
fendant's undertaking,  and  therefore  the  breach  of  it  is  proper 
to  be  shown  in  reduction  of  the  stipulated  price.*  When  dam- 
ages for  the  breach  of  a  warranty  as  to  the  quality  of  a  chat- 
tel are  established  they  are  to  be  applied  in  reduction  of 
plaintiff's  recovery  as  of  the  date  of  the  contract.^ 

§180.  Same  subject.  Whatever  the  nature  of  the  contract, 
however  numerous  or  varied  its  stipulations,  and  whether  they 
are  all  written  and  embodied  in  one  or  several  instruments,  or 
only  partly  written  or  partly  implied,  if  they  are  connected,  so 
that  what  is  undertaken  to  be  done  on  one  side  altogether  is 
the  consideration,  or  part  of  the  consideration,  either  in  prora- 

tlie  defects  will  be  deemed  waived."  Ruff  v.  Jarrett,  94  111.  474;  Shackel- 

See  Nye  v.  Iowa  City  Alcohol  Works,  ton  v.  Lawrence,  65  id.  175;  Reed  v. 

51  Iowa,  129.  3;J  Am.  Rep.  121,  50  N.  Hastings,  61  id.  266. 

W.  Rep.  988;  Reed  V.  Randall,  29  N.        *  Aultman   v.   Wheeler,  49    Iowa, 

Y.  358;  McCormick  v.  Sarson.  45  id.  647;  Can  trait  v.  Fawcett,  2  111.  App. 

256;  Gaylord  Manuf.  Co.  v.  Allen,  53  571. 

id.  515.     Compare  these  New  York        »  Allen  v.  Hooker,  25  Vt.  137;  Cole 

cases  with  the  two  cited  above.  v.   Colburn,   61  N.  H.  499;  Hoeruer 

iMcParlin  v.  Boynton,  8  Hun,  449;  v.  Giles,  53  111.  App.  540;  McCormick 

aflSrmed  by  a  majority  of  one  and  Harvesting  Machine   Co.  v.  Robin- 

without  opinion,  71  N.  Y.  604.  son,  60  111.  App.  253;  Zimmerman  v. 

-! Underwood  v.  Wolf,  131  III.  425,  Druecker,  15  Ind.  App.  512,  44  N.  E. 

19  Am.  St.  40,  23  N.  E.  Rep.  598,  cit-  Rep.  557;  National  Oak  Leather  Co. 

ing  and  discussing   previous  decis-  v.   Armour-Cudahy  Packing  Co.,  99 

ions  m  that  state.  Ky.  667,  37  S.  W.  Rep.  81. 

3  Bretz  v.  Fawcett,  29  111.  App.  319;        «  Wilson  v.  Reedy,  33  Minn.  503,  24 

Harrington  v.  Stratton,  22  Pick.  510;  N.  W.  Rep.  191. 
Hodgkins  v.  Moultou,  100  Mass.  30'J; 


448 


LEGAL    LIQUIDATIONS    AND    KEDCCTIONS. 


[§  ISO, 


ise  or  performance,  for  what  is  engaged  to  be  done  on  the  other, 
the  range  of  the  right  of  recoupment  is  co-extensive  with  tho 
duties  and  obligations  of  the  parties,  respectively,  both  to  da 
and  to  forbear, —  as  well  those  imposed  at  first  by  the  language 
of  the  contract  as  those  which  subsequently  arise  out  of  it  in 
the  course  of  its  performance.^  It  extends  to  damages  result- 
[280]  ing  from  negligence  where  care,  activity  and  diligence 
are  required;^  where  damages  accrue  from  excess  of  action,  as 


1  Green  v.  Batson,  71  Wis.  54,  36  N. 
W.  Rep.  849;  Bross  v.  Cairo  &  V.  R. 
Co.,  9  111.  App.  363;  Wilson  v.  Greens- 
boro, 54  Vt.  533;  Babbitt  v.  Moore,  51 
N.  J.  L.  229,  17  Atl.  Rep.  99;  Deitz  v. 
Leete,  28  5Io.  App.  540;  Logie  v. 
Blaok.  24  W.  Va.  1,  19;  Brigham  v. 
Hawley,  17  111.  38;  Lee  v,  Clements, 
48  Ga.  128;  Satchwell  v.  Williams, 
40  Conn.  371;  Fowler  v.  Payne,  49 
Miss.  32;  Branch  v.  Wilson,  12  Fla, 
543;  Mell  v.  Moony,  30  Ga.  413; 
Rogers  v.  Humphrey,  39  Me.  382; 
Winder  v.  Caldwell,  14  How.  434; 
Cherry  v.  Sutton,  30  Ga,  875;  Bowker 
V.  Hoyt,  18  Pick.  555;  Fabbricotti  v. 
Launitz,  3  Sandf.  743;  Van  Buren  v. 
Digges,  11  How.  461;  Dennis  v.  Belt, 
30  Cal.  247;  Logan  v.  Tibbott,  4 
Greene,  389;  Heaston  v.  Colgrove,  3 
Ind.  265;  Keyesv.  Western  Vermont 
Slate  Co.  34  Vt.  81;  Wildey  v.  Frac- 
tional School  Dist.,  25  Mich.  419; 
Elliot  V.  Heath,  14  N.  H.  131;  Blood- 
good  v.  Ingoldsby,  1  Hilt.  388;  Walker 
V.  Millard,  29  N.  Y.  375;  Guthman  v. 
Castleberry,  49  Ga.  272;  Mack  v. 
Patchin,  42  N.  Y.  167,  1  Am.  Rep. 
506;  Eldred  v.  Leahy,  31  Wis.  546; 
Whitney  v.  Meyers.  1  Duer,  267; 
Peden  v.  Moore.  1  Stew,  &  Port.  71, 
21  Ard.  Dec.  649:  Wilder  v.  Boynton, 
63  Barb.  547;  Cook  v.  Soule,  56  N.  Y". 
420,  45  How.  Pr.  340;  Holzworth  v. 
Koch,  26  Ohio  St.  33;  Myers  v. 
Burns,  33  Barb.  401,  35  N.  Y.  269; 
Ives  V.  Van  Epps,  22  Wend.  155; 
Warfield  v.  Booth,  33  Md.  63;  Mayor 
V.  Mabie,  13  N.  Y.  151,  64  Am.  Deo. 


538;  Rogers  v.  Ostrom,  35  Barb.  523; 
Westlake  v.  De  Graw,  25  Wend.  669: 
Goodwin  v.  Morse,  9  Met.  278;  Sanger 
V.  Fincher,  27  111.  346:  Bee  Printing 
Co.  V.  Hichborn,  4  Allen,  63;  Turner 
V.  Gibbs,  50  Mo.  556;  Dermott  v. 
Jones,  2  Wall.  1;  Overton  v.  Phelan, 
•2  Head,  445;  Bloom  v.  Lehman,  27 
Ark.  489;  Berry  v.  Diamond,  19  Ark. 
262;  Desha's  Ex'r  v.  Robinson's 
Adm'r,  17  Ark.  228;  Springdale 
Ass'n  V.  Smith,  32  111.  252;  Porter  v. 
Woods,  3  Humph,  56,  39  Am.  Dec. 
153;  Crouch  v.  Miller.  5  Humph.  586: 
Fisk  V.  Tank,  12  Wis.  276,  78  Am. 
Dec.  737:  Luf burrow  v.  Henderson. 
30  Ga.  482;  Molby  v.  Johnson,  17 
Mich,  382;  Stow  v.  Yarwood.  14  111. 
424;  Stewart  v.  Bock,  3  Abb  Pr.  118; 
Hoopes  v.  Meyer,  1  Nev.  433;  Cald- 
well v.  Pennington,  3  Gratt.  91;  Bur- 
roughs V.  Clancey,  53  111.  30;  Lunn  v. 
Gage,  37  111.  19;  Evans  v.  Hughey, 
76  111.  115;  Hubbard  v.  Rogers,  64  III. 
434:  Eckles  v.  Carter.  26  Ala.  563; 
Ewart  V.  Kerr,  2  McMull.  141;  Moore 
v.  Carutiiers,  17  B.  Mon.  669;  Whit- 
beck  V.  Skinner,  7  Hill,  53;  Ciiatter- 
ton  V.  Fox,  5  Duer,  64;  Hill  v.  South- 
wick,  9  R.  L  299,  11  Am.  Rep.  250; 
Fitchburg,  etc.  R.  Co.  v.  Hanna,  6 
Gray.  539,  66  Am.  Dec.  427;  Allen  v. 
McKibbin,  5  Mich.  449;  Key  v.  Hen- 
son,  17  Ark.  254:  Hutt  v.  Bruckman, 
55  111.441;  McDowell  v.  Milroy,  69 
111.  498;  Latham  v.  Sumner,  89  111. 
233;  Cooke  v.  Preble,  80  111.  381; 
Bishop  v.  Price,  24  Wis.  4S0. 

2  Sinker  v.  Diggins,  76  Mich.  557, 


§  ISO.] 


KECOUrMENT    AND    COUNTER-CLAIM. 


449 


where  it  injuriously  transcends  the  limits  of  duty  or  authority ;  ^ 
from  ignorance,  where  knowledge  and  skill  are  due;  ^  and  hon- 
esty and  good  faith,  being  always  obligations  upon  contract- 
ing parties,  all  damages  which  result  from  any  covinous  prac- 
tice or  tort  within  the  scope  of  the  transaction  which  the 
plaintilFs  action  involves  may  be  the  subject  of  recoupment. 
Thus  money  paid  to  contractors  by  government  officers  with- 
out authority,  or  in  violation,  of  law  may  be  recovered  on  a 
counter-claim  in  a  suit  on  the  contract  under  which  such  pay- 
ment was  made.'  An  employer  may  recoup  against  a  serv- 
ant's wages  not  only  the  damages  arising  from  his  negligence 
and  want  of  skill  and  knowledge,  but  for  any  fraudulent  or 
tortious  waste,  conversion  or  destruction  of  property  intrusted 
to  him  or  placed  in  his  care  in  the  course  of  his  employment.* 
If  a  servant  lives  in  the  family  of  his  employer  and  while 
there  seduces  the  latter's  daughter,  the  damages  resulting  may 


43  N.  W.  Rep.  674;  Macgowan  v. 
Whiting,  9  Daly,  86:  Whitellegge  v, 
De  Witt,  13  Daly,  319;  Lee  v.  Clem- 
ents, 48  Ga.  128;  Fowler  v.  Payne,  49 
Miss.  32:  Phelps  v.  Paris,  39  Vt.  511; 
Still  V.  Hall,  20  Wend.  51;  Briggs  v. 
Montgomery,  3  Heisk.  673;  Denevv  v. 
Daverell,  3  Camp.  451;  Grant  v.  But- 
ton, 14  Johns.  377;  Shipman  v.  State, 
43  Wis.  381;  Garfield  v.  Huls,  54  111. 
427;  Forman  v.  Miller,  5  McLean, 
218;  Doan  v.  Warren,  11  Up.  Can.  C. 
P.  423;  McCracken  v.  Hair,  2  Speer, 
256;  Marshall  v.  Hann,  17  N.  J.  L. 
425:  Eaton  v.  Woolly,  28  Wis.  628; 
Cloyd  V.  Steiger,  139  111.  41,  28  N.  E. 
Rep  987;  Hattin  v.  Chase,  88  Me. 
237,  33  Atl.  Rep.  989,  quoting  the 
text. 

1  JIcEwen  v.  Kerfoot,  37  111.  530. 

'-'De  Witt  V.  CuUings,  33  Wis.  298; 
Stoddard  v.  Tread  well,  26  Cal,  294; 
Goslin  V.  Hodson,  24  Vt.  140;  Hunt 
V.  Pierpont,  27  Conn.  301;  Shipman 
V.  State,  43  Wis.  381;  Robinson  v. 
Mace,  16  Ark.  97;  Hopping  v.  Quin, 
13  Wend.  517;  Gleason  v.  Clark,  9 
Cow.  57;  Hill  v.  Featherstonehaugh, 
T.Bing.  569;  Cardell  v.  Bridge,  9 
Vol.  1  —  29 


Allen,  355;  Eaton  v.  Woolly,  28  Wis. 
628;  Whitesell  v.  Hill,  101  Iowa.  629, 
70  N.  W.  Rep  750,  37  L.  R  A.  830. 

3  Barnes  v.  District  of  Columbia, 
22  Ct.  of  Cls.  366;  McElrath  v.  United 
States,  102  U.  S.  426,  440. 

4  Johnson  v.  White  Mountain 
Creamery  Ass'n,  68  N.  H.  437,  36 
Atl.  Rep.  13,  73  Am.  St.  610;  Bar- 
retts, etc.  Dyeing  Establishment  v. 
Wharton,  101  N.  Y.  631,  4  N.  E.  Rep. 
344;  Gibson  v.  Carlin,  13  Lea,  440; 
Heck  V.  Shener,  4  S.  &  R.  249,  8  Am. 
Dec.  700;  Allaire  Works  v.  Guion,  10 
Barb.  55;  Coit  v.  Ste%vart,  50  N.  Y. 
17;  Hatchett  v.  Gibson,  13  Ala.  587; 
Pierce  v.  Hoffman,  4  Wis.  277:  Brig- 
ham  V.  Hawley,  17  III.  38;  Brady  v. 
Price,  19  Tex.  285,  See  Ward  v. 
Willson,  3  Mich.  1,  where  it  was  held 
that  proof  that  the  plaintiff,  while 
employed  as  a  cook  on  board  a  boat, 
wilfully  destroyed  the  hose  belong- 
ing to  the  boat  should  be  excluded 
in  an  action  to  enforce  the  payment 
of  his  wages,  the  tort  not  appearing 
to  have  any  connection  with  his 
duties  as  cook.  Nashville  R  Ca  v. 
Chumlej',  6  Heisk.  325. 


450 


LEGAL    LIQUIDATIONS    AND    EEDCCTIONS. 


[§  180. 


be  recouped  in  an  action  to  recover  wages.^  The  same  remedy 
is  available  where  the  employee  quits  the  service  without  giv- 
ing the  notice  required  by  his  contract;  -  and  against  a  pledgee 
suing  for  the  debt  secured  by  the  pledge  where  he  has  con- 
verted it. '  So  in  an  action  by  the  pledgor  against  the  pledgee 
for  conversion  of  the  pledge  the  latter  may  recoup  the  amount 
of  the  debt  secured  thereby.*  Where  a  carrier  injures  or  loses 
goods,  or  any  of  them,  or  incurs  a  liability  for  negligent  delay 
in  transportation  and  delivery,  the  damage  therefor  may  be 
recouped  in  an  action  for  freight;^  damages  for  the  culpable 
negligence  of  a  physician  who  carries  infection  from  patients 
having  small-pox  to  the  defendant's  family,  when  called  to 
prescribe  for  other  diseases,  may  be  recouped  against  his 
charges  for  services.^    The  remedy  extends  to  the  vendor  of 


1  Bixby  V.  Parsons,  49  Conn.  483. 

2Stockwell  V.  Williams,  40  Conn. 
371. 

SBulkeley  v.  Welch,  31  Conn.  339; 
Ainsworth  v.  Bo  wen,  9  Wis.  348; 
Harrell  v.  Citizens'  Banking  Co.,  Ill 
Ga.  846,  36  S.  E.  Rep.  460;  Waring  v. 
Gaskill,  95  Ga.  731,  22  S.  E.  Rep.  659. 

Where  the  defendant  deposited  a 
bond  as  collateral  security  for  the 
payment  of  his  note,  and  the  bond 
was  stolen  after  the  note  became  due 
and  before  it  was  paid,  the  value  of 
the  bond  could  not  be  recouped  in  a 
suit  on  the  note.  To  make  the  de- 
fense of  recoupment  available  some 
stipulation  in  the  contract  sued  upon 
mu-t  have  been  violated  by  the  plaint- 
iff. The  deposit  of  the  bond  was  per- 
haps a  part  of  the  transaction  of  giv- 
ing the  note,  but  it  was  not  the  same 
transaction.  The  note  was  a  contract 
independently  of  the  pledging  of  the 
bond  in  itself.  Winthrop  Bank  v. 
Jackson,  67  Me.  570,  24  Am.  Rep.  56. 
The  same  rule  was  applied  where 
the  pledgee  sold  notes  given  him  to 
secure  the  payment  of  the  note  in 
suit,  which  made  no  reference  to  the 
collateral.  Fletclier  v.  Harmon,  78 
Me.  465,  7  Atl.  Rep.  271. 

*  Belden  v.  Perkins,  78  IIL  449;  Jar- 


vis  v.  Rogers,  15  Mass.  389;  Stearns 
v.  Marsh,  4  Denio,  227,  47  Am.  Dec. 
^248;  Fowler  v.  Gilman,  13  Met.  267; 
Work  v.  Bennett,  70  Pa.  484;  Brown 
V.  Phillips,  3  Bush,  656. 

The  right  to  recoup  does  not  rest 
upon  the  principle  of  lien;  it  exists 
after  the  lien  has  been  destroyed  by 
a  tortious  act  of  the  party  in  whose 
favor  it  was  originally  obtained. 
Ludden  v.  Buffalo  Batting  Co.,  22 
IIL  App.  415. 

5  Empire  Transportation  Co.  v.  Bog- 
giano,  52  Mo.  294;  Ewart  v.  Kerr,  2 
McMull.  141;  Sears  v.  Wingate,  3 
Allen,  103;  Boggs  v.  Martin,  13  B. 
Mon.  239;  The  Nathaniel  Hooper,  3 
Sumn.  542;  Jordan  v.  Warren  Ins. 
Co.,  1  Story,  352;  Bradstreet  v.  Heron, 
1  Abb.  Adm.  209:  Fitchburg,  etc.  Co. 
V.  Hanna,  6  Gray,  539,  66  Am.  Dec. 
427;  Davis  v.  Pattison,  24  N.  Y.  317; 
Edwards  v.  Todd,  2  111.  463;  Leech  v. 
Baldwin.  5  Watts.  446;  Humphrey  v. 
Reed,  6  Whart.  435;  Hinsdell  v.  Weed, 
5  Denio,  172.  But  see  Bornman  v. 
Tooke,  1  Camp.  377,  and  Sheels  v. 
Davies,  4  Camp.  119;  Mayneon  Dam. 
70. 

6  Piper  v.  Menifee,  12  B.  Mon.  465, 
54  Am.  Dec.  547. 


§  iSl.]  RKOOUPMENT    AND    COUNTICR-CLAIM-  451 

rags  sold  as  clean  and  free  from  infection  and  fit  to  be  manu- 
factured into  paper  if  in  fact  they  are  infected  with  small-pox 
and  cause  that  disease  to  break  out  in  the  paper  mill  of  the 
vendee,  whereby  some  of  his  workmen  lose  their  lives  and 
others  are  disabled,  causing  a  loss  of  business  and  increase  of 
expense  to  the  purchaser  of  the  rags.^  A  borrower  sued  by 
the  lender  for  conspiracy  in  failing  to  satisfy  certain  prior 
mortgages  with  the  borrow^ed  funds  may  set  up  that  the  lender 
had  sohl  his  note  before  due  and  that  his  agent  converted  the 
borrowed  money  before  its  delivery  to  the  borrower,  and  that 
the  lender  is  indebted  to  the  borrower  to  the  extent  of  the  value 
of  the  note  converted.^ 

§  181.  What  acts  may  be  the  basis  of  recoupment.  If  the 
contract  has  been  executed  on  the  part  of  the  plaintiff  and, 
therefore,  the  defendant's  contract  sued  on  is  based  upon  an 
executed  consideration,  then  any  tortious  act  of  the  former 
subsequently  impairing,  in  fact,  that  consideration  has  been 
deemed  an  independent  tort,  and  not  a  part  of  the  transaction, 
or  not  connected  with  the  subject  of  the  action  for  breach  of 
the  defendant's  undertaking.^  Thus,  it  has  been  held  to  be  no 
defense  to  an  action  on  a  bill  of  exchange  given  for  the  price 
of  goods  sold  that  two  months  after  their  delivery  to  the 
vendee  the  vendor  forcibly  retook  possession.^  But  where 
a  note  was  given  for  a  judgment  assigned,  proof  that  [282] 
the  assignor  afterwards  collected  part  of  the  judgment  was 
held  a  defense  jpro  tanto  to  the  note.'  In  an  action  for  the 
price  of  specific  articles  bargained  and  sold,  but  not  delivered, 
the  defendant  may  set  up  by  way  of  recoupment  any  injury 
to  such  articles  occasioned  by  the  fault  or  negligence  of  the 
vendor  subsequent  to  the  sale  and  j)rior  to  the  time  of  de- 

1  Dushane  v.   Benedict,   120  U.  S.  consideration  of  the  contract  sued 

630,  7  Sup.  Ct.  Rep.  693.  on.     Nolle  v.  Thompson,  3  Met.  (Ky.) 

^  Bowman  v.  Lickey,  86  Mo.  App.  47.  1'31.    Nor  for  slander  in  an  action  by 

*  In  an  action  for  wages  the  em-  the  indorsee  before  maturity  of  a 

plover  cannot  recoup  damages  for  an  note.  Lyon  v.  Bryant,  54  111.  App.  331. 

injury  done  by  the  plaintiff  beyond  *  Stephens  v.  Wilkinson,  2B.  &  Ad. 

the  .scope  of  his  employment.    Nash-  320,   Huelet   v.    Reyns,   1   Abb.   Pr. 

ville  R.  Co.  V.  Chumley,  6  Heisk.  327.  (N.  S.)  27;  Slayback  v.  Jones,  9  Ind. 

Damages  for  maliciously  suing  out  472.    See  Martin  v.  Brown.  75  Ala. 

an  attachment  are  not  to  be  recouped  442;  Gerding  v.  Adams,  65  Ga.  79. 

in  the  same  suit  because  the  wrong  &  Harper  v.  Columbus  Factory,  35 

was  in  no  way  connected  with  the  Ala.  127. 


452  LEGAL   LIQUIDATIONS    AND    KEDUCTI0N8.  [§  181. 

liverj;^  for  the  vendor's  duty  was  to  keep  the  articles  sold 
with  ordinary  care,  and  he  is  responsible  for  the  want  of  such 
care  or  of  good  faith.^  So  a  vendee,  when  sued  for  the  price 
of  land  sold,  may  recoup  for  the  vendor's  tort  which  dimin- 
ishes the  value  of  the  property  purchased,^  or  which  consists 
of  carrying  away  crops  or  fixtures  before  the  sale  is  consum- 
mated by  deed  and  delivery  of  possession.*  Where  suit  was 
brought  on  a  note  given  for  wood  the  maker  recouped  against 
the  note  the  amount  of  his  loss  because  the  plaintiff  refused  to 
permit  him  to  convert  the  wood  into  charcoal  on  the  land  on 
which  it  was  when  it  was  sold,  it  was  not  necessary  that  the 
wood  should  be  returned,  it  having  been  removed  and  coaled 
elsewhere.''  A  tenant  in  common,  in  control  of  the  premises 
held  in  common  for  the  purpose  of  renting  them,  when  sued 
by  his  co-tenant  for  his  share  of  the  rents  may  counter-claim 
the  damages  sustained  by  the  plaintiff's  wrongful  acts  in  in- 
ducing lessees  to  leave  the  premises  before  their  leases  ex- 
pired,^ 

"Where  a  contract  for  particular  works  has  been  entered  into, 
or  for  service,  or  for  the  sale  and  delivery  of  property,  and 
there  has  been  a  part  performance  for  which  an  action  in 
general  assujnjjsit  is  maintainable,  the  special  contract  is  a 
part  of  the  transaction  in  question.  Although  the  plaintiff 
does  not  bring  his  action  upon  it,  it  is  connected  with  the  sub- 
ject thereof.^  Though  the  performance  of  the  plaintiff's  part 
of  the  contract  may  at  first  have  been  a  condition,  yet  the  de- 
fendant may  waive  the  right  to  forfeit  the  contract  for  non- 
performance, and  retain  his  right  to  damages.  These  he  may 
recoup  in  an  action  on  a  quantum  meruit  or  a  quantum  valebat, 
or  in  an  action  upon  the  contract.^     In  such  cases  if  the  de- 

1  Barrow  v.  Window.  71  111.  214.  «  Dale  v.  Hall,  64  Ark.  221,  41  S.  W. 

2McCandlish  ^'    Newman,  25  Pa.  Rep.  761. 

460;  Chinery  v.  Viall,  5  H.  &  N.  288.  i  Twitty  v.  McGuire,  3  Murphy,  501; 

^Streeter  v,  Streeter,  43  111.  155.  Grannis  v.  Linton.  30  Ga.  330;  Steam- 

•«  Gordon  V    Bruner,   49  Mo.    570;  boat  Wellsville  v.  Geisse,  3  Ohio  St. 

Grand  Lodge  v    Knox,  20  Mo.  433;  333;    Bishop   v    Price,  24  Wis.  480: 

Patterson  v.    Hulings,   10    Pa.    506;  Hay  ward  v.  Leonard,  7  Pick.    181, 

Owens  V.   Rector,   44  Mo.  389.     But  Bowker  v.  Hoy t,  18  Pick.  555;  Barber 

see  Slayback  v.  Jones,  9  Ind.  472.  v.  Rose,  5  Hill,  76. 

5  Harraan  v.  Bannon,  71  Md.  429,  8  Woodrow   v.  Hawving,  105   Ala. 

18  Atl.  Rep.  862.  240,  16  So.  Rep.  720;  Madison  v.  Dan- 


§  1«1-] 


RECOUPMENT    AND    COUNTER-CLAIM. 


453 


fendant  thinks  proper  to  present  his  cross-claim  by  way  of  re- 
coupment the  court  will  consider  the  whole  contract  [283] 
under  which  the  plaintiff's  demand  arose,  and  direct  a  deduc- 
tion, from  what  he  would  otherwise  be  entitled  to  recover,  of 
all  damages  sustained  by  the  defendant  in  consequence  of  the 
plaintiff's  failure  to  fulfill  any  or  all  of  the  stipulations  on  his 
side.^ 

On  the  sale  of  a  quantity  of  standing  wood  the  vendor 
agreed  to  indemnify  the  vendees  against  any  damage  that 
might  happen  to  the  wood  in  consequence  of  the  burning  of 
an  adjoining  fallow.  The  latter  gave  their  notes  for  the 
price;  and,  afterwards,  the  fallow  being  burned  over,  the 
wood  in  question  was  destro3^ed  by  the  fire;  and  it  was  held, 
in  an  action  by  the  vendor  upon  the  note,  that  the  vendees 
might  recoup  their  damages  arising  from  the  loss  of  the  wood.' 


ville  Mining  Co.,  64  Mo.  App.  564; 
Wiley  V  Athol,  150  Mass.  426,  23  N.  E. 
Hep.  311,  6  L.  R.  A.  342;  Reynolds  v. 
Bell,  34  Ala.  496,  4  So.  Rep.  703;  Bell 
V.  Reynolds,  78  Ala.  511,  56  Am. 
Rep.  52;  Sciiweickhart  v.  Stuewe,  71 
Wis.  1.  5  Am.  St.  190,  36  N.  W.  Rep. 
605;  Fabbricotti  v.  Launitz,  3  Sandf. 
743;  Vanderbilt  v.  Eagle  Iron  "Works, 
25  Wend.  665;  Van  Buren  v.  Digges, 
11  How.  461;  Polhemus  v.  Heiman, 
45  Cal.  573;  Wbeelock  v  Pacific, 
Pneumatic  Gas  Co.,  51  Cal.  223; 
Upton  V.  Julian,  7  Ohio  St.  95;  Har- 
ris V.  Rathbun,  2  Keyes,  312;  Hay- 
ward  v.  Leonard,  7  Pick.  181;  Allen 
V.  McKibben,  5  Mich.  449;  McKinney 
V.  Springer,  3  Ind.  59. 

'  Id.  Loinax  v.  Bailey,  7  Blackf. 
599;  HoUinsead  v.  Mactier,  13  Wend. 
275;  Adams  v.  Hill,  16  Me.  215;  Koon 
V.  Greenman,  7  Wend.  121;  Ladue  v. 
Seymour,  24  id.  60;  Brewer  v.  Tyring- 
ham,  13  Pick.  547:  Coe  v.  Smith,  4 
Ind.  79;  Major  v.  McLester,  id.  591, 
Milnes  v  Vanhorn,  8  Blackf.  198; 
Fenton  v.  Clark,  11  Vt.  557;  Britton 
V.  Turner,  6  N.  H.  481,  26  Am.  Dec. 
713;  Seaver  v.  Morse,  20  Vt.  620; 
Epperly  v.  Bailey,  3  Ind.  72;  Good- 


win V  Morse,  9  Met.  278;  Wilkinson 
V.  Ferree,  24  Pa.  190:  Higgins  v.  Lee, 
16  111.  495;  Van  Deusen  v.  Blum,  18 
Pick.  329,  29  Am.  Dec.  582;  Lee  v. 
Ashbrook,  14  Mo.  378,  55  Am.  Dec. 
110;  White  v.  Oliver,  36  Me.  92; 
Merrow  v.  Huntoon,  25  Vt.  9;  Blood 
V.  Enos,  13  Vt.  625,  36  Am.  Dec.  36:5; 
Preston  v.  Finney,  2  W.  &  S.  53; 
Ligget  V.  Smith,  3  Watts,  331,  27 
Am.  Deo.  358;  Danville  Bridge  Co.  v. 
Pomroy,  15  Pa  151:  Allen  v.  Robin- 
son, 3  Barb.  341,  Rogers  v.  Hum- 
phreys, 39  Me.  383. 

2  Batterman  v  Pierce,  3  Hill,  171. 
This  was  an  early  and  leading  case 
on  the  subject  of  recoupment,  and 
Bronson,  J.,  comprehensively  stated 
the  doctrine  underlying  and  govern- 
ing it.  He  said:  "When  the  de- 
mands of  both  parties  spring  out  of 
the  same  contract  or  transaction, 
the  defendant  may  recoup,  although 
the  damages  on  both  sides  are  un- 
liquidated. .  .  It  was  formerly 
supposed  that  there  could  only  be  a 
recoupment  where  some  fraud  was 
imputable  to  the  plaintiff  in  relation 
to  the  contract  on  which  the  action 
is  founded;  but  it  is  now  well  settled 


4o4: 


LEGAL    LIQUIDATIONS    AND    KEDUCTIONS. 


181. 


[284]  The  plaintiff  in  one  agreement  stipulated  to  deliver  forth- 
with a  quantity  of  dressed  pork  to  the  defendant  for  a  certain 
price,  and  also  to  sell  him,  upon  their  arrival,  at  a  different 
price,  a  number  of  live  hogs  then  on  the  way  and  expected  m 


that  the  doctrine  is  also  applicable 
when  the  defendant  imputes  no 
fraud  and  only  complains  that  there 
has  been  a  breacli  of  the  contract  on 
the  part  of  the  plaintiff.  For  the 
purpose  of  avoiding  a  circuity  or 
the  multiplication  of  actions,  and 
doing  complete  justice  to  botii  par- 
ties, they  are  allowed  and  compelled, 
if  the  defendant  so  elect,  to  adjust 
all  their  claims  growing  out  of  the 
same  contract  in  one  action.  It  was 
well  remarked  by  Chancellor  Wal- 
worth, in  Reab  v.  McAlister,8  Wend. 
109,  that  '  there  is  a  natural  equity, 
especially  as  to  claims  arising  out  of 
the  same  transaction,  that  one  claim 
should  compensate  the  other,  and 
that  the  balance  only  should  be  re- 
covered.' The  defendant  has  the 
election  whether  he  will  set  up  his 
claim  in  answer  to  the  plaintiff's  de- 
mand, or  resort  to  a  cross-action; 
and  whatever  may  be  the  anaount  of 
his  damages,  he  can  only  set  them 
up  by  way  of  abatement,  either  in 
whole  or  in  part  of  the  plaintiff's 
demand.  He  cannot,  as  in  case  of 
set-off,  go  beyond  that,  and  have  a 
balance  certified  in  his  favor.  It  is 
no  objection  to  the  defense  that  the 
plaintiff  is  not  suing  upon  the  origi- 
nal contract  of  sale,  but  upon  a  note 
given  for  the  purchase-money.  The 
promise  of  the  defendants  to  pay 
the  purchase-money  has  undergone 
the  slight  modification  of  being  put 
into  the  form  of  a  written  obliga- 
tion, and  on  that  the  action  is 
founded;  but  still  the  plaintiff  is  in 
effect  seeking  to  enforce  the  original 
contract  of  sale,  and  the  question 
must  be  settled  in  the  same  manner 
as  though  the  action  was,  in  form, 


upon  that  contract.  But  the  objec- 
tion still  remains,  and  it  has  been 
strenuously  urged  against  the  de- 
fense, that  the  damages  claimed  by 
the  defendants  do  not  spring  out  of 
the  contract  of  sale,  but  arise  under 
the  collateral  agreement  of  the 
plaintiff  to  indemnify  against  fire.  It 
is  undoubtedly  true  that  there  can 
be  no  recoupment  by  setting  up  the 
breach  of  an  independent  contract 
on  the  part  of  the  plaintiff.  But 
that  is  not  this  case.  Here  there 
were  mutual  stipulations  between 
the  parties,  all  made  at  the  same 
time,  and  relating  to  the  same  sub- 
ject-matter; and  there  can  be  no 
difference,  in  principle,  whether  the 
whole  transaction  is  embodied  in 
one  written  instrument  setting  forth 
the  cross-obligations  of  both  parties, 
or  whether  it  takes  the  form  of  a 
separate  and  distinct  undertaking  by 
each  party.  The  plaintiff  proposed 
to  sell  his  wood  at  auction,  and  as  an 
inducement  to  obtain  a  better  price 
he  stipulated  with  the  bidders  that 
they  should  have  two  winters  and 
one  summer  to  get  away  the  wood, 
and  that  in  the  meantime  he  would 
insure  them  against  the  consequence 
of  setting  fire  to  his  adjoining  fallow 
grounds.  Upon  these  terms  the  pur- 
chase was  made  by  the  defendant. 
,  .  .  The  nature  of  the  transaction 
cannot  be  changed  by  putting  the 
several  stipulations  of  the  parties 
into  distinct  written  contracts;  nor 
can  it  make  any  substantial  differ- 
ence that  the  undertaking  of  one 
party  has  been  reduced  to  writing, 
while  the  engagement  of  the  other 
party  remains  in  parol.  In  substance 
it  is  still  the  case  of  mutual  stipula- 


§  181.]  KECOUPMENT    AND    COUNTEE-CLAIM.  455 

a  few  clays,  no  stipulation  being  made  as  to  the  time  of  [285] 
payment  for  either.  It  was  held  that  the  plaintilf  was  entitled 
to  recover  the  sum  stipulated  for  the  dressed  pork,  notwith- 
standing that,  after  it  became  due,  a  breach  of  the  stipulation 
in  respect  to  the  live  hogs  had  accrued,  but  subject  to  recoup- 
ment of  the  defendant's  damages  for  such  breach.' 

In  an  action  to  recover  damages  for  the  conversion  of  a  note 
made  by  the  plaintiff  and  also  of  certain  collaterals,  the  de- 
fendant may  plead  a  counter-claim  setting  up  the  note  and 
its  non-payment  at  maturity  and  asking  to  recover  the  sum 
due  with  interest,  although,  after  the  note  became  due,  the 
plaintiff  had  tendered  to  the  defendant  the  sum  due  on  it,  and 
demanded  the  note  with  the  collaterals,  which  the  defendant 
refused  to  surrender.  The  court  agreed  that  it  is  not  enouirh 
that  the  claims  set  forth  in  the  complaint  and  alleged  in  the 
counter-claim  had  a  common  origin  and  were  coincident  in 
the  time  of  their  creation.  They  must  be  so  related  that  the 
counter-claim  properly  tends  to  diminish  or  defeat  the  plaint- 
iff's recovery.  But  the  case  was  such.  The  plaintiff  at- 
tempted to  meet  this  by  saying  that  upon  his  tender  of  the 
amount  due  upon  the  note,  the  defendant's  lien  upon  the  col- 
laterals was  discharged  and  his  right  to  the  latter  became  ab- 
solute. This,  however,  did  not  solve  the  question.  We  must 
still  go  back  to  the  transaction  set  forth  in  the  complaint. 
"What  is  that  transaction  ?  The  plaintiff  limits  it  to  the  tech- 
nical conversion ;  that  is,  to  the  legal  formula  of  his  action.  But 
that  is  not  the  entire  transaction  set  forth  in  the  complaint  as 
the  foundation  of  the  plaintiff's  claim.  It  is  what  that  trans- 
action comes  to  when  reduced  to  the  concrete  charge.  But 
the  transaction  itself  —  that  is  the  entire  transaction  —  consists 
of  all  the  facts  averred  in  the  complaint;  the  making  and  de- 

tions    between    the    same    parties,  several,  or  whether  some  have  been 

made  at  the  same  time  and  relating  put  upon  paper  wliile  others  rest  in 

to    the    same  subject-matter.     The  parol,  the  reason  still  remains  for  al- 

forms  which  the  parties  may  have  lowing  the  claims  of  both  parties 

adopted  for  the  purpose  of  manifest-  growing  out  of  the  same  transaction 

ing  their  agreement  cannot  affect  to  be  adjusted  in  one  action." 
their  rights  so  far  as  this  question        i  Tipton  v.  Feitner,  20  N.  Y.  423; 

is  concerned.     Whether  all  the  mut-  Prairie  Farmer  Co.  v.  Taylor,  69  III 

ual   undertakings  have  been  embod-  440,  18  Am.  Dec.  G21;  Cherry  v.  Sut- 

ied  in  one  written  instrument,  or  in  ton,  30  Ga.  875. 


456 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


[§  181. 


liverj  of  the  note;  the  giving  of  the  collaterals,  the  tender  of 
the  amount  due  and  the  refusal  thereupon  to  surrender  the  se- 
curities. The  note  is  a  part  of  the  transaction  thus  set  forth. 
It  is  interwoven  with  it.  The  facts  with  regard  to  it  are  in 
part  the  foundation  of  the  plaintiff's  claim.  If  the  plaintiff  is 
entitled  to  the  value  of  his  securities,  the  defendant  is  equally 
entitled  to  the  amount  of  his  note.  It  is  entirely  just  that  the 
plaintiff's  claim  should  be  diminished  by  the  amount  of  the 
latter  debt.'  On  the  other  hand,  the  defendant  in  an  action 
for  the  value  of  goods  sold  and  for  services  rendered  cannot 
recoup  damages  resulting  from  an  abuse  of  the  writ  of  attach- 
ment issued  by  the  plaintiff,  there  being  no  connection  be- 
tween these  and  the  subject  of  the  action.-  The  same  is  true 
of  a  claim  for  storage  asserted  in  an  action  brought  for  the 
conversion  of  property  stored.^  Where  accounts  containing 
usurious  interest  have  been  closed  and  settled  by  note,  and  an 
action  is  brought  on  the  note,  the  defendant  cannot  counter- 
claim for  double  the  usury.* 

These  are  instances  of  cross-claims  arising  from  the  same 
contract  or  transaction.  Stipulations  are  parts  of  the  same 
contract  for  the  purpose  of  this  defense  though  they  relate  to 
distinct  subjects,  and  a  different  time  of  performance,  and  a 
distinct  and  severable  compensation  is  provided  for  each;  so 
any  implied  or  express  warranty  or  guaranty  which  forms 
part  of  the  consideration  of  the  defendant's  undertaking, 
which  is  the  foundation  of  the  plaintiff's  action,  is  part  of  the 
same  contract;  and  all  damages  to  which  the  defendant  is  en- 
titled thereon  may  be  recouped  in  such  action.  Many  exam- 
ples have  been  given.^     In  England  the  damages  which  may 


1  Empire  Dairy  Feed  Co.  v.  Chat- 
ham Nat.  Bank,  30  App.  Div.  476,  52 
N.  Y.  Supp.  387. 

2  Jones  V.  Swank,  54  Minn.  259,  55 
N.  W.  Rep.  1126. 

3  Schaeffer  v.  Empire  Lithograph- 
ing Co.,  28  App.  Div.  469,  51  N.  Y. 
Supp.  104,  See  Bernheimer  v.  Hart- 
mayer,  50  App.  Div.  816,  63  N.  Y. 
Supp.  978. 

i  Witte  V.  Weinberg.  37  S.  C.  579, 
17  S.  E.  Rep.  681. 


5  In  an  action  upon  one  of  several 
notes  given  for  a  chattel,  a  breach  of 
warranty  being  alleged,  the  defend- 
ant may  interpose  a  counter-claim 
for  his  entire  damage.  GeiserThresh- 
ing  Machine  Co.  v.  Farmer,  27  Minn. 
428.8  N.  W.  Rep.  141;  Minneapolis, 
Harvester  Works  v.  Bonnallie,  29 
Minn.  373,  13  N.  W.  Rep.  149.  Contra, 
Aultman  &  T.  Co.  v.  Hetherington 
42  Wis,  622;  Same  v.  Jett,  ii  48a 


§  182.] 


EEOOUPMENT   AND   COUNTER-CLAIM, 


457 


be  recouped  are  limited  to  those  which  directly  result  from  the 
character  of  the  property  or  the  work  done;  consequential 
damages  must  bo  recovered  in  a  separate  action.'  "But  in 
this  country  the  courts,  in  order  to  avoid  circuity  of  action, 
have  gone  further  and  have  allowed  the  defendant  to  recoup 
damages  suffered  by  him  from  any  fraud,  breach  of  warranty 
or  negligence  of  the  plaintiff  growing  out  of  or  relating  to 
the  transaction  in  question."  ^ 

§  182.  Cross-claims  between  landlord  and  tenant.  In  ac- 
tions between  landlord  and  tenant  they  have  each  the  right  to 
recoup  damages  in  the  other's  action  brought  on  the  covenants 
in  the  lease,  or  those  which  are  implied  from  the  relation. 
Although  there  be  a  written  lease  or  even  an  indenture  con- 
taining express  stipulations  and  covenants,  if  others  are  im- 
plied, the  latter  belong  to  and  are  parts  of  the  same  contract.' 


1  Mondel  V.  Steel,  8  M.  &  W.  858; 
Davis  V.  Hedges,  L.  R.  6  Q.  B.  637. 

liDushane  v.  Benedict,  120  U.  S. 
030,  7  Sup.  Ct.  Rep.  696;  Harrington 
V.  Stratton,  23  Pick.  510:  Withers  v. 
Greene,  9  How.  218;  Van  Buren  v. 
Digges,  11  id.  661;  Winder  v.  Cald- 
well, 14  id.  434;  Lyon  v.  Bertram,  20 
id.  149;  Railroad  Co.  v.  Smith,  21 
Wall.  255;  Marsh  v.  McPherson,  105 
U.  S.  709. 

» Harmony  Co.  v.  Ranch,  62  111. 
App.  97;  Culver  v.  Hill.  68  Ala.  68,  44 
Am.  Rep.  134;  Vandegrift  v.  Abbott, 
7o  Ala,  487;  Jones  v.  Horn,  51  Ark.  19, 
14  Am.  St.  17,  9  S.  W.  Rep.  309; 
Gocio  v.  Day,  51  Ark.  46;  Lewis  v. 
Chisholm,  68  Ga.  46;  Stewart  v. 
Lanier  House  Co.,  75  Ga.  582,  598; 
Howdyshell  v.  Gary,  21  III  App.  288; 
Burroughs  v.  Clancey,  53  111.  30; 
Dodds  V.  Toner,  3  Ind.  427;  Blair  v. 
Claxton,  18  N.  Y.  529;  Caldwell  v. 
Pennington,  3  Gratt.  91;  Vining  v. 
Leeman,  45  111.  248;  Hobein  v.  Drew- 
ell,  20  Mo.  450;  Lynch  v.  Baldwin,  69 
III.  210:  Whitbeck  v.  Skinner,  7  Hill, 
53;  Mack  v.  Patchin,  42  N.  Y.  167, 
1  Am.  Rep.  505;  Mayor  v.  Mabie,  13 
V  Y.  151,  64  Am.  Dec.  538;  Lmdley 


v.  Miller,  67  111.  244;  Westlake  v.  De 
Graw,  25  Wend.  669;  Lunn  v.  Gage, 
37  111.  19;  Guthman  v.  Castleberry, 
49  Ga.  272;  Tone  v.  Brace,  8  Paige, 
597;  Graves  v.  Berdan,  26  N.  Y.  498; 
Vernam  v.  Smith,  15  N.  Y.  328; 
Myers  v.  Burns,  35  N.  Y.  269;  Hexter 
v.  Knox,  63  N.  Y.  561;  Eldred  v. 
Leahy,  31  Wis.  546;  Morgan  v.  Smith, 
5  Hun,  220;  Commonwealth  v.  Todd, 
9  Bush,  708;  Holbrook  v.  Young,  108 
Mass.  83. 

If  the  landlord  does  not  furnish 
the  quantity  of  land  or  the  number 
of  animals  he  agrees  to,  the  tenant 
may  recoup  his  damages  in  an  action 
brought  to  recover  advances  mada 
Horton  v.  Miller,  84  Ala.  537,  4  Sa 
Rep.  370. 

If  the  tenant  makes  special  inquiry 
as  to  the  condition  of  water  on  the 
premises  he  leases,  and  it  is  in  fact 
unfit  for  use,  and  the  landlord, 
knowing  it,  fails  to  remove  the  cause, 
the  tenant  is  justified  in  regardi:ig 
the  condition  of  the  water  as  an 
eviction  from  the  premises,  and  in  an 
action  to  recover  rent  may  recoup 
the  expenses  of  sickne.s.->,  including 
physician's  fees,  resulting  from  lii« 


458 


LEGAL    LIQUIDATIONS    AND    EEDUCTIONS. 


[§  182. 


The  landlord,  impliedly,  in  the  absence  of  an  express  agree- 
ment defining  his  obligation  in  that  regard,  undertakes  for 
the  quiet  enjoyinent  of  the  premises  by  his  tenant  as  against 
any  hostile  assertion  of  a  paramount  title,  and  that,  so  far  as 
[286]  he  is  concerned,  he  will  do  no  act  to  interrupt  the  ten- 
ant's free  and  peaceable  possession  during  the  term  granted.^ 
For  any  violation  or  breach  of  this  obligation  the  tenant  may 
recoup  his  damages  in  any  action  by  the  landlord  against  him 
based  on  his  liabilities  as  a  tenant.^  But  for  mere  tortious 
acts  of  interference  by  the  landlord  with  the  demised  prem- 
ises, not  done  in  the  assertion  of  a  right  nor  amounting  to  an 
eviction,  damages  by  wa}''  of  recoupment  have  been  denied.^ 
They  have  been  denied  for  the  malicious  prosecution  of  suits- 
for  unlawful  detainer  because  they  do  not  arise  out  of  the  con- 
tract and  are  not  connected  with  the  subject-matter  of  the  suit> 
Where  a  cross-claim  exists  in  favor  of  the  tenant  he  may  avail 
himself  of  it  not  only  in  an  action  against  him  by  the  land- 
lord on  the  contract,  but  also  in  replevin  of  property  dis- 
trained for  rent;*  but  not  in  a  summary  proceeding  for  pos- 


use  of  such  water.  Maywood  v. 
Logan,  78  Mich.  185,  18  Am.  St.  431, 
43  N.  W.  Rep.  1052. 

In  a  statutory  contest  between 
landlord  and  tenant  as  to  the 
amount  of  rent  due,  the  former  may 
meet  violation  of  the  lease  with  vio- 
lation, damages  with  damages,  have 
a  full  reckoning,  and  uphold  his 
warrant  to  the  extent  of  the  sum 
due  him  for  rent  after  a  settlement 
of  the  damage  account.  Johnston 
V.  Patterson,  91  Ga.  531,  18  S.  E.  Rep. 
350. 

1  Keating  v.  Springer,  146  111.  481, 
34  N.  E.  Rep.  805,  37  Am.  St.  175, 22  L. 
R.  A.  544;  Mayor  v.  Mabie,  13  N.  Y. 
151,  64  Am.  Dec.  538;  Dexter  v.  Man- 
ley,  4  Cush.  14;  Bradley  v.  Cart- 
wright,  36  L.  J.  (C.  P.)  218;  Maule  v. 
Ashmead,  20  Pa.  482;  Hart  v.  Smith, 
2  A.  K  Marsh.  301;  Young  v.  Har- 
grave,  7  Ohio,  394. 

2McAlester  v.  Landers,  70  Cal.  79, 
11  Pac.  Rep.  505;  Kelsey  v.  Ward,  38 
N.  Y.  83;    Mayor  v.  Mabie,   supra; 


Wade  V.  Halligan,  16  111.  507;  Lynch 
v.  Baldwin,  69  111.  210;  Rogers  v. 
Ostram,  35  Barb.  523;  Chatterton  v. 
Fox,  5  Duer,  64. 

The  fact  that  the  lessee  has  paid 
the  rent  for  the  greater  part  of  the 
term  will  not  deprive  him  of  the 
right  to  counter-claim  his  damages 
for  the  entire  term.  McAlester  v. 
Landers,  supra. 

^Edgerton  v.  Page,  20  N.  Y.  281; 
Hulme  V.  Biown,  3  Heisk.  679;  Bart- 
lett  V.  Farrington,  120  Mass.  284; 
Campbell  v.  Shields,  11  How.  Pr. 
565;  Drake  v.  Cockroft,  10  id.  377; 
Walker  v.  Shoemaker,  4  Hun,  579; 
Lounsbery  v.  Snyder,  31  N.  Y.  514; 
Ogilvie  V.  Hull,  5  Hill,  52;  Vatel  v. 
Herner,  1  Hilt.  149;  Cram  v.  Dres- 
ser, 2  Sandf.  120;  Crowe  v.  Kell,  7 
Ind.  App.  683,  35  N.  K  Rep.  186.  But 
see  Kamerick  v.  Castleman,  23  Mo. 
App.  481. 

4  Dietrich  v.  Ely,  11  C.  C.  A.  266, 
63  Fed.  Rep.  413. 

5  Nichols  V.   Dusenbury,   2   N.  Y. 


§  183.] 


EECOUPMENT   AND    COUNTEK-CLAIM, 


450 


session  based  on  the  determination  of  the  lease  by  forfeiture.* 
In  an  action  for  rent  the  defendant  may  show  that  the  plaint- 
iff agreed  to  build  a  fence,  or  make  certain  repairs  or  other 
improvements,  and  has  neglected  to  perform  the  agreement.^ 
§  183.  Cause  of  action,  connection  between  and  cross- 
claim.  Where  the  basis  of  the  transaction  between  the  [2.S7] 
parties  is  a  contract  and  its  breach  amounts  to  a  trespass  or 
entitles  the  injured  party  to  an  action  for  negligence  or  fraud 
or  to  any  action  ex  delicto^  he  is  not  deprived  of  his  right  to 
set  off  such  a  claim,  nor  the  other  party  to  set  off  a  claim  aris- 
ing upon  the  contract  against  such  a  cause  of  action.  In  all 
such  cases,  there  being  a  contract  in  fact,  the  party  in  default 
is  not  allowed  to  deprive  the  injured  party  of  the  right  to  take 
advantage  of  such  default  by  way  of  recoupment  or  counter- 
claim by  alleging  that  the  contract  was  tortiously  violated.' 


288;  Fowler  v.  Payne,  49  Miss.  32; 
Breese  v.  McCann,  52  Vt.  498;  Fair- 
man  V.  Fluck,  5  Watts,  516;  Giith- 
man  v.  Castleberry,  49  Ga.  272;  Phil- 
lips V.  Mouges,  4  Whart.  225;  Hat- 
field V.  Fullerton,  24  111.  278;  Lind- 
ley  V.  Miller,  67  111.  244. 

Where  the  board  of  supervisors 
allowed  a  claim  for  repairing  a 
bridge,  and  issued  a  warrant  there- 
for, and  afterwards  the  claimant 
committed  a  breach  of  his  contract 
by  failing  to  keep  it  in  repair  pur- 
suant to  his  bond,  and  he  and  his 
sureties  became  insolvent,  held,  that 
the  board,  in  an  action  of  mandamus 
to  compel  payment  of  the  warrant, 
could  recoup  the  breach,  occurring 
before  notice  of  assignment,  against 
the  assignee  of  the  warrant.  Jeffer- 
son County  V.  Arrghi,  51  Miss.  668. 

iMcSloy  V.  Ryan,  27  Mich.  110; 
D'Armond  v.  Pullen,  13  La.  Ann. 
137:  Johnson  v.  Hoffman,  53  Mo.  504. 

■''Miller  v.  Gaither,  8  Bush,  152; 
Myers  v.  Burns,  35  N.  Y.  269;  Hexter 
V.  Knox,  63  N.  Y.  561;  Guthman  v. 
Castleberry,  49  Ga.  272;  Fairman  v. 
Fluck,  5  Watts,  516;  Lunn  v.  Gage, 
87  111.  19;  Kimball  v.  Doggett,  62  111. 


A  pp.  528;  Baker  v.  Fawcett,  69  id. 
300. 

The  tenant  may  rely  upon  his 
landlord  to  repair  according  to  his 
agreement,  and  is  not  barred  of  the 
right  to  recoup  because  he  might 
have  made  the  repairs  at  small  cost. 
Culver  v.  Hill,  68  Ala.  66,  44  Am. 
Rep.  134. 

3  Davidson  v.  Wheeler,  17  R  I.  433, 

22  Atl.  Rep.  1022;  Cole  v.  Colburn,  01 
N.  H.  499;  Morrison  v.  Love  joy,  6 
Minn.  319;  Hatchett  v.  Gibson,  13 
Ala.  587;  Williams  v.  Schmidt,  54  111. 
205;  Chamboret  v.  Cagney,  2  Sweeny, 
378,  41  How.  Pr.  125;  Starbird  v.  Bar- 
rens, 43  N.  Y.  200;  Wadley  v.  Davis, 
63  Barb.  500;  Griffin  v.  Moore,  52  Ind. 
295;  Mc  Arthur  v.  Green  Bay,  etc.  Co , 
34  Wis.  139;  Bitting  v.  Thaxton,  72 
N.  C.  541 ;  Price  v.  Lewis,  17  Pa.  St. 
51,  55  Am.  Dec.  536;  Scott  v.  Kenton, 
81  111.  96.     See  Scheuuert  v.  Kaebler, 

23  Wis.  523. 

In  all  cases  in  which  the  parties 
have  entered  into  an  express  con- 
tract and  in  which  a  tort  has  been 
suffered,  which  the  sufferer  may 
waive  and  sue  in  assumpsit,  a  coun- 
ter-claim may  be  made  under   the 


460 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


[§  183. 


Where  there  was  an  exchange  of  chattels  the  court  said :  Here 
are  mutual  and  adverse  claims  for  damages  growing  out  of  one 
transaction.  Each  party  sold  to  the  other  a  chattel  and  took 
another  chattel  in  payment.     For  misrepresentations  of  the 


contract.  Bai'nes  v.  McMullins,  78 
Mo.  i?60.  And  where  tlie  actor  elects 
to  sue  in  tort  lor  a  wrong  originating 
in  or  growing  out  of  a  contract 
wliicli  he  pleads  as  an  inducement, 
the  defendant  may  counter-claim 
for  damage  sustained  by  the  breach 
of  the  contract.  Kamerick  v.  Castle- 
man,  23  Mo.  App.  481. 

The  I'uie  in  Pennsylvania  is  that, 
independently  of  statute,  any  matter 
eitiier  of  contract  or  of  tort,  imme- 
diately connected  with  the  plaintiff's 
cause  of  action,  may  be  set  up  by 
way  of  defense  to  the  action  and  in 
abatement  of  the  plaintiff's  damages 
only;  any  matter  of  contract  may  be 
set  up  by  way  of  counter-claim  under 
the  statute,  not  only  to  defeat  the 
action  but  for  the  purpose  of  estab- 
lisliing  a  liability  of  the  plaintiff  to 
the  defendant  in  excess  of  the  latter's 
demand.  No  mere  matter  of  tort 
can  be  availed  of  by  the  defendant 
under  the  statute.  Dushane  v.  Bene- 
dict, 120  U.  a  630, 644,  7  Sup.  Ct.  Rep. 
696,  citing  many  Pennsylvania  cases. 
In  Conner  v.  Winton,  7  Ind.  523,  the 
court  defined  a  counter-claim  to  be 
that  which  might  have  arisen  out  of, 
or  could  have  had  some  connection 
with,  the  original  transaction  in  the 
view  of  the  parties,  and  which  at  the 
time  the  contract  was  made  they 
could  have  intended  might  in  some 
event  give  one  a  claim  against  the 
other  for  compliance  or  non-compli- 
ance with  its  provisions. 

In  Slay  back  v.  Jones,  9  Ind.  472, 
the  court,  referring  to  recoupment 
and  counter-claim,  said:  "They  re- 
late more  especially  to  damages  for 
breach  of  contract  which  may  be 
recouped  in  a  suit  for  what  may  have 


been  done  or  rendered  in  part  per- 
formance of  a  contract.  In  such 
cases  the  cause  of  action  and  defense 
are  part  of  the  same  transaction." 

In  Love  joy  v.  Robinson,  8  Ind.  399; 
Terre  Haute  &  I.  R.  Co.  v.  Pierce,  95 
Ind.  496,  the  court  say  that  trespasses 
cannot  be  made  to  compensate  each 
other. 

In  Minnesota  independent  torts 
cannot  be  counter-claimed.  Allen  v. 
Coates,  29  Minn.  46,  11  N.  W.  Rep.  132. 

In  Barhyte  v.  Hughes,  33  Barb. 
320,  and  Loewenberg  v.  Rosenthal, 
18  Ora  178.  23Pac.  Rep.  601,  the  word 
"transaction"  was  construed  to  re- 
fer to  business  dealings,  and  did  not 
include  torts.  Macdougall  v.  Ma- 
guire,  35  Cal.  274,  95  Am.  Dec.  98. 

A  counter-claim  founded  on  con- 
tract cannot  be  interposed  in  an  ac- 
tion based  on  fraud.  People  v.  Den- 
nison,  84  N.  Y. 272;  Davis  v.  Frederick, 
6  Mont.  300;  Humbert  v.  Brisbane, 
25  S.  C.  506;  Copeland  v.  Young,  21 
id.  275. 

Where  there  is  no  contract  rela- 
tion between  the  parties  touching 
the  subject  in  question,  mutual  torts 
committed  at  the  same  tiiue  or  in 
such  succession  or  sequence  as  would 
make  them  parts  of  the  res  gestce 
cannot  be  made  the  basis  of  recoup- 
ment or  counter-claim.  In  an  action 
for  assault  and  battery  the  defend- 
ant cannot  counter-claim  or  recoup 
for  a  battery  committed  at  the  same 
affray  by  the  plaintiff  on  the  defend- 
ant (Schnaderbeck  v.  Worth,  8  Abb. 
Pr.  37);  nor  can  the  defendant  in  an 
action  for  slander  counter-claim  for 
slanderous  words  uttered  by  the 
plaintiff.  Kemp  v.  Amacker,  13  La. 
65. 


§  183.] 


KECOUPMENT    AND    COUNTER-CLAIM. 


4G1 


character  alleged  each  party  may  generally  sue  in  contract  or 
tort.  If  the  plaintiff  had  declared  in  contract,  alleging  that 
the  defendant  agreed  that  his  horse  was  sound  as  far  as  he 
knew,  knowing  him  to  be  unsound,  it  cannot  be  doubted  that 


In  Askins  v,  Hearns,  3  Abb.  Pr.  1S4, 
Justice  Emott  thought  a  counter- 
claim could  not  be  sustained  upon 
the  following  facts:  The  plaintiff 
sued  for  damages  for  convei'sion  of  a 
ring.  The  defendant  alleged  an  ex- 
change of  rings,  each  to  be  kept 
until  the  other  should  be  returned, 
and  averred  a  tender  of  the  one  and 
demand  of  the  other,  and  asked 
judgment  for  his  ring.  Such  a  coun- 
ter-claim would  now  be  allowed  with- 
out hesitation.  Hoffman,  J.,  said  of 
this  case,  that  "a  distinction  may  be 
suggested,  that  where  the  ground  of 
each  claim  is  really  a  contract,  al- 
though the  form  of  action  under  the 
old  system  would  be  for  a  wrong, 
then,  when  the  transaction  that 
gives  rise  to  each  is  the  same,  the 
code  is  broad  enough  to  include  a 
counter-claim.  The  exchange  alleged 
of  the  rings  was  in  fact  a  mutual 
agreement."  Xenia  Branch  Bank  v. 
Lee.  7  Abb.  Pr.  377.  In  this  case  Wood- 
ruff, J.,  said:  "The  great  question 
in  controversy  is,  in  an  action  in  the 
nature  of  trover  by  a  plaintiff  who 
has  indorsed  notes  or  bills  of  ex- 
change, brought  to  recover  the  value 
thereof  from  a  defendant  in  whose 
possession  they  are,  and  who  claims 
title  thereto  through  the  plaintiff's 
indorsement,  can  the  defendant  set 
up  title  in  himself,  demand  of  pay- 
ment, protest  and  notice,  and  ask  by 
way  of  counter-claim  a  judgment 
against  the  plaintiff  as  indorser?" 
It  was  decided  in  the  affirmative. 
After  quoting  subdivisions  1  and  2 
of  section  150  of  the  New  York  code, 
the  judge  said:  "This  division  of 
the  section  shows  that  there  may  be 
a    counter-claim   when    the   action 


itself  does  not  arise  on  contract;  for 
the  second  clause  is  expressly  con- 
fined to  actions  upon  contract  ami 
allows  counter-claims  in  such  casek 
of  any  other  cause  of  action  alst 
arising  on  contract;  and  thig  maj 
embrace  probably  all  cases  hereto 
fore  denominated  'set-off,'  legal  or 
equitable,  and  any  other  legal  or 
equitable  demand,  liquidated  or  un- 
liquidated, whether  within  the  proper 
definition  of  set-oflf  or  not  if  it  arise 
on  contract.  Gleason  v,  Moen,  2 
Duer,  639.  The  first  subdivision 
would  therefore  be  unmeaning  as  a 
separate  definition  if  it  neither  con- 
templated cases  in  which  the  action 
was  not  brought  on  the  contract  it- 
self in  the  sense  in  which  these  words 
are  ordinarily  used,  nor  counter- 
claims which  did  not  themselves 
arise  on  contract.  The  first  subdi- 
vision by  its  terms  assumes  that  the 
plaintiff's  complaint  may  set  forth, 
as  the  foundation  of  the  action,  a 
contract  or  a  transaction.  The  legis- 
lature in  using  both  words  must  be 
assumed  to  have  designed  that  each 
should  have  a  meaning;  and  in  our 
judgment  this  construction  should 
be  according  to  the  natural  and  ordi- 
nary signification  of  the  terms.  In 
this  sense  every  contract  may  be  said 
to  be  a  transaction,  but  every  trans- 
action is  not  a  contract.  Again,  the 
second  subdivision  having  provided 
for  all  counter-claims  arising  on  con- 
tract—  in  all  actions  arising  on  con- 
tract —  no  cases  can  be  supposed  to 
which  the  first  subdivision  can  be 
applied  unless  it  be  one  of  three 
classe.s,  viz. :  1st.  In  actions  in  which 
a  contract  is  stated  as  the  plaintiff's 
claim — counter-claims  which  arise 


462 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


[§  183. 


the  defendant  may  recoup  his  damages.  The  fact  that  the  de- 
fendant sues  in  tort  does  not  complicate  the  matter.  It  is  not 
more  difficult,  or  less  desirable,  in  such  an  action  to  have  the 
whole  litigation  adjusted  in  a  single  suit.* 


out  of  the  same  contract;  or,  2d.  In 
actions  in  which  some  transaction, 
not  being  a  contract,  is  set  forth  as 
the  foundation  of  the  plaintiff's 
claim —counter-claims  which  arise 
out  of  the  same  transaction;  or,  3d. 
In  actions  in  which  either  a  contract, 
or  a  transat'tion  which  is  not  a  con- 
tract, is  set  forth  as  the  foundation 
of  the  plaintiff's  claim  —  counter- 
claims which  neither  arise  out  of  the 
same  contract,  nor  out  of  the  same 
transaction,  but  which  are  connected 
with  the  subject  of  the  action." 

In  Glen  &  Hall  M.  Co.  v.  Hall.  61 
N.  Y.  226,  19  Am.  Rep.  278.  an  ac- 
tion was  brought  to  restrain  the  de- 
fendant from  using  the  plaintiff's 
trade-mark;  the  defendant  claimed 
it  was  his,  and  asked  damages  for 
plaintiff's  use  of  it  by  way  of  coun- 
ter-claim, and  it  was  held  to  be 
proper. 

A  claim  on  the  part  of  the  defend- 
ant for  the  price  and  value  of  the 
Identical  goods  which  are  the  sub- 
ject of  the  action  is  a  cause  of  action 
arising  out  of  the  same  transaction 
alleged  as  the  foundation  of  the 
plaintiff's  claim,  or  is  at  least  con- 
nected with  the  subject  of  the  ac- 
tion. Thompson  v.  Kessel,  30  N.  Y. 
383;  Brown  v.  Buckingham,  11  Abb. 
Pr.  387. 

The  words  "subject  of  the  action  " 
refer  to  the  origin  and  ground  of  the 
plaintiff's  right  to  recover  rather 
than  to  the  thing  itself  in  contro- 
versy.   Collier  v.  Erwin,  3  Mont.  142. 

In  an  action  for  assault  and  bat- 
tery the  injury  which  provoked  the 
defendant  to  commit  the  wrong  is 
not  connected  with  the  subject  of 


the  action.     "Ward  v.  Blackwood,  48 
Ark.  396,  3  S.  W.  Rep.  624. 

The  debaucheryof  the  defendant's 
daughter  is  not  ground  for  a  counter- 
claim in  an  action  brought  by  him 
guilty  thereof  to  recover  money  ob- 
tained by  duress.  Heckman  v. 
Swartz,  55  Wis.  173,  12  N.  W.  Rep. 
439. 

In  an  action  against  a  judgment 
creditor  for  the  unlawful  seizure  of 
exempt  property  the  defendant  can- 
not set  up  the  judgment  under  which 
the  seizure  was  made  as  a  counter- 
claim. Elder  v.  Frevert,  18  Nev.  446, 
3  Pac.  Rep.  237. 

The  "subject  of  the  action  "  is  the 
facts  constituting  the  plaintiff's 
cause  of  action.  The  mere  fact  that 
the  defendant  sets  up  acts  on  the 
part  of  the  plaintiff  which  are  pre- 
judicial to  his  rights,  and  alleges 
that  these  acts  on  his  part  give  the 
reason  the  defendant  conducted 
himself  as  complained  of  by  the 
plaintiff,  does  not  show  such  a  con- 
nection as  is  necessary  to  constitute 
such  acts  a  counter-claim.  IMulber- 
ger  V.  Koenig,  63  Wis.  558,  22  N.  W. 
Rep.  745.  The  word  "  connected " 
may  have  a  narrow  or  broad  sig- 
nification, according  to  the  facts  of 
the  case. 

"The  counter-claim  must  have 
such  relation  to  and  connection  with 
the  subject  of  the  action  that  it  will 
be  just  and  equitable  that  the  con- 
troversy between  the  parties  as  to 
the  matters  alleged  in  the  complaint 
and  the  counter-claim  should  be  set- 
tled in  one  action  by  one  litigation : 
and  that  the  claim  of  the  one  should 
be  offset  against  or  applied  upon  the 


1  Carey  v.  Guillow,  105  Mass.  18,  7  Am.  Rep.  494. 


183.] 


KECOUPMENT   AND    COUNTER-CLAIM. 


403 


If  the  buyer  of  goods  brings  an  action  against  the  seller  for 
not  completing  the  contract  the  latter  may  counter- [288,  280] 
claim  or  recoup  for  the  goods  already  delivered. •  And  so  in 
an  action  by  the  vendor  to  recover  the  price  of  goods  sold  and 
only  delivered  in  part  the  purchaser  may  recoup  any  damao-es 
sustained  by  him  by  reason  of  the  failure  or  refusal  to  deliver 
the  residue;^  and  in  replevin  for  goods  sold  with  reservation 
of  title  until  payment,  for  failure  to  deliver  at  the  time  fixed ; ' 
and  generally  for  failure  to  deliver  as  agreed  although  the 
contract  is  severable  and  part  delivery  has  been  accepted;* 
and  in  an  action  by  the  seller  for  the  price  the  buyer  may 
recoup  for  any  deficiency  in  quantity,  delay  in  delivery  or 
breach  of  warranty.^  So  in  an  action  on  a  note  given  for  the 
good  will  of  a  business  the  defendant  may  recoup  his  dama«"es 
resulting  from  the  plaintiff's  resumption  of  that  business;^ and 


claim  of  the  other."  This  rule  in- 
cludes a  ease  where  a  second  mort- 
gagee in  possession  of  land  commit- 
ted waste  for  the  alleged  purpose  of 
depriving  the  defendant,  the  first 
mortgagee,  of  his  security.  In  an 
action  for  the  conversion  of  wood 
cut  by  the  second  mortgagee  the 
damage  sustained  by  the  prior  in- 
cumbrancer was  connected  with  the 
subject  of  the  action.  Carpenter  v. 
Manhattan  L.  Ins.  Co.,  93  N.  Y.  552. 
See  Thomson  v.  Sanders,  118  id.  252, 
23  N.  E.  Rep.  874. 

In  an  equitable  action  to  cancel 
an  insurance  policy  a  counter-claim 
alleging  a  cause  of  action  on  the  pol- 
icy for  the  loss  of  property  insui-ed 
is  connected  with  the  subject  of  the 
action.  Revere  F.  Ins.  Co.  v.  Cham- 
berlin.  56  Iowa,  508,  8  N.  W.  Rep. 
338.  9  id.  386. 

The  penalty  imposed  upon  a  na- 
tional bank  for  taking  an  unlawful 
rate  of  interest  cannot  be  counter- 
claimed  in  an  action  upon  the  instru- 
ment discounted  by  it.  Barnet  v. 
Nat.  Bank,  98  U.  S.  555.  See,  gener- 
ally, Keegan  v.  Kinnare,  123  111.  280, 
14  N.  E.  Rep.  14;  Evans  v.  Hughey, 


76  111.  115;  Nolle  v.  Thompson,  3 
Met.  (Ky.)  121;  Kingman  v.  Draper, 
14  111.  App.  577;  Cow  Run  Co.  v. 
Lehmer,  41  Ohio  St.  384;  Tarwater 
V.  Hannibal,  etc.  R.  Co.,  42  Mo.  193; 
McArthur  v.  Green  Bay,  etc.  Co.,  34 
Wis.  139;  Walsh  v.  Hall,  66  N.  C. 
233;  Walker  v.  Johnson,  28  Minn. 
147,  9  N,  W.  Rep.  632;  Poston  v.  Rose, 
87  N.  C.  279;  Whitlock  v.  Ledford,  82 
Ky.  390;  Cornelius  v.  Kessel,  58  Wis. 
237,  16  N.  W.  Rep.  550. 

1  Leavenworth  v.  Packer,  52  Barb. 
132. 

2Harrolson  v.  Stein,  50  Ala.  347: 
Piatt  V.  Brand.  26  Mich.  178;  Bowker 
V.  Hoyt,  18  Pick.  555. 

3  Ames  Iron  Works  v.  Rea,  56  Ark. 
450,  19  S.  W.  Rep.  1063, 

^Gomer  v.  McPhee,  2  Colo.  App. 
287,  31  Pac.  Rep.  119;  Booth  v.  Ty- 
son, 15  Vt.  515;  Evans  v.  Chicago, 
etc.  R.  Co.,  20  111.  189. 

5  Cooke  V.  Preble,  80  111.  318;  Hitch- 
cock V.  Hunt,  28  Conn.  843;  Stiegle- 
man  v.  Jeffries,  1  S.  &  R.  477,  7  Am. 
Dec.  626. 

eWarfield  v.  Booth,  33  Md.  63; 
Herbert  v.  Ford,  29  Me.  546;  Burk- 
hardt  v.  Burkhardt.  36  Oiiio  St.  261. 


464  LEGAL    LIQUIDATIONS    AND    EEDUOTIONS.  [§   184. 

in  an  action  on  an  agreement  not  to  set  up  business  in  a  cer- 
tain place  the  defendant  may  recoup  the  amount  agreed  to  be 
paid  for  the  good  will.'  A  contract  which  gives  the  sole  right 
to  sell  an  article  in  a  specified  place  is  not  so  disconnected  with 
a  note  executed  at  the  same  time  for  the  purchase-money  of 
the  article  to  be  sold  as  that  the  damages  resultmg  from  the 
breach  of  the  former  cannot  be  recouped  in  a  suit  on  the 
latter.- 

§  184,  Recoupment  between  vendor  and  purchaser.  On 
the  same  principles  recoupment  is  reciprocally  available  be- 
tween vendor  and  purchaser  of  real  estate  as  well  as  of  per- 
sonal property.  Eecoupment  may  be  had  against  the  vendor 
for  false  representations  affecting  the  identity  and  value  of 
the  land.*  The  purchaser's  right  to  do  so  is  not  affected  by 
the  fact  that  the  sale  included  both  personal  and  real  property, 
and  that  the  misrepresentation  related  to  only  one  class,  if  the 
transaction  and  the  consideration  were  an  entirety.*  If  tenants 
in  common  make  partition  to  each  other  by  quitclaim  deeds 
the  law  implies  a  warranty  that  each  will  make  good  to  the 
other  any  loss  resulting  from  a  superior  title ;  ^  hence  a  counter- 
claim may  be  maintained  by  the  tenant  who  is  evicted,  on  that 
account,  against  his  co-tenant.^  In  debt  on  a  bond  given  for 
real  estate  or  other  action  for  the  price  the  defendant  may  re- 
coup his  damages  for  the  plaintiff's  breach  of  an  agreement  to 
give  possession,  as  well  as  for  injury  to  the  premises,'^  or  for  the 
violation  of  an  agreement  to  dig  a  well  on  the  premises  sold.* 
So  a  vendee's  action  to  recover  the  purchase-money  is  subject 
to  recoupment  for  his  negligent  destruction  of  the  subject  of 
the  purchase.^     Recoupment  has  been  allowed,  in  a  suit  for 

1  Baker  v.  Connell,  1  Daly,  469.  «  Huntley  v.  Cline,  93  N.  C.  458. 

2Andre  v.  Morrow,  65  Miss.  315,  7  7  Patterson  v.  Hulings,  10  Pa.  506; 

Am.  St.  658,  3  So.  Rep.  659.  Owens  v.  Rector,  44  Mo.  389;  Gordon 

3  James  v.  Elliot,  44  Ga.  237;  Estell  v.  Bruner,  49  Mo.  570;  Grand  Lodge 

V.  Myers,  56  Miss.  800;  Warvelle  on  v.    Knox,   20  Mo.   433;     Streeter  v. 

Vendors  (2d  ed.),  §  962;    Mulvey  v.  Streeter,  43  111.  155;  Fetternecht  v. 

King,  39  Ohio  St.  491.  McKay,  47  N.  Y.  426;  Abrahamson 

*  Baughman  v.  Gould,  45  Mich.  481,  v.  Lamberson,  72  Minn.  308,  75  N.  W. 

8  N.  W.  Rep.  73.  Rep.  226. 

5  Nixon   V.   Lindsay,  2  Jones'  Eq.  «  Maguire  v.  Howard,  40  Pa.  391. 

230;  Rogers  v.  Turley,  4  Bibb,  355;  9  Hatchett  v.  Gibson,  13  Ala.  587. 
Morris  v.  Harris,  9  Gill,  26. 


§  184.]         KECOUPMENT  AND  COUNTER-CLAIM.  405 

purchase-money,  for  damages  done  to  the  premises  by  an  [290] 
adverse  claimant,  pending  a  litigation  with  the  vendor,  in 
which  the  latter's  title  was  maintained;  because,  as  plaintiff, 
he  could  have  indemnified  himself  against  the  spoliator  by  the 
recovery  of  rnestie  profits.^ 

It  is  well  settled  that  when  a  deed  has  been  made  and  ac- 
cepted, and  possession  taken  under  it,  defects  in  the  title  will 
not  enable  the  purchaser  to  resist  the  payment  of  the  purchase- 
money,  or  recover  more  than  nominal  damages  on  his  cove- 
nants for  title,  except  in  some  states  on  the  covenant  of  seizin, 
while  he  retains  the  deed  and  possession,  and  has  been  sub- 
jected to  no  inconvenience  or  expense  on  account  of  the  de- 
fect.^ Though  if  no  title  or  possession  passed  by  the  deed  it 
would  seem  that  any  undertaking  for  payment  of  the  purchase- 
money  would  be  void  for  want  of  consideration  notwithstand- 
ino-  the  covenants  in  the  deed.' 

A  vendee  is  authorized  to  extinguish  an  incumbrance  or  to 
remedy  a  defect  of  title  after  a  breach  of  thp  covenant  of  war- 
ranty, without  a  special  request  from  or  the  consent  of  the 
vendor,  and  may  recoup  the  amount  reasonably  paid  for  that 
purpose  in  an  action  for  purchase-money,  where  there  are  cove- 
nants for  title  and  against  incumbrances.*     So  the  vendee  may 

iWeakland  V.  HofEman,  50 Pa.  513,  17   Ark.  254;  Tillotson  v.  Grapes,  4 

88  Am.  Dec.  560.  N.  H.  444. 

2Whislerv.  Hicks,  5  Blackf.  100,  ^  Delavergne  v.  Norris,  7  Johns. 
33  Am.  Dec.  454;  Delavergne  v.  358,  5  Am.  Dec.  281;  Stanard  v.  Eld- 
Norris,  7  Johns.  358,  5  Am.  Dec.  281;  ridge,  16  Johns.  254;  Johnson  v. 
Stanard  v.  Eldridge,  16  Johns.  254;  Collins,  116  Mass.  393;  Leffingwell  v. 
Stephens  v.  Evans,  30  Ind.  39;  Brandt  Elliott,  10  Pick.  204;  Brooks  v.  Moody, 
V.  Foster,  5  Iowa,  287;  McCaslin  v.  20  Pi'-^k.  474;  Norton  v.  Babcock,  2 
State,  44  Ind.  151;  Edwards  v.  Bo-  Met.  510;  Doremus  v.  Bond,  8  Blackf. 
dine,  26  Wend.  109;  Abbott  v.  Allen,  368;  Baker  v.  Railsback,  4  Ind.  533; 
2  Johns.  Ch.  519;  Bumpus  v.  Platner,  Brandt  v.  Foster,  5  Iowa,  287;  Mc- 
1  id.  213;  Farnham  v.  Hotchkiss,  2  Daniel  v.  Grace,  15  Ark.  465;  Lamer- 
Keyes,  9;  Warvelle  on  Vendors  (2d  son  v.  Marvin,  8  Barb.  11;  Detroit  & 
ed.),  t;  862.  But  see  Walker  v.  Wil-  M.  R.  Co.  v.  Griggs,  12  Mich.  45;  Still- 
son,  13  Wis.  522;  Hall  v.  Gale,  14  well  v.  Chappell,  30  Ind.  72;  Brown 
Wis.  54;  Akerly  v.  Vilas,  21  Wis.  88;  v.  Crowley.  39  Ga.  376,  99  Am.  Dec. 
Lowry  v.  Hurd,  7  Minn.  356;  Scant-  462;  Deen  v,  Herrold,  37  Pa.  150;  Key 
lin  V.  Allison,  12  Kan.  85;  Tarpley  v.  v.  Henson,  17  Ark.  254;  Brown  v. 
Poage,  2  Tex.  139.  Starke,  3  Dana,  316;  Burk  v.  Clem- 

3  Dickinson  v.  Hall,  14  Pick.  217;  ents,    16  Ind.    132;   Schuchmann  v. 

Rice  v.   Goddard,  id.  293;    Trask  v.  Knoebei,  27111.  175;  Christy  v.  Ogle, 

Vinson,  20  id.  105;  Key  v.  Henson,  33  111.  295;  Kent  v.  Cantrall,  44  Ind. 
Vol.  I  — 30 


4:Q6  LEGAL    LIQUIDATIONS    AND    KEDUCTIONS.  [§   184. 

[291]  recoup  his  damages  on  the  covenant  of  warranty  after 
the  title  has  failed  and  there  has  been  an  eviction,  or  what  is 
equal  thereto.^  In  some  states,  however,  the  defense  for  par- 
tial failure  of  title  to  real  estate  is  not  allowed  at  law  in  actions 
for  the  price.^  Generally  no  difference  is  made  as  to  the  exer- 
cise of  the  right  of  recoupment  whether  the  plaintiff's  action 
is  brought  on  the  original  contract,  or  on  a  note  or  other 
security  given  for  the  price,  and  the  latter  under  seal.'  Such 
a  distinction,  however,  seems  to  be  recognized  in  New  Jersey  * 
and  in  England.  In  an  action  on  a  bill  of  exchange  for  goods 
supplied,  which  were  "  to  be  of  good  quality  and  moderate 
price,"  and  to  be  estimated  at  about  400^.,  bills  having  been 
given  for  that  amount,  it  was  no  defense  that  the  goods  turned 
out  to  be  worth  much  less  than  the  estimated  price.  Lord 
Tenterden  said:  "The  cases  cited  by  the  plaintiffs  have  com- 
pletely established  the  distinction  between  an  action  for  the 
price  of  the  goods  and  an  action  on  the  security  given  for 
them.  In  the  forriier,  only  the  value  can  be  recovered;  in  the 
latter,  I  take  it  to  have  been  settled  by  these  cases,  and  acted 
upon  ever  since  as  law,  that  a  party  holding  bills  given  for 
[2\)2']  the  price  of  goods  supplied  can  recover  upon  them  unless 
there  has  been  a  total  failure  of  consideration.     If  the  consid- 

452;  Robinius  v.  Lister,  30  Ind.  143,  63;  Judd  v.  Dennison,  10  Wend.  512; 
95  Am.  Dec.  674;  Davis  v.  Bean,  114  Payne  v.  Cutler,  13  Wend.  GOo;  Good- 
Mass.  358;  Scantlin  v.  Allison,  13  win  v.  Morse,  9 Met.  278;  Purkett  v. 
Kan.  85;  McKee  v.  Bain,  11  Kan.  569.  Gregory,  3  111.  44;  Christy  v.  Ogle,  33 
iMcDaniel  v.  Grace,  15  Ark.  487;  111.  295;  Hitchcock  v.  Hunt,  28  Conn. 
Tallmadge  v.  Wallis,  25  Wend.  107;  343;  Mears  v.  Nichols.  41  111.  207,  89 
Sargeant  v.  Kellogg.  10  III.  273:  Wil-  Am.  Dec.  381;  Kellogg  v.  Denslow, 
son  V.  Burgess,  34  id.  494;  Coster  v.  14  Conn.  411;  Wilmot  v.  Hurd,  11 
Monroe  Manuf.  Co.,  2  N.  J.  Eq.  467;  Wend.  585:  Dailey  v.  Green,  15  Pa. 
Tone  V.  Wilson,  81  111.  529;  McDowell  118;  Ward  v.  Reynolds,  32  Ala.  384; 
V.  Milroy,  69  id.  498.  Key  v.  Henson,  17  Ark.  254. 

2  CuUum  V.  Bank  of  Mobile,  4  Ala.  In  an  action  by  the  vendee  upon 
21,  37  Am.  Dec.  725;  Starke  v.  Hill,  the  covenants  in  his  deed  the  vendor 
6  Ala.  785:  Tankersly  v.  Graham,  8  may  recoup  the  unpaid  purchase- 
id.  247;  Helvenstein  v.  Higgason.  35  money  or  notes  given  to  represent 
Ala.  259;  Morrison  v.  Jewell,  34  Me.  the  same.  Beecher  v.  Baldwin,  55 
146;  Thompson  v.  Mansfield,  43  Me.  Conn.  419,  12  Atl.  Rep.  401,  3  Am. 
490;  Wheat  v.  Dotson,  12  Ark.  699;  St.  57. 

Bowley  v.  Holway,  124  Mass.  395.  *  Price  v.  Reynolds,  39  N.  J.  L.  171; 

3  Harrington  v.  Stratton,  22  Pick.     Hunter  v.  Reiley,  43  id.  480. 
510;   Van  Epps  v.  Harrison,  5  Hill, 


§  1S5.]  kecoupme:nt  and  cou>;TEii-cLAiM.  467 

cration  fails  partially,  as  by  the  inferiority  of  the  article  fur- 
nished to  that  ordered,  the  buyer  must  seek  liis  remedy  bv 
cross-action.  The  warranty  relied  on  in  this  action  makes  no 
difference."  ^ 

In  Wisconsin  it  has  been  held  that  where  notes  are  given 
for  the  contract  price  they  are  not  payment  unless  so  agreed ; 
and  in  a  suit  upon  one  of  several  such  notes  it  will  be  pre- 
sumed, in  the  absence  of  evidence,  that  those  not  yet  due  are 
still  in  the  vendor's  hands,  and  that  it  is  error  to  render  jud fo- 
ment for  the  defendant  on  a  counter-claim  for  the  excess  of 
his  damages  for  breach  of  warranty  over  the  note  in  suit.^  It 
was  held  to  be  unjust  to  allow  the  defendants  full  damages  for 
breach  of  warranty,  the  same  as  though  they  had  paid  for  the 
property,  when  these  damages  largely  exceed  the  amount 
sued  for.  In  Minnesota  the  decisions  are  to  the  contrary  and 
rest  upon  the  principle  that  the  defendant's  cause  of  action  is 
one  and  indivisible;  that  a  recovery  of  a  part  of  the  damages 
would  bar  a  subsequent  counter-claim  to  recover  for  the 
remainder.* 

§  185.  Liquidated  and  unliquidated  damages  may  be 
recouped.  It  is  immaterial  whether  the  damages  which  a  de- 
fendant seeks  to  recoup  or  counter-claim  are  liquidated  or  un- 
liquidated; nor  is  it  material  whether  the  plaintiff's  demand  is 
liquidated  or  not.^  The  theory  of  this  defense  being  the  set- 
ting off  of  the  damages  on  one  cause  of  action  against  those 
recoverable  on  another  to  avoid  the  necessity  of  other  suits, 

1  Obbard  v.  Betham,  Moo.  &  M.  483;  Lierz  v.  Morris,  19  id.  73;  Weaver  v. 

Morgan  v.  Richardson,!  Canip.  40,  Penny.  17111.  App.  628:  Batterman  v. 

n.;  Day  v.  Nix.  9  Moore,  159;  Trickey  Pierce,  3  Hill,  171;  Ward  v.  Fellers, 

V.  Larne,  6  M.  &  W.  278;  Gascoynev.  3  Mich.  281;  Winder  v.  Caldwell,  14 

Smith,  McC.  &  Y.  338;  Warwich  v.  How.  434;  Van  Buren  v.  Digges,  11 

Nairn,  10  Ex.  762.  id.  461;  McLure  v.  Rush,  9  Dana,  64; 

'^  Aultman  &  T.  Co.  v.  Hethering-  Bayne  v.  Fox,  18  La.  80;  Stoddard  v. 

ton,  42Wis.  022;  Aultman&T.  Co.  V.  Treadwell,    26  Cal.    294;     Keyes  v. 

Jett,  id.  488.  Western  Vermont  Slate  Co.,  34  Vt 

3  Geiser  Threshing  Machine  Co.  v.  81:   Hubbard  v,  Fisher,  25  Vt,  539; 

Farmer.  27  Minn.  428,  8  N,  W.  Rep.  Dennis  v.  Belt,  30  Cal.  247;  Kaskas- 

141;  Minneapolis   Harvester   Works  kia  Bridge  Co.  v.  Shannon,  6  111.  15; 

V.  Bonnallie,  29  Minn.  373,  13  N.  W.  Schubert  v.  Harteau,  34  Barb.  447; 

Rei>.  149.  Speers  v.  Sterrett,  29  Pa.  192;  Hayne 

*  North  German  Lloyd  Steamship  v.  Prothro,  10  Rich.  218. 
Co.  v.  Wood,  18  Pa.  Super.  Ct  488; 


468  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  186. 

where  both  arise  out  of  the  same  transaction,  the  defendant 
puts  forward  a  substantive  cause  of  action,  becomes  an  actor 
to  assert  and  prove  it,  with  no  other  hampering  conditions 
than  would  apply  to  him  as  plaintiff  in  a  separate  action  upon 
his  claim.  When  it  appears  to  be  so  connected  with  the  sub- 
ject of  the  plaintiff's  action  as  to  be  available  as  a  counter- 
[293]  claim  or  b}'^  way  of  recoupment,  it  must  be  pleaded  and 
proved  according  to  the  same  rules  as  when  it  is  made  the 
basis  of  an  action;  the  damages,  if  of  such  nature  as  to  be 
submitted  to  the  consideration  of  a  jury  in  a  suit  brought  for 
their  recovery,  are  equally  subject  to  determination  by  a  jury 
for  the  purpose  of  redress  in  favor  of  a  defendant.  The  policy 
of  admitting  this  defense  to  avoid  circuity  of  action  obviously 
embraces  all  cases  where  the  rights  of  the  parties  are  of  such 
a  character  as  to  be  susceptible  of  adjustment  in  one  action. 
Accordingly,  where  the  defense  has  the  necessary  connection 
with  the  subject  of  the  plaintiff's  action  and  the  rights  of  both 
parties  may  be  finallj^  and  justly  settled  b}'^  one  adjudication, 
it  is  not  essential  that  the  damages  on  either  side  should  be 
liquidated,  nor  of  the  same  nature; —  they  may  be  liquidated 
on  one  side  and  unliquidated  on  the  other ;  on  one  side  they 
may  be  claimed  strictly  for  violation  of  contract,  and  on  the 
other  for  fraud,^  or  negligence,'^  or  other  tort/  or  for  tort  on 
both  sides.* 

§  186.  Affirmative  relief  not  obtainable.  Eecoupment  is 
generally  available  only  as  a  defense;  for,  except  by  statute, 
it  can  have  no  further  effect  than  to  answer  the  plaintiff's 
damages  in  whole  or  in  part;  the  defendant  cannot  recover  any 
balance  or  excess,^  It  is  not  necessary  that  it  be  a  full  de- 
fense;® it  cuts  off  so  much  of  the  plaintiff's  damages  as  the 
cross-claim  comes  to,^  and  when  sufficient  in  amount  may,  of 
course,  satisfy  his  claim  entirely,^     The  verdict  will  then  be 

1  See  §  179.  ^  Hay  v.  Short,  49  Mo.  139;  Ward  v. 

2  §  180,  Fellers,  3  Mich,  281 ;  Estell  v.  Myers, 

3  §180.  54  Miss,   174;   Fowler   v,  Payne.  52 
*  Carey  v.  Guillow.  105  Mass.  18;     Miss.  210.    Contra,  Johnson  v.  White 

Estell  V.  Myers,  54  Miss.  174;  Deagan  Mountain  Creamery  Ass'n.  68  N.  H, 

V,  Weeks,  67  App.  Div.  410,  73  N.  Y,  437,  36  Atl.  Rep.  13,  73  Am.  St.  610. 

Supp.  641;  Pelton  v.  Powell,  96  Wis.  6  Ross  v,  Longrauir,  15  Abb.  Pr.  32a 

473,  71  N,  W.  Rep.  887.    Contra,  Terre  ^  ives  v.  Van  Epps,  22  Wend.  155, 

Haute  &  I.  R,  Co.  v.  Pierce,  95  Ind,  8  Deagan   v.  Weeks,  67  App.  Div. 

496.  410,  73  N.  Y.  Supp.  641. 


§  186.]         KECOUPMENT  AND  COUNTER-CLAIM.  469 

for  the  defendant.  In  this  respect  it  is  different  from  mere 
mitigation,  for  damages  can  never  be  mitigated  below  a  nom- 
inal sum.  But  however  large  the  damages  assessable  in  respect 
of  the  defendant's  cross-claim  set  up  by  way  of  recoupment,  if 
it  exceed  the  plaintiff's  damages  only  so  much  is  taken  into 
account  as  is  required  to  annul  his  demand;  the  excess  is  lost.' 
This  limitation  has  been  obviated  by  the  defendant  brino^ino-a 
cross-suit  as  well  as  setting  up  the  claim  by  way  of  re-  [ii94] 
coupment  and  having  the  actions  consolidated  or  tried  to- 
gether.^ If  two  cross-actions  are  so  tried,  one  for  the  price  of 
property  sold  and  the  other  for  fraud  in  the  vendor,  the  jury, 
if  they  find  the  fraud  and  that  the  damages  equaled  or  ex- 
ceeded the  purchase-mone}^  may  render  a  verdict  for  the  de- 
fendant in  the  first  action  and  for  the  plaintiff  in  the  second 
for  the  excess,  if  any,  of  such  damages.'  But  in  such  case  a  party 
who  defends  by  recoupment  and  brings  a  cross-suit,  on  the 
trial  of  both  together  is  not  entitled  to  have  damages  assessed 
in  both  actions  for  the  same  breach  of  contract,  nor  to  divide 
his  claim  for  damages  as  he  sees  fit  between  the  two.  Both 
actions  being  tried  together,  however,  his  entire  damages  for 
breaches  of  the  contract,  or  in  respect  of  his  cross-demand, 
must  be  assessed  and  applied  first,  to  cancel  in  whole  or  in 
part  the  damages  of  the  plaintiff  in  the  first  action;  then,  if 
there  be  an  excess,  it  should  be  returned  in  a  verdict  for  the 
plaintiff  in  the  cross-action.*  Very  generally  in  this  country 
authority  has  been  given  to  render  judgment  in  favor  of  the 
defendant  for  any  excess  of  damages  after  satisfying  the  de- 
mand against  which  his  cross-claim  is  preferred.  But  when 
the  plaintiff  sues  as  assignee  of  the  demand,  the  defendant 
having  a  cross-claim  against  the  assignor  can  onl}"  use  it  for 
defense;  to  that  extent  it  is  available  the  same  as  though  tho 
suit  were  in  the  name  of  the  assignor.* 

1  Brunson  v.  Martin,  17  Ark,  270;        2 Cook  v.  Castner,  9  Cush.266;  Star 
Burlingame  v.  Davis,  13  111.  App.  602;  Glass  Co.  v.  Morey,  108  Mass.  570. 
Kingman  v.  Draper,  14  id.  577;  Wa-        ^Cook  v.  Castner,  supra. 
terman  v.  Clark,  76  111.  428;  Stow  v.        *  Star  Glass  Co.  v.  Morey,  supra, 
Yarwood,   14  id.   424;  Charles  City        ^See  §  176;  Desha's  Ex'r  v.  Robin- 
Plow  &  Manuf.  Co.  v.  Jones,  71  Iowa,  son,  17  Ark.  228. 
234,  32  N.  W.  Rep.  280. 


470  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  187, 

§  187.  Election  of  defendant  to  file  cross-claim  or  sue 
npon  his  demand.  A  defendant  has  an  election  to  use  such 
cross-demand  as  a  defense  by  way  of  recoupment  or  to  bring 
a  separate  action  upon  it;  but  he  will  not  have  an  election  to 
set  up  his  claim  by  way  of  recoupment  unless  it  would  be  jist 
and  equitable,  and  it  is  practicable  to  adjust  and  allow  it  in  the 
plaintiff's  action.  The  omission  to  take  advantage  of  matter 
of  recoupment  or  counter-claim  as  a  defense  is  no  bar  to  a 
[295]  cross  or  separate  action  upon  it;  so  that,  though  the 
cross-claim  be  admissible  by  way  of  defense,  the  defendant  has 
an  option  to  avail  himself  of  it  in  that  form  or  to  sue  upon  it 
in  another  action.*  The  reason  for  allowing  the  defendant  an 
option  is  that  it  w^ould  greatly  diminish  the  benefit  to  which 
he  is  entitled  and  in  some  cases  wholly  neutralize  it,  because, 
while  the  right  of  action  exists,  the  extent  to  which  the  breach 
of  warranty  or  of  contract  may  afford  a  defense  is  usually  un- 
certain, it  may  require  sometime  for  the  development  of  all 
the  injury  which  will  result  from  the  plaintiff's  misconduct  or 
default.  It  is  unreasonable,  therefore,  that  he  should  have  the 
right  to  fix  the  time  at  which  the  money  value  of  his  wrong- 
doino;  or  neMigent  omission  shall  be  ascertained.^ 

But  the  defendant  will  be  denied  the  right  of  recoupment 
w^hen  it  cannot  be  justly  and  equitably  allowed.*  It  is  a  de- 
fense on  principles  borrowed  from  equity,  and  if  a  superior 
equity  intervene  it  will  be  denied;  and  when  any  equitable 
barrier  exists  and  the  whole  controversy  cannot  be  settled  in 
the  plaintiff's  action  a  separate  suit  must  be  brought.  On  this 
ground,  in  several  states,  defenses  of  this  kind  in  suits  for  the 
purchase-money  of  land  based  on  breaches  of  covenants  for 
title  will  not  be  allowed  in  actions  at  law.*  The  owner  of  a 
lot  entered  into  a  contract  with  others  for  the  latter  to  build 

1  Barth  v.  Burt,  43  Barb.  628;  Mim-  so.  Hitchcock  v.  TurnbuU,  44  Minn, 
naugh  V.  Partlin,  67  Mich.  391,  34  N.    475,  47  N.  W.  Rep.  153. 

W.  Rep.  717.  Where  notes  are  given  on  a  settle- 

2  Davis  V.  Hedges,  L.  R.  6  Q.  B.  G87.  ment  for  a  balance  found  due  after 

3  Judgment  may  be  ordered  for  the  all  the  grounds  for  claiming  a  recoup- 
plaintiff  on  the  pleadings  if  the  ment  are  known  to  their  maker  he 
answer  states  a  counter-claim  for  is  estopped  from  urging  any  such 
merely  nominal  damages  and  the  matters  in  defense  to  an  action  upon 
costs  will  not  be  affected  by  doing  them.     Hill  v.  Parsons,  110  111.  107. 

♦See  S  184. 


§  187.]         KECOUPMENT  AND  COUNTEK-CLAIM.  471 

a  warehouse  u])on  it  for  a  specified  sum.     The  contract  also 
contained  a  lease  to  this  party  for  thirteen  years  from  the  date 
fixed  for  its  completion  at  a  stated  yearly  rent.     After  the 
building  had  been  erected  the  builders  and  lessees  entered  a 
mechanic's  lien  for  the  work  and  materials,  and  two  years 
afterwards  the  property  was  sold,  and  it  had  to  be  determined 
how  the  fund  should  be  distributed.     The  lessees  had  occupied 
for  two  years  without  paying  any  rent,  and  during  that  time 
the  lessor  became  indebted  to  them  on  account  to  an  amount 
nearly  equal  to  the  rent  for  that  period.     The  court  below  ex- 
cluded the  lessee's  account  as  a  set-off  against  the  rent,  and 
set  off  the  rent  against  the  lien  debt  because  these  latter  were 
part  of  one  transaction.     This  decision  was  the  subject  of  re- 
view.    Thompson,  J.,  said:  "There  are  undoubtedly  cases  in 
which  the  transaction  is  so  entirely  a  unit  that  it  is  most  just 
and  proper  when  litigation  arises  that  matters  arising  directly 
out  of  it  should  be  determined  in  one  suit.     These  cases  are 
not  parallel  with  this.     Here  the  same  paper,  it  is  true,  con- 
tains the  contract  out  of  which  the  lien  arises  as  well  as  that 
out  of  which  the  rent  accrued;  but  they  are  as  distinct  and 
separate  covenants  as  if  written  on  separate  sheets  of  paper. 
There  is  a  complete  contract  for  building,  describing  the  kind 
of  structure,  and  the  time  when  to  be  completed  and  paid  for. 
Then  follows  a  complete  lease  of  the  building  for  a  long  term, 
to  commence  shortly  before  its  completion  and  to  con-  [296] 
tinue  for  thirteen  years.     The  former,  the  building  contract, 
was  to  be  finished  in  about  eight  months,  and  to  be  then  paid 
for.     The  first  year's  rent  would  not  fall  due  for  near  a  year 
after.     These  things  show  the  distinctiveness  of  the  covenants 
as  contracts.     Now  the  lien  might  have  been  reduced  under 
the  principle  invoked  by  showing  defectiveness  in  the  work 
and  the  like,  and  so  might  the  rent  if  the  landlord  had  been 
suing  for  it  on  account  of  interference  with  the  tenant's  pos- 
session, not    amounting   to   eviction,   but  acts   against   quiet 
enjoyment.     These  would  be  instances  of  claims  arising  in  the 
same  transaction  being  allowed  to  be  given  in  evidence  to  ex- 
tinguish the  claim  by  a  liberal  construction  of  our  defalcation 
act.     ...     It  was  impossible  to  settle  the  entire  covenants 
in  one  action.     They  were  of  different  and  distinct  natures, 
and  to  be  performed  at  different  and  distinct  periods.     In  ap- 


472  LEGAL   LIQUIDATIONS    AND    REDUCTIONS.  [§  188. 

plying  the  rent,  therefore,  to  the  extinguishment  of  the  lien,  on 
this  principle  alone,  when  the  plaintiffs  had  other  claims  en- 
titled to  its  application  on  equitable  principles,  was  of  course 
error  in  the  absence  of  appropriation  by  the  debtor  and  cred- 
itor. They,  therefore,  should  have  been  allowed  to  put  in 
evidence  their  book  account;  if  it  was  unpaid  and  unsecured, 
and  no  appropriation  by  the  parties  of  the  rent,  equity  would 
apply  it  to  the  book  account  in  preference  to  the  old  debt 
secured  by  the  lien.     This  is  the  well  settled  rule.  " ' 

In  an  action  on  a  note  against  the  executor  of  an  accom- 
modation indorser,  it  appeared  that  the  note  was  made,  in- 
dorsed and  transferred  to  the  plaintiff  in  payment  of,  or  as 
collateral  security  for,  an  antecedent  debt  of  a  firm  of  which 
the  maker  was  a  member;  that  afterwards  the  firm  made  an 
assignment  to  the  plaintiff  for  the  benefit  of  the  creditors,  pre- 
ferring the  plaintiff  and  the  defendant's  testator.  The  answer 
setting  up  these  facts  alleged  also  that  the  assets  were  more 
than  sufficient  to  pay  in  full  all  the  preferred  creditors.  But 
as  these  facts  could  not  be  established  without  an  accounting, 
and  the  plaintiff  was  entitled,  when  compelled  to  account,  to 
do  so  entirely,  which  could  not  occur  in  that  action  for  the 
want  of  necessary  parties,  all  evidence  touching  the  counter- 
claim was  properly  rejected.^ 

§  188.  Burden  of  proof;  measure  of  damages.  When  a 
defendant  sets  up  a  cross-claim  by  way  of  recoupment  he  as- 
sumes, like  a  plaintiff,  the  burden  of  proof  in  respect  to  it;  and 
the  same  rule  or  measure  of  damages  applies  as  would  be  ap- 
plicable in  a  separate  suit  upon  such  claim;  subject,  however, 
to  the  limitation  already  mentioned,  that  there  can  be  no  re- 
covery by  a  defendant  for  any  balance  found  in  his  favor  be- 
j'ond  the  damages  established  on  the  part  of  the  plaintiff,  in 
the  absence  of  a  statute  authorizing  it.  The  burden  of  proof 
rests  upon  him  because  he  asserts  a  claim  or  right,  and  must 
therefore  produce  the  proof  necessary  to  make  good  his  con- 
tention.^    That  the  same  rule  of  damages  applies  has  been 

1  McQuaide  v.  Stewart,  48  Pa.  198.        3  Mendel  v.  Fink,  8  III  App.  378;  1 
See  Howe  Machine  Co.  v.  Hickox,    Wliart.  Ev.,  §  356. 

106  111.  461.  The  defendant  has  the  burden  of 

2  Bailey  v.  Bergen,  67  N.   Y.   346.     establishing  all  the  elements   of  a 
See  Duncan  v.  Stanton,  30  Barb.  533.     cause  of  action  (Heedstrom  v.  Baker, 


§  ISO.] 


RECOUPMENT    AND    COUNTER-CLAIM. 


473 


repeatedly  held;^  and  it  is  universally  assumed  by  actually 
applying  it.^  But  the  rule  is  the  rule  of  compensator}'-  dam- 
ages —  no  recovery  on  a  claim  set  up  for  recoupment  can  be 
had  for  malice  or  any  aggravation  in  the  form  of  exemplary 
damages.'  The  consideration  that  this  defense  is  to  avoid  cir- 
cuity of  action,  and  when  resorted  to  is  a  substitute,  ['298] 
renders  it  desirable  and  necessary  to  its  usefulness  that  the 
defendant,  to  the  extent  of  full  defense,  should  have  the  bene- 
fit of  the  rule  of  damages  to  which  he  would  be  entitled  if  he 
elected  to  bring  a  separate  action. 

§  189.  A  cross-claim  used  in  defense  cannot  be  sued  upon. 
When  a  cross-claim  is  submitted  as  a  defense  by  way  of  re- 


13  IIL  App.  104):  and  must  plead 
them,     Rawson  v.  Pratt,  91  Ind.  9. 

•Goodwin  v.  Morse,  9  Met.  278; 
Myers  v.  Estell,  47  Miss.  4;  Hitch- 
cock V.  Hunt,  28  Conn.  343;  Tim- 
mons  V.  Dunn,  4  Ohio  St.  680. 

2  Blanchard  v.  Ely,  21  Wend.  342 
Tinsley  v.  Tinsley,  15  B.  Mon.  454 
Rogers  v.  Ostram,  35  Barb.  523 
Stoddard  v.  Treadwell,  26  Cal.  294 
Satchwell  v.  Williams,  40  Conn.  371 
Cook  V.  Soule.  56  N.  Y.  420;  War  field 
V.  Booth,  33  Md.  63;  Bradley  v.  Rea. 

14  Allen,  20;  Harralson  v.  Stein,  50 
Ala.  347;  Haven  v.  Wakefield.  39  111. 
509;  Bounce  v.  Dow,  57  N.  Y.  16; 
Aultman  &  T.  Co.  v.  Hetherington, 
42  Wis.  622;  Van  Epps  v.  Harrison,  5 
Hill,  63;  Overton  v.  Phelan,  2  Head, 
445;  Timmons  v.  Dunn,  4  Ohio  St. 
680;  Rotan  v.  Nichols,  22  Ark.  244; 
Harris  v.  Rathbun,  2  Keyes,  312; 
Railroad  Co.  v.  Smith,  21  Wall.  255. 

3  Allaire  Works  v.  Guion,  10  Barb. 
55.  This  case  has  sometimes  been 
cited  as  holding  that  special  dam- 
ages are  not  the  subject  of  recoup- 
ment (Benkard  v.  Babcock,  2  Robert. 
175);  and  Dorwin  v.  Potter,  5  Denio, 
306,  has  also  been  cited  as  holding 
the  same.  Neither  case  advances 
any  such  doctrine.  In  the  latter 
case  a  landlord's  action  for  rent  was 
defended  by  way  of  recoupment  for 
his  neglect  to  put  the  barns  on  the 


demised  premises  in  that  state  of  re- 
pair required  by  his  agreement.  The 
court  say,  Whittlesey,  J.:  "The  ma- 
terial question  here  is  as  to  the 
proper  rule  of  damages  for  such 
neglect  to  repair.  We  do  not  know 
what  the  referees  adopted,  but  the 
questions  put  to  the  witnesses  after 
objection  would  only  be  admissible 
upon  the  ground  that  the  defendant 
was  entitled  to  all  the  damages 
which  he  might  have  sustained  by 
the  injuries  to  the  cows  and  young 
cattle,  the  increase  of  food  required, 
and  the  decrease  of  produce  by  rea- 
son of  the  state  of  the  barns  in  ques- 
tion. It  strikes  me  that  such  dam- 
ages are  altogether  too  remote  and 
contingent,  and  that  the  true  rule  of 
damages  is  the  sum  necessary  to 
place  the  barns  in  that  state  of  re- 
pair in  which  they  were  to  be  put 
according  to  the  agreement,  with 
interest  thereon,  if  the  referees 
thought  proper  to  allow  interest." 
There  is  no  hint  that  this  rule 
was  adopted  because  the  plaintiff's 
breach  of  contract  was  set  up  by 
way  of  recoupment;  but  it  is  laid 
down  as  "  the  proper  rule  of  dam- 
ages for  such  neglect  to  repair;"  on 
that  subject  see  Myers  v.  Burns,  35 
N.  Y.  269;  Hexter  v.  Knox,  63  N.  Y. 
561. 


I 


474  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  189. 

coupment  the  judgment  will  be  a  bar  to  another  action  or 
recoupment.  A  defendant  has  an  election  to  avail  himself  of 
a  cross-claim  by  way  of  recoupment,  or  under  the  code  as  a 
counter-claim,  or  to  bring  an  action  upon  it.  This  choice, 
however,  is  only  final  when  submitted  for  adjudication,  and  is 
so  to  prevent  a  second  recovery.  Neither  pleading  it  in  de- 
fense nor  bringing  an  action  upon  it  will  determine  the  elec- 
tion.^ 'Where  it  appeared  in  a  suit  in  which  a  cross-claim  was 
set  up  by  way  of  recoupment  that  the  defendants  had  previ- 
ously brought  an  action  for  the  same  damages,  which  was  still 
pending,  and  the  trial  court  had  rejected  the  defense,  the 
appellate  court  said:  "The  court  [below]  seemed  to  have  re- 
garded the  pendency  of  the  other  action  as  a  sort  of  abate- 
ment of  the  defendants'  plea,  or  to  have  deemed  the  bringing 
of  the  suit  (by  the  defendants)  ...  as  a  conclusive  elec- 
tion to  prosecute  a  cross-action,  and  not  to  recoup  or  use  the 
claim  as  a  defense  under  any  circumstances  while  that  action 
should  continue.  There  is  in  this  holding  a  misapprehension 
of  the  defendants'  position.  They  are  not  prosecuting  two 
actions,  one  of  which  abates  the  other.  In  an  endeavor  to  re- 
cover their  damages  they  find  themselves  prosecuted  by  their 
adversary.  They  may  defend  by  setting  up  any  matter  which 
[299]  the  law  recognizes  as  a  defense,  whether  it  be  a  cause 
of  action,  or  whether  it  be  a  judgment  actually  recovered 
therein  —  the  only  difiference  being  that  after  judgment  it 
must  be  used  as  a  judgment  and  by  way  of  set-off.  The  elec- 
tion made  by  the  defendants  was  not  an  election  not  to  recoup. 
At  that  time  it  was  an  election  between  prosecuting  to  estab- 
lish their  claim,  or  suffering  the  injury  without  seeking  any 
redress.  And  when  the  plaintiff  forced  them  into  court,  .  .  . 
their  opportunity  to  use  their  claim  by  way  of  defense  first 
arose,  and  they  had  a  right  to  embrace  it.  Until  judgment  in 
one  of  the  suits,  the  right  to  press  the  claim  in  the  other  con- 
tinued."^    But  after  a  judgment  in  a  separate  action  upon  the 

1  McDonald  v.  Christie,  42  Barb.  36;  2  Naylor  v.  Schenck,  3RD.  Smithy 

Fabbricotti  v.  Launitz,  3  Sandf.  743;  135;  Lindsay  v.  Stewart,  72  Cal.  540, 

Eankin  v.  Barnes,  5  Bush,  20;  Gil-  14  Pac.  Rep.  516. 

more  v.  Reed,  76  Pa.  462.     See  Cook  If  the  matter  pleaded  in  recoup- 

V.   Castner,   9   Cush.   266;   Miller  v.  ment  can  be  set  up  in  defense  to  a 

Freeborn,  4  Robert.  608.  suit  upon  the  contract  out  of  which 


I 


§  ISO.] 


RECOUPMENT   AND    COUNTER-CLAIM. 


ii> 


claim  it  is  merged  in  the  judgment;  or,  if  rejected,  barred;  if 
the  issue  embraces  it,  the  judgment  is  conclusive.^ 

In  an  action  for  breach  of  warrant}'-  in  the  sale  of  per-  [300] 
sonal  property   these  facts  appeared:  A  note  given  for  the 


it  arose  and  which  is  pending  it  will 
not  be  proper  to  plead  it  in  another 
suit  in  the  same  court.  Jeffei'son 
Lumber  Co.  v.  Williams,  68  Tex.  656, 
5  S.  W.  Rep.  67. 

A  plaintiff  is  not  estopped  from 
prosecuting  a  suit  for  work  and  labor 
by  reason  of  the  payment  of  a  judg- 
ment recovered  against  him  by  the 
defendant  pending  such  suit  for 
damages  for  the  improper  perform- 
ance of  the  work  and  labor  sued  for; 
the  claim  is  not  res  judicata  because 
one  suit  sounded  in  tort  and  the 
other  in  assumpait.  Mimnaugh  v. 
Partlin,  67  Mich.  391,  34  N.  W.  Rep. 
717. 

1  Davis  V.  Tallcot,  13  N.  Y.  184; 
Kane  v.  Fisher,  3  Watts,  S4G;  Grant 
V.  Button,  14  Johns.  377;  O'Connor 
V.  Varney,  10  Gray,  331;  Burnett  v. 
Smith,  4  Gray,  50;  Salem  India  R. 
Co.  V.  Adams,  23  Pick.  256;  Stevens 
V.  Miller,  13  Gray,  283;  Huff  v. 
Broyles,  26Gratt.  283:  Beall  v.  Pearre, 
12  Md.  550;  McLane  v.  Mdler.  10  Ala. 
856;  Britton  v.  Turner,  6  N.  H.  481, 
495,  26  Am.  Dec.  713. 

In  Davis  v.  Tallcot,  suj)ra,  it  was 
held  that  a  recovery  in  a  suit  upon 
an  agreement,  wherein  the  right  to 
recover  depended  by  the  pleadings 
upon  the  truth  of  the  allegations 
made  in  the  complaint  and  denied 
by  the  answer,  that  the  plaintiff  had 
fully  performed  the  agreement,  is  a 
bar  to  an  action  brought  subse- 
quently by  the  defendant  in  the 
tirst  suit  against  the  plaintiff  therein 
to  recover  damages  for  the  alleged 
non-performance  of  the  same  agree- 
ment. The  record  of  the  recovery 
estops  the  defendant  from  contro- 
verting   that  the    plaintiff  thertjin 


fully  performed  the  contract.  The 
rule  is  not  otherwise,  although  in 
the  first  suit  the  defendant,  in  addi- 
tion to  the  allegation  of  perform- 
ance, alleged  breaclies  by  the  plaint- 
iff, and  claimed  to  recoup  damages, 
and  at  the  trial  expressly  withdrew 
the  claim  for  damages,  gave  no  evi- 
dence touching  the  alleged  breaches, 
and  the  second  suit  was  to  recover 
damages  for  such  breaches. 

Gardiner.  C.  J.,  said:  "The  defend- 
ants in  that  (the  former)  action,  the 
present  plaintiffs,  insisted  upon  the 
non-performance  of  the  agreement 
upon  the  part  of  Tallcot  and  Can- 
field,  the  manufacturers  of  the  m.i- 
chineiy,  for  two  purposes  entirely 
distinct  in  their  nature  and  objects. 
First,  as  a  complete  defense  to  the 
action,  by  a  denial  of  that  which  the 
makers  of  the  machinery  had  averred 
and  must  prove  before  they  could 
recover  anything.  Second,  as  a 
foundation  for  a  claim  in  the  nature 
of  a  cross  action  for  dama;.'es  to  be 
deducted  from  the  amount  which 
the  then  plaintiff  might  otherwise 
recover.  It  is  obvious  that,  by  with- 
drawing their  claim  to  damages,  the 
then  defendants  did  not  waive  the 
right  to  insist  upon  their  defense. 
The  plaintiffs,  notwithstanding,  must 
have  established  their  title  to  the 
price  stipulated,  by  proof  that  the 
machinery  was  made  within  the 
time  and  in  the  manner  called  for 
by  the  agreement;  and  the  vendees 
were  at  liberty  to  meet  and  combat 
these  proofs  by  counter  evidence  on 
their  part.  Now,  this  was  precisely 
what  was  done,  or  rather  the  neces- 
sity for  introducing  evidence  to  sus- 
tain the  action  was  superseded  by 


476 


LEGAL    LIQUIDATIONS    AND    KEDUCTIONS. 


[§  189. 


purchase-money  bad  been  collected  by  suit;  to  that  the  now 
plaintiff  had  pleaded  non  assum,psit^  and  it  was  agreed  that 
under  that  plea  he  might  offer  the  special  matter  in  evidence 
as  fully  as  if  he  had  specially  pleaded  the  same  or  given  notice 
thereof;  the  breach  of  warranty  now  sued  for  the  then  defend- 
ant offered  to  prove  as  a  defense,  but  it  was  rejected  by  the 
court  because  it  did  not  tend  to  show  a  total  failure  of  consid- 
eration.    On  these  facts  the  judgment  in  the  former  action 


the  admission  of  the  then  defend- 
ants in  open  court  'that  they  were 
indebted  to  the  manufacturers  for 
tlie  causes  of  action  mentioned  in 
their  complaint.'  As  the  cause  of  ac- 
tion and  the  indebtedness  of  the  de- 
fendants were  by  the  complaint 
made  dependent  upon  a  full  per- 
formance of  the  contract  by  the 
parties  who  instituted  the  suit,  the 
concession  of  the  defendants  was 
equivalent  to  an  admission  on  the 
record  to  that  effect;  and  the  report 
of  the  referee  followed  by  the  judg- 
ment of  the  court  consequently 
estops  the  parties  to  that  suit  from 
ever  after  questioning  that  fact  in 
any  controversy  upon  the  same  agree- 
ment (2  Cow.  &  H.  N.  843;  10  Wend. 
80,  3  Comst  173).  In  the  suit  now 
pending,  however, the  vendees  bring 
their  suit  upon  the  same  conti'act 
against  the  manufacturers,  and  aver 
a  non-performance  by  the  defend- 
ants as  the  sole  cause  of  action. 
They  have  succeeded  in  the  court 
below,  notwithstanding  the  ob- 
jection we  have  considered;  and 
there  are,  consequently,  two  records 
in  the  same  court  between  the  same 
parties,  each  importing  absolute 
verity,  one  of  which  affirms  that  the 
manufacturers  faithfully  performed 
said  agreement  'in  every  respect  on 
or  before  the  7th  of  June,  1850;  the 
other,  that  they  did  not  perform  it 
in  any  respect  at  any  time.'  This 
flat  contradiction  is  attempted  to  be 
reconciled  by  the  assertion  that  the 


record  in  the  firstsuit  only  shows  that 
this  point  might  have  been,  not  that 
it  was,  litigated.  The  answer  is  that 
the  record  in  that  case  proves  that 
that  question  of  performance  was 
directly  in  issue  and  must  have  been 
litigated;  that  a  recovery  without 
establishing  the  fact  of  performance 
was  a  legal  impossibility.  Again, 
the  parol  evidence,  if  admissible, 
only  proves  that  the  vendees  did  not 
rely  upon  a  breach  of  the  contract 
upon  the  part  of  the  makers  of  the 
machinery  to  support  their  claim  to 
recoup.  This  is  the  course  they 
would  naturally  adopt  if  their  dam- 
ages, in  their  opinion,  exceeded  the 
sum  to  be  paid  for  the  machinery. 
Their  only  remedy  for  the  excess 
would  depend  upon  defeating  the 
action  then  pending,  and  subse- 
quently suing  on  the  agreement. 
That  this  was  really  the  object  of 
their  legal  adviser  is  evidenced  by 
the  fact  that  while  the  manufact- 
urers recovered  in  their  suit  less 
than  $650,  the  present  plaintiffs  have 
obtained  judgment  in  the  case  un- 
der review  for  upwards  of  $900. 
The  withdrawal  of  their  claim  to 
recoup  was  therefore  not  only  con- 
sistent with  the  determination  to  in- 
sist upon  a  breach  of  the  contract  on 
the  part  of  the  manufacturers  in  or- 
der to  defeat  the  suit  then  pending, 
but  this  was  indispensable  to  the  ulti- 
mate recovery  of  their  full  damages 
in  a  subsequent  action."  See  Merriam 
V.  Woodcock,  104  Mass.  326. 


§  190.]  RECOUPMENT    AND    COUNTER-CLAIM.  477 

[301]  was  held  to  be  a  bar.^  The  defense  being  admissible  in 
the  former  action  and  erroneously  rejected,  the  judgment  had 
the  same  effect  as  though  the  claim  had  been  admitted.  The 
error  of  its  rejection  should  have  been  corrected  by  proceed- 
ings taken  in  that  case;  therefore  the  exclusion  of  the  defense 
by  the  court  had  the  same  effect  as  a  disallowance  by  a  jury.- 
"VVhere,  notwithstanding  the  cross-claim  is  pleaded,  the  judg- 
ment is  afterwards  taken  by  default  by  the  plaintiff,  and  so 
appears  by  the  record,  such  claim  is  not  barred.'  The  fact 
that  the  judgment  was  upon  default  makes  it  as  certain  that 
the  counter-claim  was  not  passed  upon  by  an  actual  adjudica- 
tion as  though  the  plea  had  been  formally  withdrawn.  If  sev- 
eral notes  have  been  given  for  a  chattel  and  they  become  due 
at  different  times,  and  the  defendant  in  an  action  upon  the 
one  which  matures  first  counter-claims  for  damaires  arisino- 
from  the  breach  of  the  warranty,  judgment  in  his  favor  estops 
him  from  pleading  such  defense  in  an  action  subsequently 
brought  upon  the  other  notes.'* 

§  190.  Notice  of  cross-claim.  This  defense  being  a  substi- 
tute for  an  action  and  to  avoid  the  necessity  of  another  suit, 
some  pleading  must  be  adopted  by  which  the  defendant  evinces 
his  election  to  insist  on  his  cross-claim  as  a  defense.  It  must 
make  the  necessary  allegations  and  inform  the  plaintiff  so  that 
he  may  not  be  taken  by  surprise.  And  it  must  be  set  up  in 
the  answer  under  the  code.^  The  defendant  is  as  much  con- 
cluded b}'"  the  amount  of  damages  he  claims  in  his  counter- 
claim as  the  plaintiff  is  by  his  complaint.^    Kecoupment  can- 

1  Beall  V.  Pearre,  13  Md.  550.  Hardman,  4  E.  D.  Smith,  448:  Lam- 

2  Grant  v.  Button,  14  Johns.  377;  son  &  Goodnow  M.  Co.  v.  Russell.  112 
Smith  V.  Whiting,  11  Mass.  445.  Mass.  387;  Lansing  v.  Van  Alstyne,  2 

3  Bascom  v.  Manning.  52  N.  H.  132;  Wend.  561 ;  Steamboat  Welisville  v. 
Bodurtha  V.  Phelon,  13  Gray,  413.  Geisse,   8  Ohio    St.   333;    Young  v. 

*  Geiser  Threshing  Machine  Co.  v.  Plumeau,   Harp.   543;    Maverick    v. 

Farmer,  27  Minn.  428,  8  N.  W.  Rep.  Gibbs,3McCord,315;McLure  v.Hart, 

141;    Minneapolis  Harvester  Works  19  Ark.  119;  Hill  v.  Austin,  id.  230; 

V.  Bonnallie,  29  Minn.  373,  13  N.  W.  Spink   v.   Mueller,   77  Mo.  App.  85; 

Rep.  149.     Compare   Aultman  &  T.  Rawson  v.  Pratt,  91  Ind.  9. 

Co.  V.  Hetherington,   42    Wis.   622;  « Annis  v.   Upton,   66    Barb.   370; 

Aultman  &  T.  Co.  v.  Jett,  id.  488.  Taylor  v.  Butters  &  Peters  Salt  & 

s  Trowbridge  v.  Mayor,  7  Hill,  429;  Lumber  Co.,  103  Mich.  1,  61  N.  W. 

Burton    v.    Stewart,   3    Wend.    236;  Rep.  5. 
Barber  v.  Rose,  5  Hill,  76;  Crane  v. 


478  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§  191. 

not  extend  beyond  the  specific  matters  sued  upon  unless  the 
notice  or  pleading  informs  the  plaintiff  that  the  defendant  will 
go  into  others.^  The  notice  must  be  sufficiently  certain  to  ap- 
prise the  plaintiff  of  the  nature  of  the  defendant's  claim,  and 
in  case  of  a  suit  upon  contract  it  must  specify  the  breach  com- 
plained of.-  An  averment  in  a  cross-bill  claiming  a  recoup- 
ment of  special  damages  for  the  breach  of  a  contract,  the  gen- 
eral damages  for  which  appear  to  be  only  nominal,  should  be 
special;  if  it  only  alleges  tliat  the  defendant  has  been  damnified 
to  a  specified  amount  it  is  insufficient.^  A  reduction  of  dam- 
ages by  way  of  recoupment  cannot  be  shown  under  a  special 
plea  in  bar,  but  may  be  obtained  under  the  general  issue.* 
Statutes  concerning  notice  will  be  liberally  construed;  the  rules 
in  relation  to  a  variance  between  the  pleadings  and  the  proof 
will  not  be  applied  to  the  notice,  which  is  good  if  it  states  the 
ground  and  substance  of  the  defense,  though  it  is  defective  in 
matters  of  form.-^  The  only  way  to  make  the  objection  that  a 
cause  of  action  pleaded  as  a  counter-claim  is  not  such  in  the 
particular  case  because  it  is  in  no  way  connected  with  the  sub- 
ject of  plaintiff's  action  is  by  demurrer.  If  there  is  no  demurrer 
on  that  ground  and  issue  is  taken  on  the  facts  alleged,  the  right 
to  object  is  waived.^ 

Section  5. 

marshaling  and  distribution. 

§  101.  Definition.  Marshaling  is  the  setting  of  debts 
[302]  or  assets  in  a  certain  order;  distribution  is  the  applica- 
tion of  funds  to  the  paj^ment  of  debts  marshaled.  There  are 
therefore  two  kinds  of  marshaling,  one  of  assets,  the  other  of 
debts.  Marshaling  is  resorted  to  whenever  it  becomes  neces- 
sary practically  to  answer  either  the  question  in  what  order 
certain  distinct  funds  or  properties  shall  bear  the  burden  of 
paying  or  contributing  to  pay  a  debt  which  is  directly  or  indi- 

1  McKevitte  v.  Feige,  57  Mich.  374,  McCormick  Harvesting  Machine  Co. 

24  N.  W.  Rep.  109.  v.  Robinson,  60  id.  253. 

a  Sinker  v.  Diggins,  76  Mich.  557,  43        &  Merrill  v.  Everett,  38  Conn.  40. 
N.  W.  Rep.  674.  ^Ayres  v.  O'Farrell,  10  Bosw.  143; 

3  Hooper  V.  Armstrong,  69  Ala.  343.  Hammond    v.    Terry,   3    Lans.  186; 

nVadhams  v.   Swan,    109  III.  46;  Walker  v.  Johnson,  28  Minn.  147,9 

Hoerner  v.    Giles,  53   III  App.  540;  N.  W.  Rep.  632. 


§  192.]  MAKSHALING    AND    DISTRIBUTION.  479 

rcctly  a  charge  upon  all ;  or,  secondly,  when  there  are  several 
debts  directly  or  indirectly  charged  upon  one  fund  or  prop- 
erty which  is  insufficient  to  pay  them  in  full,  to  determine  in 
what  order  such  fund  shall  be  applied  as  far  as  it  will  go.  In 
answering  the  first,  the  court  settles  the  order  of  liability 
among  the  funds  that  must  pay;  the  second,  the  priorities  of 
the  claims  to  be  paid.  Under  the  first  inquiry  two  classes  of 
persons  are  liable  to  be  afi'ected:  those  having  proprietary 
interests  in  the  fund  or  property  marshaled,  and  creditors 
having  liens  thereon. 

§  192.  Sales  of  incumbered  property  iii  parcels  to  differ- 
ent purchasers.  For  the  protection  of  purchasers  this  rule 
obtains:  if  the  creditor's  lien  be  upon  several  parcels  of  land 
for  the  payment  of  the  same  debt,  and  some  of  those  parcels 
belong  to  the  person  who  in  equity  and  justice  owes,  or  ought 
to  pay,  the  debt,  and  other  parcels  have  been  transferred  by 
him  to  third  persons,  his  part,  as  between  himself  and  them, 
shall  be  primarily  chargeable  with  the  debt.^  And  if  [303] 
there  have  been  successive  alienations  by  him  of  parts  of  the 
incumbered  property,  and  the  portion  retained  is  insufficient 
to  discharge  the  entire  incumbrance,  the  parcels  transferred 
will  be  subject  to  sale  in  the  inverse  order  of  alienation.^    The 

'  2  Story's  Eq.,  §  1233;  Clowes  v.  have  satisfied  the  judgment;  or,  if 

Dickenson,  5  Johns.  Ch.  285,  9  Cow.  not.torestoreoraccount  for  the  value 

403;  Cowden's  Estate,  1  Pa.  267,  274;  beyond  what  would,  with  the  other, 

Mason    v.    Payne,    Walk.   Ch.    459;  have  satisfied  the  judgment.     That 

Cooper    V.     Biglj%     13    Mich.     463;  such  alienee,  having  stood  by  and 

Barnes'  Appeal,  46  Pa.  350;  Ammer-  allowed  the  legal  estate  to  pass  from 

man  v.  Jennings,  12  B.  Mon.  135.  liim,  shall  not  be  allowed  the  land 

In   Clowes   v.   Dickenson,  9  Cow.  itself,  with  improvements  made  sub- 

403,  it  was  held  that  if  the  creditor  sequent  to  the  execution  sale   and 

or  any  other  person  having  control  before  he  asserted  his  claim.     The 

of  his  judgment  cause  a  sale  of  the  true  value  of  the  aliened  estate  iu 

aliened  part  before  resorting  to  that  market  at  the  time  of  the  execution 

•retained  by  the  judgment  debtor,  the  sale,  not  the  price  bid  for  it,  is  the 

latter  part  being  sufficient  to  pay  measure  of  compensation. 

his  debt,  though  no  order  or  decree  ^  Id.;  Wieting  v.  Bellinger,  50  Hun, 

be  obtained  directing  the  remaining  324,  3  N.  Y.  Supp.  361;   Gage  v.  Mc- 

portion  to  be  first  sold,  such  creditor  Gregor,  61  N.  H.  47;  Vogle  v.  Brown, 

will  be  required  to  restore  the  real  120  111.  338,  11  N.  E.  Rep.  327,  12  id. 

estate  so  sold;  or,  if  sold  to  a  bona  252;  Gill  v.  Lyon,  1  Johns.  Ch.  447; 

fide  purchaser,   to  account    to    the  Stevens  v.  Cooper,  id.  425;  James  v. 

alienee  for  the  value  of  the  real  as-  Hubbard,  1  Paige,  228;  Gouverneur 

tate  so  sold,  if  the  other  part  would  v.  Lynch,  2  id.  300;  Guiou  v.  Knapp, 


480 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


[§  193. 


operation  of  this  rule  may  be  waived,  limited  or  modified  bj'' 
the  instrument  executed  to  the  earlier  grantee,  which  will 
bind  all  who  claim  under  him.' 

[304]  §  193.  Sale  subject  to  incumbrance.  If  a  portion 
of  the  land  covered  by  a  mortgage  is  conveyed  subject  to  the 
payment  of  the  entire  mortgage  by  the  grantee  the  subse- 
quent purchaser  of  another  parcel,^  or  the  mortgagor,'  has  a 
right  to  insist  that  the  parcel  so  conveyed  shall  be  first  sold  to 
satisfy  the  mortgage.  The  lot  so  sold  becomes,  as  to  the  par- 
ties to  the  conveyance,  the  primary  fund  for  the  payment  of 
the  mortgage,*  and  the  grantee  thereby  becomes  the  party 
who  in  justice  ought  to  pay  the  debt.  The  mortgagor  becomes 
then  a  quasi-surety,  and  has  the  right  to  insist  upon  the  col- 
lection of  the  debt  first  out  of  the  land.* 


6  id.  35;  Skeel  v.  Spraker,  8  id.  182; 
Patty  V.  Pease,  id.  277,  35  Am.  Dec. 
683;  Schryver  v.  Teller,  9  Paige,  173; 
New  York  Life,  etc.  Co.  v.  Cutler,  3 
Saudf.  Ch.  176;  Commercial  Bank  v. 
Western  Reserve  Bank,  11  Ohio,  444, 
38  Am.  Dec.  739;  Green  v.  Ramage, 
18  Ohio,  428.  51  Am.  Dec.  458;  Stuy- 
vesant  v.  Hone,  1  Sandf.  Ch.  419; 
Stuyvesant  v.  Hall,  2  Barb.  Ch.  151; 
Averall  v.  Wade,  Lloyd  &  Gould,  252; 
Lyman  v.  Lyman,  33  Vt.  79,  76  Am. 
Dec.  151;  Hurd  v.  Eaton,  28  111.  122; 
Carter  v.  Neal,  24  Ga.  346,  71  Am. 
Dec.  136;  Root  v.  Collins,  34  Vt.  173; 
Brown  v.  Simons,  44  N.  H.  475; 
Jenkins  v.  Freyer,  4  Paige,  53; 
Howard  Ins.  Co.  v.  Halsey,  4  Sandf. 
565;  La  Farge  Ins.  Co.  v.  Bell,  22 
Barb.  54:  Gates  v.  Adams,  24  Vt.  71 
Chase  v.  Woodbury,  6  Cush.  143 
Black  V.  Morse,  7  N.  J.  Eq.  509 
Shannon  v.  Marselis,  1  id.  412;  Henkle 
V.  AUstadt,  4  Gratt.  284;  Jones  v. 
Myrick,  8  Gratt.  179:  Britton  v.  Up- 
dike, 3  N.  J.  Eq.  125:  Wikoff  v.  Davis, 
4  id.  224. 

Judge  Story  (2  Story's  Eq.,  §  12336) 
doubts  whether  this  last  position  is 
maintainable  upon  principle;  for  as 
between  the  subsequent  purchasers 
or  incumbrancers,  each  trusting  to 
his  own  security  upon  the  separate 


estates  mortgaged  to  him,  it  is  diffi- 
cult to  perceive  that  either  has,  in 
consequence  thereof,  any  superiority 
of  right  or  equity  over  the  other. 
On  the  contrary,  there  seems  strong 
ground  to  contend  that  the  original 
incumbrance  or  lien  ought  to  be 
borne  ratably  between  them,  accord- 
ing to  the  relative  value  of  the  es- 
tates. And  so  the  doctrine  has  been 
asserted  in  the  ancient  as  well  as 
modern  English  cases  on  the  subject 
(Harbert's  Case,  3  Co.  12;  Barnes  v. 
Racster,  1  Y.  &  C.  New  Caa  401; 
Lanoy  v.  Duchess  of  Athol,  2  Atk. 
448;  Aldrich  v.  Cooper,  8  Ves.  391; 
Averall  v.  Wade,  Lloyd  &  Gould, 
252;  Bugden  v.  Bignold,  2  Y.  &  C. 
New  Caa  377;  Green  v.  Ramage,  18 
Ohio,  428,  51  Am.  Dec.  458);  and  the 
law  is  so  settled  in  Kentucky.  Dickey 
V.  Thompson,  8  B.  Mon.  312;  Morrison 
V.  Beck  with,  4  T.  B.  Mon.  76:  Hughes 
V.  Graves,  1  Litt.  319;  Burk  v. 
Chrisman,  3  B.  Mon.  50. 

1  Vogel   V.   Shurtliflf,   28  111.   App. 
516;  Briscoe  v.  Powers,  47  111.  447. 

2  Caruthers  v.  Hall.  10  Mich.  40. 

3  Mason    v.    Payne,  Walker's  Ch. 
461. 

4  Cox  V.   Wheeler,   7    Paige,  248; 
Jumei  V.  Jumel,  id.  591. 

5  Harris  v.  Jex,  66  Barb.  233. 


§  103.]  MARSHALING    AND   DISTRIBUTION.  481 

The  rule  being  intended  for  the  benefit  of  parties  having 
separate  interests  in  the  property  or  fund  on  which  the  debt 
is  a  lien,  their  relation  between  themselves  is  considered  in 
determining  whether  the  burden  rests  upon  them  equally,  or 
if  unequally,  in  what  order  their  several  i)roperties  may  bo 
resorted  to  for  payment.  Where  there  are  several  heirs,  or 
where  several  persons  join  in  a  recognizance,  one  heir,  or  one 
conusor,  should  not  be  charged  exclusively,  for  their  relations 
and  duties  are  equal. ^  And  the  same  principle  would  apply 
between  several  purchasers  of  the  same  date.  But  the  prop- 
erty of  the  party  who  is  in  equity  bound  to  pay  the  debt,  as 
between  him  and  the  owner  of  other  property  bound  for  the 
same  debt,  is  the  primary  fund;  and  the  court  will  establish 
the  order,  between  any  number  of  persons  whose  property  is 
subject  to  the  debt,  in  which  resort  may  be  had  to  properties 
so  separated  in  ownership.  Thus,  in  an  action  of  foreclosure 
against  G.  and  L.  as  mortgagors,  where  it  appears  that  G.  is 
possessed  of  a  portion  of  the  premises  in  his  own  right,  and  L. 
of  another  portion,  and  that  a  third  portion  is  held  jointly, 
and  it  also  appears  that  L.  personally  owes  the  mortgage  debt, 
or  is  equitably  bound  to  pay  it,  the  judgment  should  be  so 
entered  that  the  interest  of  L.  be  first  sold;  secondly,  the  joint 
interest;  and  lastly,  the  interest  of  G.- 

But  these  equities  between  co-debtors,  by  which  one  [305] 
part  of  incumbered  premises  becomes  the  primary  fund  for  the 
payment  of  the  mortgage,  may  be  defeated  by  the  honajide 
purchase  of  that  part  by  one  without  notice  of  the  facts  which 
raise  these  equities.  Where  A.  and  B.,  owning  lands  in  sev- 
eralty, joined  in  mortgaging  them  to  secure  the  payment  of  a 
joint  debt,  and  A.  afterwards  executed  a  bond  of  indemnity 
to  B.  agreeing  to  pay  the  whole  mortgage  debt,  but  subse- 
quently executed  on  his  lands  other  mortgages  for  a  valuable 
consideration,  to  parties  who  had  no  notice  of  the  bond  or  agree- 
ment between  him  and  B.,  it  was  held  on  the  foreclosure  of  the 
mortgage  that  B.  could  not,  as  against  the  subsequent  mort- 
gagees, compel  the  collection  of  the  whole  of   the  original 

1  Harvey    v.    Woodhouse,     Select  2  0gden    v.   Glidden,    9    Wis.    46; 

Cas.  in  Ch.  80.     See  Clowes  v.  Dick-  Warren  v.  Boynton,  5  Barb.  13;  Cor- 

enson,  5  Johns.  Ch.  235,  241.  nell  v.  Prescott,  id.  16. 
Vol.  1  —  31 


482 


LEGAL    LIQUIDATION'S    AND    EEDUCTIONS.       [§§  194,  195. 


mortgage  debt  from  the  land  of  A.  to  their  prejudice,  and  that 
half  of  it  was  collectible  from  B.'s  land.^ 

§  194.  Effect  of  creditor  releasing  part.  A  creditor,  hav- 
ing notice  of  such  equities  between  several  parties  owning 
property  subject  to  his  debt,  cannot  defeat  them  by  releasing 
the  property  first  liable.  A  release  by  the  mortgagee  of  a 
portion  of  the  land  mortgaged,  with  knowledge  of  a  prior  sale 
of  another  portion,  will  operate  as  to  such  prior  purchaser  as  a 
discharge  yro  tanto  of  the  mortgage  debt.*  But  a  release  with- 
out such  knowledge  will  not  be  a  discharge.' 

§  195.  Rights  where  one  creditor  may  resort  to  two  funds 
and  another  to  only  one.  A  rule  for  the  protection  of  cred- 
itors having  junior  liens  exists.  If  one  creditor  can  resort  to 
two  funds  and  another  to  but  one  of  those  funds,  the  former 
will  be  compelled  to  seek  satisfaction  out  of  the  fund  which 
the  other  cannot  reach,  if  adequate,*  and  it  can  be  done 
[306]  without  prejudice  to  such  double  fund  creditor.'  The 
rule  is  founded  in  social  duty  and  is  never  enforced  to  the 
prejudice  of  such  creditor;^  nor  where  it  will  work  injustice 


1  Hoyt  V,  Dougherty,  4  Sandf.  462; 
Root  V.  Collins.  34  Vt.  173. 

2  Brown  v.  Simons.  44  N.  H.  475; 
Guion  V.  Knapp,  6  Paige,  43;  Patty 
V.  Pease,  8  id.  277;  La  Farge  Ins.  Co. 
V.  Bell,  22  Barb.  54;  Taylor  v.  Maris, 
5  Rawle,  51.  See  Cooper  v.  Bigly,  13 
Mich.  463;  James  v.  Brown,  11  Mich. 
35;  Howard  Ins.  Co.  v.  Halsey,  4 
Sandf.  565;  Union  Nat.  Bank  v. 
Moiine,  eta  Co.,  7  N.  D.  201,  73  N.  W. 
Rep.  527. 

3  Id. 

4  Ball  V.  Setzer,  33  W.  Va.  444,  10 
S.  R  Rep.  798;  Hall  v.  Stevenson,  19 
Ore.  153,  23  Pac.  Rep.  887;  Glass  v. 
Fallen,  6  Bush,  346;  Wise  v.  Shep- 
herd. 13  111.  41;  Marshall  v.  Moore,  36 
IlL  321:  Hurd  v.  Eaton,  28  111.  122; 
Evertson  v.  Booth,  19  Johns.  492; 
Hayes  v.  Ward,  4  Johns.  Ch.  132; 
Dodds  V.  Snyder,  44  IlL  53;  Goss  v. 
Lester,  1  Wis.  43;  Worth  v.  Hill,  14 
Wis.  559;  Ogden  v.  Glidden,  9  Wis. 
46;   Lloyd  v.  Galbraith,  32  Pa.  103; 


Nailer  v.  Stanley,  10  S.  &  R.  450; 
Cowden's  Estate,  1  Pa.  267;  Bank  of 
Kentucky  v.  Vance's  Adm'r,  5  Litt. 
168.  See  Union  Nat.  Bank  v.  Moiine, 
etc.  Co.,  7  N.  D.  201,  73  N.  W.  Rep. 
527. 

s  Logan  v.  Anderson,  18  B.  Mon. 
114;  Jervis  v.  Smith.  7  Abb.  Pr.  (N.  S.) 
217;  Wise  v.  Shepherd,  13  111.  41; 
Cannon  v.  Hudson,  5  Del.  Ch.  112; 
Hudkins  v.  Ward,  30  W.  Va.  204,  8 
Am.  St.  22,  5  S.  E.  Rep.  600;  Leib  v. 
Stribling,  51  Md.  285;  Marr  v.  Lewis, 
81  Ark.  203,  25  Am.  Rep.  553;  Mc- 
Arthur  v.  Martin,  23  Minn.  75;  Gil- 
liman  v.  McCormack,  85  Tenn.  597, 
4  S.  W.  Rep.  521. 

«Id.  In  Worth  v.  Hill,  14  Wis. 
559,  the  mortgage  being  foreclosed 
covered  two  distmct  tracts  in  differ- 
ent towns.  The  defendant  Buck,  who 
was  the  appellant,  held  a  mortgage 
next  to  this  in  point  of  time,  cover- 
ing one  of  the  tracts  contained  in 
this  mortgage,   and  other  land  not 


■.^  ul 


§  105.] 


MAESHALING    AND    DISTKIBUTION. 


483 


to  other  parties.  Thus  where  a  firm  creditor  has  security  [307] 
on  the  separate  property  of  one  of  its  members,  such  creditor 
is  not  for  that  reason  to  be  excluded  from  sliaring  in  the  pro- 
ceeds of  the  company  assets  until  he  has  exliausted  his  security, 


covered  by  this,  in  the  same  town. 
Defendant  Mowry  held  a  mortgage 
next  to  Buck's  in  point  of  time,  but 
upon  tlie  land  in  the  other  town  cov- 
ered by  the  mortgage,  and  also  upon 
another  tract.  Hence  the  Mowry 
mortgage  did  not  cover  any  of  the 
land  mortgaged  to  Bunk,  but  their 
interests  conflicted  by  reason  of  the 
mortgage  which  was  being  fore- 
closed, and  which  was  prior  to  both, 
covering  a  part  of  the  land  contained 
in  each  of  them.  It  further  ap- 
jieared  that  there  was  a  mortgage 
prior  to  all  of  these,  covering  tlie 
tract  m  the  Buck  mortgage,  and  the 
parcel  in  the  Mowry  mortgage 
which  was  not  contained  in  the 
mortgage  being  foreclosed;  that  that 
mortgage  had  been  foreclosed,  and 
that  part  which  was  covered  by  the 
Mowry  mortgage  adjudged  to  be 
sold  before  the  part  covered  by 
Buck's.  It  was  further  proved  that 
the  other  tract  covered  by  Buck's 
mortgage  was  ample  security  for  the 
amount  of  the  debt  secured  by  that 
mortgage.  Upon  this  state  of  facts 
it  had  been  decreed  below  that  the 
portion  covered  by  Buck's  mort- 
gage should  be  sold  in  this  fore- 
closure before  that  covered  by 
Mowry's,  and  from  that  part  of  the 
decree  Buck  appealed. 

Referring  to  the  equitable  rule  that 
in  foreclosure  cases  where  the  land 
has  been  subsequently  conveyed  by 
the  mortgagor  it  shall  be  sold  in  the 
inverse  order  of  alienation.  Paine,  J., 
says:  "The  justice  of  this  rule  has 
been  sometimes  questioned,  but  we 
regard  it  as  not  only  well  settled,  but 
correct  upon  principle,  and  have  re- 
peatedly enforced  it.  But  at  the  same 


time  we  think  it  may  be  controlled 
by  other  established  equitable  prin- 
ciples, where  the  facts  render  them 
applicable;  and  such  we  think  was 
the  case  here.  It  is  a  familiar  prin- 
ciple that  where  one  creditor  has 
security  upon  two  funds,  and  another 
has  security  upon  one  of  them  only, 
the  latter  may  compel  the  former  to 
resort  first  to  that  fund  which  he 
cannot  reach.  And  although  this  is 
nota  direct  proceeding  to  accomplish 
that  object,yet  it  is  substantially  that, 
inasmuch  as  Mowry  sets  up  these 
facts  to  rebut  the  equity  Buck  would 
otherwise  have  as  against  him.  For 
the  result,  if  the  judgment  had  been 
otherwise,  would  have  deprived 
Mowry  of  his  security  entirely.  The 
one  tract  covered  by  his  mortgage 
having  already  been  adjudged  to  be 
sold  first  for  Bucks  benefit,  now  if 
the  other  should  be  adjudged  to  be 
sold  first,  he  would  have  nothing 
left.  Whereas  it  appears  by  the  tes- 
timony that  upon  the  decree  as  ren- 
dered Mowry  is  protected  and  Buck 
left  with  amplesecurity  for  his  debt. 
Suppose  A.  mortgages  a  tract  to  B., 
then  gives  a  second  mortgage  on 
a  part  of  it  to  C,  which  mortgage 
also  covers  other  tracts,  and  then 
gives  a  mortgage  on  another  part  to 
D.  On  a  foreclosure  of  B.'s  mort- 
gage, the  ordinary  rule,  based  merely 
on  the  order  of  alienation,  would  be 
to  sell  D.'s  part  first.  But  suppose 
D.  could  show  that  the  other  tracts 
covered  by  C.'s  mortgage  were  an 
ample  security  for  his  debt;  would 
not  that  raise  an  equity  suflficient  to 
overcome  the  ordinary  rule,  and  re- 
quire as  between  C.  and  D.  that  C.'s 
part  should  be  first  sold?  I  think  so; 


484 


LEGAL    LIQUIDATIONS    AND    EEDrCTIONS. 


[§  196. 


for  that  would  be  a  detriment  to  such  creditor  where  it 
involved  delay,  and  unjust  to  the  creditors  of  the  separate 
estate  which  furnished  the  security,'  Where  the  rule  would 
[308]  bo  applied  in  favor  of  a  creditor  having  a  right  to  resort 
to  but  one  fund  or  property,  it  will  be  equally  available  to 
one  claiming  through  a  sale  under  his  lien.^ 

§  196.  Same  when  the  funds  belong  to  two  debtors.  The 
rule,  however,  does  not  apply  when  one  of  the  creditors  has 
a  lien  for  his  debt  upon  two  funds  belonging  to  two  separate 
debtors,  and  the  other  has  a  lien  upon  a  fund  belonging  to  one 
of  them,  so  as  to  compel  the  first  creditor  to  make  his  claim 
wholly  out  of  that  debtor  whom  the  other  cannot  reach,  un- 


and  that  is  substantially  the  relation 
which  these  defendants  hold  to  each 
other  in  the  present  case.  I  can  see 
no  reason  why  the  principle  requir- 
ing the  creditor  having  two  funds 
to  resort  first  to  the  one  which  the 
other  cannot  reach  is  not  applicable 
to  such  a  case.  It  is  true  that  ordi- 
narily the  adequacy  of  the  first  fund 
might  be  tested  by  an  actual  sale,  and 
the  creditor  who  was  compelled  first 
to  resort  to  that  might  still  be  in  a 
position  to  resort  to  the  other  to  sup- 
ply any  deficiency;  and  here  B.  may 
not  be  left  in  such  a  position.  I  think 
that  is  good  reason  why  such  a  decree 
as  the  one  made  in  this  case  should 
be  made  only  upon  clear  proof  of  the 
entire  adequacy  of  the  remaining  se- 
curity. But  I  am  not  prepared  to 
say  that  courts  should  not  act  upon 
such  proof,  or  that  a  party  so  situated 
has  any  absolute  right  to  have  the 
adequacy  of  his  remaining  security 
tested  in  all  cases  by  an  actual  sale. 
It  is  obvious  that  such  a  test  could 
not  be  had  in  a  case  like  this,  and  con- 
sequently, if  that  rule  was  adopted,  it 
would  lead  to  the  injustice  of  cut- 
ting off  the  last  mortgagee  entirely, 
though  it  might  not  be  necessary  lor 
the  protection  of  the  second.  Courts 
are  constantly  adjudicating  upon 
the  most  important  rights  of  parties 
upon  the  theory  that  human  testi- 


mony can  establish  facts  with  suffi- 
cient certainty  to  justify  such  adju- 
dication, and  I  think  the  question  of 
the  adequacy  or  inadequacy  of  a  se- 
curity should  form  no  exception." 
In  Miller  v.  Jacobs,  3  Watts,  477,  it 
was  held  that  one  lien  creditor  can 
invoke  no  security  taken  by  another 
which  had  not  become  a  lien  when 
he  procured  his  own;  hence,  a  subse- 
quent mortgagee,  having  taken  bonds 
but  without  a  warrant  to  confess 
judgment,  has  no  equity  to  call  on  a 
prior  mortgagee  to  enter  up  a  judg- 
ment on  a  bond  which  accompanied 
his  mortgage  in  order  to  throw  him 
on  another  fund;  nor  can  the  subse- 
quent mortgagee  object  to  the  vaca- 
tion of  judgments  subsequently  con- 
fessed on  those  bonds,  though  pur- 
posely withdrawn  to  make  way  for 
other  judgment  creditors  whose  lien 
funds  are  consequently  posterior  in 
date  to  his  lien  on  the  mortgaged 
premises. 

1  Bell  V.  Hepworth,  51  Hun,  616.  4 
N.  Y.  Supp.  823;  Morrison  v.  Kurtz, 
15  III.  193.  See  Berry  v.  Powell,  18 
111.  98;  White  v.  Dougherty,  Mart.& 
Yerg.  309,  17  Am.  Dec.  802;  Breed- 
love  v.  Stump,  3  Yerg.  257. 

2  Marshall  v.  Moore,  36  III  821.  See 
Dodds  v.  Synder,  44  111.  53;  McCor- 
mick's  Appeal,  55  Pa.  252. 


§  IDG.]  MARSHALING    AND    DISTRIBUTION.  485 

less  there  be  some  peculiar  relations  between   these  debtors 
which  would  make  it  equitable  that  the  debtor  having   but 
one  creditor  should  pay  the  whole  demand  against  him  and 
his  co-debtor.^    A  creditor  who  has  a  double  security,  or  a  right 
to  go  upon  more  than  one  fund  for  payment,  may  go  on  all  or 
either  one  of  them  for  his  whole  debt.     His  interest  under 
each  is  several  and  independent  of  the  other,  and  cannot  bo 
diminished  by  reference  to  the  value  of  the  other.-    A  cred- 
itor who  has  several  securities,  neither  one  of  which  is  sufficient 
for  the  payment  of  his  debt,  has  a  right  to  look  to  each  one  of 
them  for  its  payment  in  the  same  manner  and  to  the  same 
extent  that  he  could  do  if  he  had  no  other.     It  is  only  when  it 
may  happen  that  a  creditor  who  has  no  more  securities  than 
one  may  not  require  for  the  payment  of  his  debt  the  entire 
proceeds  of  all  his  securities  that  any  marshaling  of  them  can 
take  place  for  the  benefit  of  other  creditors  who  are  only  sub- 
sequently entitled  to  a  lien  on  a  part  of  the  same  fund  or 
property.'    If,  for  example,  property  sufficient  for  the  pay- 
ment of  fifty  cents  on  the  dollar  be  mortgaged  to  two  or  more 
creditors,    and   the   mortgagor   afterwards   mortgages  other 
property  to  the  same  and  other  creditors  to  secure  the  pay- 
ment of  the  same  debts,  and  also  the  debts  due  to  the  other 
creditors,  and  the  fund  arising  from  the  last  mortgage  is  [309] 
also  sufficient  to  pay  fifty  cents  on  the  dollar  of  all  the  debts 
therein  named,  the  creditors  in  the  first  mortgage  have  a  right 
to  their  full  proportion  thereof  on  the  whole  amount  of  their 
debts  without  regard  to  what  has  been  or  may  be  received  by 
them  on  the  first  mortgage.     The  two  securities  are  sufficient 
for  the  payment  of  those  creditors  who  are  entitled  to  the 
benefit  of  both ;  and  yet,  if  the  other  creditors  in  the  second 
mortgage  have  a  right  to  reduce  their  debts  by  applying  as  a 
credit  thereon  the  amount  of  their  dividend  under  the  first 
mortgage,  and  to  restrict  them  to  a  jpro  rata  of  the  proceeds 
of  the  last  mortgage  on  the  balance  of  their  debt,  when  thus 
reduced,  one-fourth  part  of  it  would  still  remain  unpaid,  al- 

1  Wise  V.  Shepherd,  13  111.  41;  Dorr  2  Gwynne  v.  Edwards,  2  Russ.  289. 

V.  Shaw,  4  Johns.  Ch.  17,  20;  1  Story's  See  Kendall  v.  New  England  Carpet 

Eq.,  §  642;  Ebenhardt's  Appeal,  8  W.  Co.,  18  Conn.  38a 

&  S.  327.    See  Ex  parte  Kendall,  17  '  Logan  v.  Anderson,  18  B.  Mon. 

Ves.  520.  114. 


4S6 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


[§  lOT. 


though  either  security  taken  separately  was  sulEcient  for  the 
payment  of  one-half  of  the  clebt.^  Whenever,  then,  a  mort- 
gage or  assignment  is  executed  to  secure  the  payment  of  cer- 
tain specified  debts  and  it  contains  nothing  to  show  that  it 
was  intended  only  to  secure  the  payment  of  a  part  of  the 
debt  of  some  of  the  creditors,  and  not  the  whole  amount 
thereof,  the  mortgagees  or  beneficiaries  under  the  assignment 
have  each  a  right  to  a  full  ratable  share  of  the  fund  on  the 
whole  amount  of  their  respective  debts.  This  share  cannot 
be  diminished  by  the  existence  of  another  security,  where 
both  securities  are  necessary  for  the  payment  of  the  debt. 
Equity  refuses  to  interfere  or  to  marshal  the  securities  to  the 
prejudice  of  the  creditor  entitled  to  a  double  fund.  And  it 
makes  no  difference  in  such  a  case  whether  the  benefit  of  one 
of  the  funds  has  been  realized  or  still  remains  as  a  mere 
security  for  the  payment  of  the  debt.^ 

[310]  §  197.  Principle  on  wliich  priority  determined. 
The  principle  is  believed  to  be  universal  that  a  prior  lien 
gives  a  prior  claim  which  is  entitled  to  prior  satisfaction  out 
of  the  subject  which  it  binds  unless  the  lien  be  intrinsically 


1  Logan  V.  Anderson,  supra. 

2  Id,;  Morris  v,  Olwine,  22  Pa.  441; 
Kittera's  Estate,  17  id,  416;  Miller's 
Appeal,  35  id.  481;  Jervis  v.  Smith,  7 
Abb.  Pr.  (N.  S.)  217;  GraeflE's  Appeal, 
79  Pa.  146:  Patten's  Appeal,  45  Pa. 
152,  84  Am.  Dec.  479:  Hess'  Estate,  69 
Pa.  272;  Brough's  Estate,  71  Pa.  460. 

In  Patten's  Appeal,  supra,  it  was 
held  that  the  detention  by  vendors 
of  goods  sold,  on  the  insolvency  and 
assignment  for  the  benefit  of  cred- 
itors by  the  vendees,  does  not  rescind 
the  conti'actof  sale;  and  the  vendors 
are  entitled  to  a  pro  rata  distribu- 
tion out  of  the  assigned  estate;  and 
that  where  a  part  of  the  goods  had 
been  delivered  and  tlie  balance  which 
had  been  detained  was  sold  by  the 
vendors,  who  applied  the  proceeds  to 
the  payment  of  the  notes  given  upon 
the  sale,  leaving  a  balance  still  due, 
they  were  entitled  to  a  dividend  upon 
tlie  whole  amount  of  their  claim  at 


the  date  of  the  assignment.  See 
Midgeley  v.  Slocomb,  2  Abb.  Pr.  (N. 
S.)  275. 

In  Bridendecker  v.  Lowell,  32  Barb. 
9,  it  was  held  that  where  an  ar- 
rangement was  made  between  debt- 
or and  creditor,  by  which  the  former 
gives  a  new  security  upon  property 
exceeding  in  value  the  amount  of 
the  debt,  and  receives  back  the  evi- 
dence of  his  indebtedness,  there 
being  at  the  time  a  general  fund  or 
security  by  mortgage  ufon  real 
estate  embracing  all  the  debts  of 
the  debtor,  but  insufficient  to  pay 
the  whole,  the  effect  of  such  an  ar- 
rangement was  to  make  the  specified 
security  the  primary  fund  for  the 
payment  of  the  debt  specifically 
secured  by  it,  and  to  postpone  the 
right  of  that  creditor  to  participate 
in  the  general  fund  until  the  specific 
fund  had  been  exhausted. 


§  198.]  SET-OFF    OF   JUDGMENTS.  487 

defective  or  be  displaced  by  some  act  of  the  party  holdino-  it 
which  should  postpone  him  in  a  court  of  hiw  or  equity  to  a 
subsequent  claimant.'  Where  surplus  moneys  arose  upon  the 
foreclosure  of  several  mortgages  and  were  thus  claimed :  by 
judgment  creditors  having  the  first  lien  upon  two  such  funds; 
by  a  mortgage  creditor  having  a  later  lien  on  only  one  such 
fund,  and  by  other  judgment  creditors  having  still  later  liens 
upon  all,  the  prior  judgment  was  ordered  paid  out  of  the  fund 
not  subject  to  the  mortgage,  but  if  it  were  not  sufficient,  any 
deficiency  was  to  be  paid  prior  to  the  mortgage  out  of  the 
fund  on  which  the  mortgage  was  a  lien;  then  the  mortgage 
was  to  be  paid  out  of  the  surplus  on  which  it  was  a  lien,  and 
the  subsequent  creditors  were  entitled  to  payment  only  after 
satisfaction  in  this  manner  of  the  prior  judgment  and  mortgage 
creditors.^ 

Section  6. 

set-off  of  judgments. 

§  198.  Power  to  direct  set-olF  inherent.  Courts  of  [311] 
law  or  equity  have  power  to  order  mutual  judgments  to  be 
set  off  against  each  other  on  motion  made  for  that  purpose. 

1  Rankin  v.  Scott,  13  Wheat.  177;  ment  and  defeat   by  subsequently 

Broom's  Max.  236;  9  Paige,  61,  note;  acquired  liens  upon  the  funds.     The 

Weaver  v.  Toogood,  1  Barb.  238;  Em-  facts  were  that  the  owner  of  three 

bree  v.  Hanna,  5  Johns.  101,  9  Am.  lots  gave  six  mortgages  tliereon  to 

Dec.  274;  Muir  v.  Schenck,  3  Hill,  different  persons  at  various  dates; 

228,  38  Am.  Dec.  633:  Watson  v.  Le  the  first  mortgage  covered  the  en- 

Eow,  6  Barb.  481;   Lynch  v.  Utica  tire  property,   and  the   subsequent 

Ins.    Co.,  18  Wend.  236;    Poillon  v.  ones  parcels  thereof  less   than   the 

Martin,  1  Sandf.  Ch.  569;  Berry  v.  whole.     All  the  lots  were  sold,  and 

Mutual  Ins.  Co..  2  Johns.  Ch.  603.  their  proceeds  were  insufficient  to 

It  is  iield  in  Gilliam  v.  McCormack,  ■  pay  all  the  mortgage  debts.     A  con- 

85  Tenn.  597,  4  S.  W.  Rep.  521,  that  troversy    arose    among    the    junior 

marshaling  is  a  pure  equity  and  does  mortgagees  as  to  the  application  of 

not  rest  at  all  upon  contract.     The  the  proceeds  of  the  sale  after  the 

equity  to  marshal  assets  is  not  one  senior  mortgages  were  discharged, 

which  fastens  itself  upon  the  situa-  It  was  held  that  the  several  mort- 

tion  at  tlie  time  the  successive  secu-  gages  should  be  paid  pro  rata  in  the 

rities  are  taken,  but  is  to  be  deter-  order  of  their  priority  out  of   the 

mined  at  the  time  the  marshaling  is  amount  realized  from  the  parcel  or 

invoked.      The  equity  does  not  be-  parcels  covered  by  each, 

cornea  fixed  right  until  the  proper  ^jsjew  York  L.  Ins.   &   F.   Co.    v. 

steps  are  taken  to  have  it  enforced;  Vanderbilt,  12  Abb.  Pr.  458. 
until  then  it  is  subject  to  displace- 


488  LEGAL    LIQUIDATIONS    AND    KEDUCTIONS.  [§  199. 

Such  power  is  not  derived  from  or  exercised  in  pursuance  of 
tile  statutes  wLiicli  allow  parties  to  set  off  mutual  debts.  It 
follows  the  general  jurisdiction  of  a  court  over  its  suitors:  it  is 
an  equitable  part  of  such  jurisdiction  and  has  been  frequently 
exercised.^  Courts  proceed  upon  the  equity  of  the  statute  of 
set-offs ;  but  as  their  power  consists  in  the  authority  they  have 
over  their  suitors,  rather  than  any  express  or  delegated  author- 
ity, their  action  in  such  cases  has  been  termed  the  exertion  of 
the  law  of  the  court.  Suitors  may  ask  their  interference  in 
effecting  such  set-off,  not  ex  dehito  JustiticB,  but  only  ex  gratia 
curicB.^ 

§  199.  When  it  will  or  will  not  be  granted.  One  judg- 
ment will  not  be  ordered  to  be  set  off  against  another,  on  mo- 
tion, unless  it  is  a  judgment  which  is  conclusive  on  the  party 
against  whom  it  is  rendered,  and  which  the  party  recovering 
and  claiming  the  right  to  offset  has  a  clear  right  to  enforce; 
it  must  have  been  rendered  by  a  court  which  had  jurisdiction' 
and  must  be  final;  this  right  of  set-off  cannot  be  asserted 
pending  an  appeal  from  the  judgment*  An  appeal,  however, 
[31*2]  only  suspends  the  right  to  set-off,  and  the  court  may  stay 
proceedings  on  the  other  judgment  for  the  protection  of  that 

1  Chase  v.  Woodward,  61  N.  H.  79;  444,  54  N.  E.  Eep.  11,  70  Am.  St.  570; 

Hovey  v.  Morrill,  id.  9,  60  Am.  Rep.  Brown  v.  Hendrickson,  39  N.  J.  L. 

315;  Brown  v.  Hendrickson,  39  N.  J.  239;  Davidson  v.  Geoghagan,  3  Bibb, 

L.  239;Matson  V.  Oberne,  25  IlL  App.  233;  Makepeace  v.  Coates,  8  Mass. 

213;  Alexander  V.  Durkee,  112  N.  Y.  451;  Simson   v.   Hart,  14  Johns.   63, 

655,  19  N.  R  Rep.    514;  Mitchell  v.  757. 

Oldfield,   4  T.   R.  123;   Williams   v.  3  Harris  v.  Palmer,  5  Barb.  105. 

Evans,    2  McCord,   203;   Tolbert   v.  <  pjerce  v,  Tuttle,  51  How.  Pr.  193; 

Harrison,  1  Bailey,  599;  Herrick  v.  Hardt  v.  Schulting,  24  Hun,  345;  De 

Bean,  20  Me.  51;  Temple  v.  Scott,  3  Figaniere   v.  Young,  2   Robert.  670; 

Minn.  419;  Makepeace  v.   Coates,  8  Zerbe  v.  Missouri,  etc.  R.  Co..  80  Mo. 

Mass.   451;  Greene  v.  Hatch,  12  id.  App.  414;   Spencer  v.  Johnston,  58 

195;    Ames  v.   Bates,    119    id.    397;  Neb.  44,  78  N.  W.  Rep.  482;  De  Camp 

Mason  v.  Knowlson,  1  Hill,  218;  Har-  v.  Thomson,  159  N.  Y.   444,  54  N.  E. 

ris  V.  Palmer,  5  Barb.   105;  Noble  v.  Rep.  11,  70  Am.  St.  570. 

Howard's  Ex'r,  2  Hayw.  14;  Holmes  If  a  writ  of  error  does  not  operate 

V.  Robinson,  4  Ohio,  90;  Meadow  v.  an  a.  supersedeas  an  intention  to  ob- 

Rhyne,  11    Rich.  631;  Benjamin    v.  tain  a  review  of   a   judgment  will 

Benjamin,   17  Conn.  110;  Cooper  v.  not  interfere  with  the  allowance  of 

Bigalow.  1  Cow.  296.     See  Zogbaum  a  set-off.     Sowles  v.  Witters,  40  Fed. 

V.  Parker.  55  N.  Y.  120.  Rep.  413.     See  Haskins  v.  Jordan,  123 

2De  Camp  v.  Thomson,  159  N.  Y.  Cal.  157,  55  Pac.  Rep.  786. 


§  10'.'.] 


SET-OFF    OF   JUDGMENTS. 


4S9 


right  until  the  appeal  is  determined. ^  In  the  exercise  of  this 
jurisdiction  courts  will  act  upon  the  equitable  as  well  as  le^-al 
interests  and  relations  of  the  parties.  Applications  for  such 
set-off,  not  being  founded  on  any  statute  or  governed  by  any 
fixed  or  arbitrary  rule,  are  addressed  to  the  discretion  of  the 
court,  and  its  discretion  will  be  so  exercised  as  to  do  equity  and 
not  to  sanction  fraud  -  or  oppression.'     The  fact  that  a  piaintilT 


1  Pierce  v.  Tuttle,  supra;  Terry  v. 
Roberts,  15  How.  Pr.  65. 

In  Irvine  v.  Myers,  6  Minn.  562,  it 
was  held  that  where  the  right  of  set- 
off was  suspended  by  appeal  after  a 
motion  made,  it  might  remain  unde- 
cided until  the  final  determination 
of  the  appeal. 

In  Blackburn  v.  Reilly,  48  N.  J.  L. 
82,2  Atl.  Rep.  817,  it  is  held  that 
after  the  affirmance  of  a  judgment 
by  tiie  appellate  court  and  the  return 
of  the  record  to  the  trial  court,  the 
latter  may  stay  the  execution  of  such 
judgment  for  the  purpose  of  setting 
it  olf  against  a  counter  judgment. 

^Tolbert  v.  Harrison,  1  Bailey,  599; 
Meador  v.  Rhyne,  11  Rich.  631. 

3  Williams  v.  Evans,  2  McCord,  203. 
W.  had  obtained  judgment  against 
E.  for  $188;  subsequently  E.  obtained 
a  judgment  in  trover  against  W.  for 
$240.  W..  instead  of  moving  to  have 
his  judgment  set  off  against  the 
larger  one  which  had  been  recov- 
ered against  him,  issued  a  ca,  sa. 
against  E.  and  then  assigned  his 
judgment  to  a  third  person  for 
value.  E.  was  imprisoned  on  the 
ca.  sa.,  and  so  remained  until  he 
died.  At  the  next  term,  W.,  who 
seems  to  have  repossessed  himself 
of  the  judgment  recovered  by  him, 
moved  to  have  it  set  off  against 
that  obtained  by  E.  On  a  motion 
to  rescind  an  order  allowing  such 
set-off,  Nott,  J.,  said:  "There  is  no 
doubt  but  that  the  court  has  the 
power  to  order  mutual  judgments 
to  be  set  off  against  each  other. 
This  is  a  common-law  power,  and  is 


not  derived  from  the  act  authoriz- 
ing parties  to  set  off  mutual  debts. 
.  .  .  If  it  constitute  a  part  of  the 
equitable  jurisdiction  of  the  court, 
it  ought  to  be  so  exercised  as  to  do 
equity  and  not  to  sanction  fraud; 
and  a  person  who  wishes  to  have 
the  benefit  of  it  ought  to  avail  him- 
self of  the  earliest  opportunity  to 
make  his  application,  and  not  to 
delay  until  the  interests  of  third 
persons  have  become  involved.  If 
the  party  in  this  case  had  made  his 
application  at  the  court  when  his 
judgment  was  obtained,  it  ought  to 
have  been  granted.  He  had  three 
methods  of  proceeding:  one.  that 
which  he  is  now  endeavoring  to 
pursue:  another  by  fi.  fa.  against 
the  goods  of  the  defendant;  and  the 
third  by  taking  his  body  in  execu- 
tion. He  chose  the  latter,  and  after 
having  made  his  election  (and  par- 
ticularly under  the  circumstances 
of  this  case),  he  ought  to  be  bound 
by  it;  at  least  he  can  have  no  high 
claim  to  the  assistance  of  the  court 
to  relieve  him  from  the  difficulty  of 
his  own  voluntary  creation.  It  is 
true  a  judgment  is  not  a  negotiable 
instrument;  nevertheless,  an  assign- 
ment conveys  an  equitable  interest 
to  the  assignee,  such  as  a  court  of 
law  will  notice  and  respect  in  all 
cases  of  appeal  to  its  discretion. 
Newman  v.  Crocker,  1  Bay,  246.  A 
bond  is  not  negotiable,  and  yet  tiiis 
court  would  so  far  respect  the  as- 
signee of  one  as  not  to  permit  a 
judgment  recovered  upon  it  to  be 
set  off  against  one  recovered  by  tlie 


490 


LEGAL    LIQUIDATIONS    AND    EEDLCTIONS. 


[§  l'^9 


against  whom  a  judgment  for  costs  has  been  rendered  has 
begun  another  action  against  the  defendant  for  a  larger 
amount  will  not  prevent  said  judgment  being  offset  against  a 
judgment  in  favor  of  the  defendant,  since  the  latter  judgment 
would  be  a  proper  set-off  or  counter  claim  against  such  demand 
us  the  plaintiff  holds  against  the  defendant.^  The  discretion 
of  a  court  in  acting  upon  a  motion  to  set  off  judgments  will 
not  be  reviewed  if  the  motion  is  denied.^  In  exercising  their 
power  courts  will  consider  the  rights  of  persons  who  are  not 
parties  to  the  action.^  If  a  party  who  is  entitled  to  a  set-off 
has  a  special  fund  which  is  primarily  applicable  to  the  satis- 
faction of  his  judgment  or  decree  he  will  not  be  permitted  to 
avail  himself  of  his  right  against  the  holder  of  an  opposing 
judgment  or  decree  until  such  fund  is  exhausted,  and  then 
only  for  any  balance  of  his  demand  which  is  unsatisfied.*  A 
set-off  of  judgments  will  not  be  allowed  if  it  will  result  in 
depriving  a  debtor  of  property  which  is  exempt  from  execu- 
tion.^    Were  it  otherwise  A.  might  get  judgment  against  B., 


obligee.  The  plaintiff,  by  taking  the 
body  of  the  defendant,  had  volun- 
tarily relinquished  every  other  claim 
upon  him;  and  the  claim  which  he 
now  has  upon  his  property  is  revived 
only  by  the  accidental  circum- 
stance of  his  death.  Suppose  the 
assignee  of  this  judgment  had  en- 
forced an  execution  against  W.  in 
the  life-time  of  E.  and  during  the 
time  he  had  his  body  in  execution, 
could  W.  have  required  that  money, 
while  in  the  hands  of  the  sheriff,  to 
be  paid  over  to  him?  Certainly  not; 
because,  having  taken  the  body  in 
execution,  he  must  have  been  con- 
tented with  it;  he  could  not  have 
double  satisfaction.  A  release  of  E. 
from  custody  would  have  been  a  re- 
lease of  the  debt.  He  had  a  mild 
and  easy  method  of  enforcing  the 
payment  of  his  debt,  if  he  had  chosen 
to  make  use  of  it.  Instead  of  which 
he  resorted  to  the  most  rigorous  and 
unfeeling  known  to  the  law;  like  an- 
other Shylock,  he  would  have  noth- 
ing short  of  his  flesh;  and  having  no 


longer  the  means  of  gratifying  his 
vengeance,  he  now  comes  and  asks 
this  court  to  take  from  a  humane 
and  merciful  creditor  a  vested  right, 
to  satisfy  a  debt  which  he  had  it  in 
his  power  to  receive,  and  which  he 
voluntarily  relinquished  to  gratify 
a  vindictive  passion.  The  motion 
must  be  granted."  See  Cooper  v. 
Bigalow,  1  Cow.  206. 

1  Welsher  v.  Libby,  107  Wis.  47,  82 
N.  W.  Eep.  693. 

'^  Chipman  v.  Fowle,  130  Mass.  352. 

sMeador  v.  Rhyne,  11  Rich.  631: 
Simmons  v.  Reid,  31  S.  C.  389,  17 
Am.  St.  36,  9  S.  E.  Rep.  1058. 

4  Nuzum  V.  Morris,  25  W.  Va.  559. 
See  Payne  v.  Webb,  29  id.  627,  2  S. 
E.  Rep.  330. 

5  Butner  v.  Bowser,  104  Ind.  255,  3 
N.  E.  Rep.  889;  Puett  v.  Beard,  86 
Ind,  172,  44  Am.  Rep.  280;  Junker  v. 
Hustes,  113  Ind.  524;  Beckman  v. 
Manlove,  18  Cal.  388;  Duff  v.  Wells, 
7  Heisk.  17;  Collett  v.  Jones,  7  B. 
Men.  586;  Johnson  v.  Hall,  84  Mo. 
210.     Contra,    Temple    v.    Scott.    :?• 


§  200.]  SET-OFF    OF   JUDGMENTS.  491 

seize  and  sell  his  exempt  horse  and  obtain  partial  satisfaction 
of  the  judgment  from  the  proceeds  of  such  sale.  If  B.  should 
then  recover  a  judgment  for  damages  against  A.  the  latter 
might  set  off  the  unsatisfied  portion  of  his  judgment  a^-ainst 
it.  Thus  B.  would  lose  his  horse,  and  A.,  by  a  violation  of  tho 
law,  would  collect  a  portion  of  his  judgment  against  an  insolv- 
ent debtor.  B.'s  judgment  ought  to  take  the  place  of  his 
horse.  But  this  exemption  from  liability  to  set-off  is  not  to 
be  extended  to  judgments  in  favor  of  the  owner  of  exempt 
property  for  damages  for  its  wrongful  taking  in  attachment 
proceedings,  the  property  being  in  bis  possession.'  A  court  of 
equity  may  set  off  judgments  when  courts  of  law  cannot  because 
they  are  not  between  the  same  parties.  But  this  will  not  bo 
done  unless  the  moving  party  shows  equitable  ground  for  it; 
he  must  make  it  appear  that  his  rights  are  superior  to  any- 
equitable  right  in  favor  of  the  other  party.^ 

g  200.  Interest  of  the  real  parties  considered.  The  [313] 
parties  beneficially  interested  may  assert  their  right,  and  a 
set-off  between  the  nominal  parties  will  be  refused  where  it 
would  be  prejudicial  to  those  having  equitable  interests.' 
Thus,  a  court  will  not  order  a  judgment  against  an  executor  in 
his  own  right  to  be  set  off  against  a  judgment  in  his  favor  on 
a  promissory  note  taken  for  goods  of  his  testator,  sold  by  him, 
if  it  appear  that  the  creditors  or  legatees  of  the  testator  will 
be  thereby  prejudiced.*    A  debtor  to  the  estate  of  a  decedent, 

Minn.  419,  ruled  by  a  divided  court,  ^  Daniel  v.  Bush,  80  Ga.  218,4  S.  E. 

and  on  the  theory  that  exemption  Rep.  271. 

statutes  are  to  be  strictly  construed;  *  Tolbert  v.  Harrison,  1  Bailey,  599. 
a  rule  opposed  to  the  great  weight  In  this  case  the  court  say:  "The 
of  authority.  Sutherland's  Stat,  note  given  to  the  executor  for  a  con- 
Const.,  §§  420-422.  See  Mallory  v.  tract  made  with  him  must  be  treated 
Morton,  21  Barb.  424.  and  considered  as  his  own.     In  a  le- 

1  Johnson  v.  Hall,  84  Mo.  210.  gal  pomt  of  view  it  was  the  note  of 

2  Howe    Maclune   Co.    v.    Hickox,  Sterling  Harrison  to  Jos.  S.  Tolbert. 
lOfi  111.  461.  It  is,  however,  unquestionable  that 

The  Rhode  Island  statute  govern-  in  fact  it  was  a  part  of  the  assets  of 

ing  the  right  to  setoff  judgments  the  estate  of  his  testator;  and  the  ex- 

and  executions  applies  only  to  cases  ecutor  might   and   ought    to    have 

in   which  the  parties  are  reversed  treated  it  as  such.     He.  on  the  pres- 

and  sue  and  are  sued  in  the  same  ent  occasion,  claims  that  it  sliould  be 

ri!;ht;  the  suits  must  also  be  pend-  considered  as  the  assets  of  the  estate, 

ing  at  the  same  time.     Hopkins  v.  This  is  the  equity  of  the  case:  and  the 

Drowne,  21  R.  L  80, 51  AtL  Rep.  1010.  court  of  equity,  in  the  exercise  of  the 


492 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


[§  200. 


against  whom  a  judgment  has  been  obtained  by  the  adminis- 
trator in  favor  of  such  estate,  is  entitled  to  set  off  against 
such  judgment  claims  proved  against  the  estate,  and  which 
existed  in  the    debtor's  favor  prior  to  the  death  of   the  de- 


jurisdiction  which  legitimately  be- 
longs to  it  over  trustees,  will  follow 
a  note  of  hand  as  the  property  of  an 
estate  if  really  taken  for  assets  of  the 
estate  sold  by  the  administrator, 
though  the  note  be  taken  in  the  pri- 
vate name  of  the  administrator. 
Glass  V.  Baxter,  4  Desaus.  153.  The 
question  is  whether  this  court  is 
bound  by  legal  rules  to  set  off  judg- 
ments in  all  cases  where  they  are  in 
the  same  right.  It  is  clear  that  it  is 
not." 

In  Ames  v.  Bates,  119  Mass.  397, 
W.  purchased  of  A.  a  claim  against 
K  pending  an  action  by  A.  upon  the 
claim.  B.  had  previously  purchased 
a  claim  against  A.  and  had  given  no- 
tice thereof  to  A.  Suit  was  brought 
thereon  by  B.  in  which  W.  appeared 
as  adverse  claimant  of  funds  in  the 
hands  of  R  summoned  as  trustee. 
At  the  time  of  his  purchase  of  the 
first  claim  W.  had  no  knowledge  of 
the  claim  against  A.  Held,  that 
judgment  for  the  plaintiff  in  the  sec- 
ond action  could  not  be  set  off  against 
judgment  for  the  plaintiff  in  the  first 
action.  The  court  say:  "While  there 
is  no  express  statute  authority  for 
setting  off  judgments  where  the 
creditor  in  one  action  is  the  debtor 
in  another,  except  in  a  limited  num- 
ber of  cases  (Gen.  Stats.,  ch.  126.  g.^  2, 
3,  5),  yet  this  power  has  been  fre- 
quently exercised  by  courts  of  law, 
and  rests  upon  their  jurisdiction  over 
suitors  in  them  and  their  general  su- 
perintendence of  proceedings  before 
them.  Makepeace  v.  Coates,  8  Mass, 
4'31;  Greene  v.  Hatch,  13  Mass.  195. 
Such  a  power  is  only  to  be  exercised 
upon  careful  consideration  of  all  the 
circumstances  of  the  transactions  out 
of  which  the  judgments  arise,  and 


in  order  to  protect  the  just  rights  of 
parties.  In  the  present  case  the 
nominal  parties  to  the  judgments 
are  not  the  same,  nor  is  the  equita- 
ble owner  of  the  judgment  recov- 
ered in  the  name  of  Ames  the  de- 
fendant in  the  suit  of  which  Bates 
is  the  equitable  owner.  But  even  if 
Ames  had  continued  to  be  the  owner 
of  the  judgment  recovered  in  his 
name,  it  might  well  be  questioned 
whether  Bates  should  be  permitted 
to  set  off  against  it  the  judgment  re- 
covered by  him  in  the  name  of  Free- 
man and  another,  when  he  could  not 
have  set  off  the  claim  upon  which 
the  judgment  was  founded.  The  rea- 
son why  a  party  is  not  permitted  by 
the  statute  to  set  off  such  claims  may 
fairly  be  presumed  to  be,  that  it  is 
not  just  that  one  should  be  encour- 
aged, instead  of  paying  his  own  debt, 
to  seek  out  claims  against  his  cred- 
itor in  order  thus  to  change  the  posi- 
tion of  parties  pendente  lite;  and  this 
reason  is  equally  applicable  to  judg- 
ments which  may  afterwards  be  ob- 
tained upon  such  claims.  However 
this  might  be  as  to  Ames  himself,  it 
is  clear  that  as  to  the  assignee  of 
Ames.  Bates  should  not  be  allowed 
to  effect  this  change.  When  the 
equitable  rights  of  third  parties 
would  be  affected  by  an  offset  of  this 
character  it  is  not  to  be  made  to  the 
injury  of  intervening  rights  honestly 
acquired.  Greene  v.  Hatch,  iibi 
supra;  Zogbaum  v.  Parker,  55  N.  Y. 
120;  Gay  v.  Gay,  10  Paige,  369; 
Ramsey's  Appeal,  2  Watts,  22a'' 

In  Carter  v.  Compton,  79  Ind.  37, 
T.  obtained  judgment  against  the  es- 
tate of  S.  on  a  note.  The  executors 
of  S.  held  a  note  of  a  later  date 
against  T.,  which  was  executed  to 


§  20U.] 


SET-OFF    OF   JUDGMENTS. 


493 


cedent,  but  not  claims  assigned  to  him  after  his  death.  As  to 
these  last  it  was  said  the  rights  of  the  administrators  and 
the  creditors  had  become  fixed  by  the  decedent's  death; 
the  claim  against  the  assignee  had  become  assets  of  the  es- 
tate, in  which  its  creditors  and  the  administrators  had  an  in- 
terest.^ Set-off  will  not  be  allowed  in  favor  of  the  [.'{14] 
nominal  judgment  creditor  where  it  appears  that  before  the 
judgment  was  obtained  the  cause  of  action  had  been  as-  [315] 
signed  to  a  third  person.^  But  if  the  right  exists  at  the  time 
of  the  assignment  of  a  judgment,  the  assignee  will  stand  only 
in  the  shoes  of  the  assignor.^  The  assignee  of  a  judgment  is 
not  affected  by  equities  which  arise  between  the  parties  to  it 
subsequent  to    the  assignment.*     Xor  is  the  assignee  of   all 


them  in  their  representative  capac- 
ity. Judgment  upon  it  was  set  off 
against  the  first  mentioned  judg- 
ment. 

1  Wikel  V.  Garrison,  82  Iowa,  453, 48 
N.  W.  Rep.  803. 

2  Swift  V.  Prouty,  64  N.  Y.  545; 
Perry  v.  Chester,  53  N.  Y.  240; 
Mackey  v.  Mackey,  43  Barb,  58; 
Turner  v.  Satterlee,  7  Cow.  480; 
Nash  V.  Hamilton,  3  Abb.  Pr.  35. 

It  is  held  in  Williams  v.  Taylor,  69 
Ind.  48,  that  if  at  the  time  a  judg- 
ment is  pleaded  in  set-off  the  equita- 
ble title  to  it  is  in  one  person  and  the 
legal  title  in  another,  the  latter  will 
prevail. 

3  Skinker  v.  Smith,  48  Mo.  App.  91 ; 
Irvine  v,  Myers,  6  Minn.  502;  Jaeger 
V.  Koenig,  32  N.  Y.  Misc.  244,  65  N, 
Y.  Supp.  795;  Lammers  v.  Goode- 
man,  09  Ind.  76;  McBride  v.  Fallon, 
63  CaL  301,  4  Pac.  Rep.  17;  Peirce  v. 
Bent,  69  Ma  381;  Wells  v.  Clarkson, 
5  Mont.  336,  5  Pac  Rep.  894;  Brown 
V.  Hendnckson,  39  N.  J.  L.  239; 
Chamberlin  v.  Day,  3  Cow.  353; 
Ferguson  r.  Bassett,  4  How.  Pr.  168; 
Noxon  V.  Gregory,  5  id.  339;  Cooper 
V.  Bigalow,  1  Cow.  56,  206;  Turner  v. 
Crawford,  14  Kan.  499.  See  Duncan 
V.  Bl(X)mstock,  2  McCord.  318;  Ram- 
sey's Appeal,  2  Watts,  228. 


"Cases  often  occur  in  which  the 
set-off  of  one  judgment  against  an- 
other is  allowed  regardless  of  a  prior 
assignment  of  one  to  a  tliird  person. 
Such  cases  are,  where  the  assignee 
has  taken  the  judgment  charged 
with  notice  of  the  right  of  set-off  as 
an  existing  defense  (Rowe  v.  Lang- 
ley,  49  N.  H.  395);  where,  through  in- 
solvency of  the  assignor  at  the  time 
of  the  assignment,  the  party  claim- 
ing the  right  of  set-off  bad  no  other 
means  of  collecting  his  debt  (Gay  v. 
Gay,  10  Paige,  369,  375);  and  where, 
in  anticipation  of  an  application  to 
make  the  set-off,  the  assignment  wa.s 
made  for  the  purpose  of  defeating 
the  right.  Duncan  v.  Bloomstot^k,  2 
McCord,  318.  In  all  cases  where  the 
assignment  is  without  consideration, 
not  in  good  faith,  or  fraudulently 
made  to  defeat  the  application,  the 
court  will  direct  the  set-off  to  be 
mada  Cross  v.  Brown,  51  N.  H.  486; 
Hurst  V.  Sheets,  14  Iowa,  322;  Rus- 
sell V.  Conway,  11  Cal.  93;  Morris  v. 
Hollis,  2  Harr.  4:  Duncan  v.  Bloom 
stock,  supra."  Hovey  v.  Morrill.  61 
N.  H.  9,  60  Am.  Rep.  315. 

*  Wyvell  V.  Barwise,  43  Minn.  171, 
45  N.  W.  Rep.  IL 


I 


494  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  [§   201. 

ri2:hts  and  demands  under  a  contract  charr!:ed  with  notice  of 
such  of  its  stipulations  as  are  wholl}'-  distinct  from  that  portion 
of  it  which  he  is  concerned  with;  as  where  an  instrument  pro- 
vides for  closing  up  an  existing,  and  also  for  carrying  on  a 
new,  business.  The  subject-matters  are  so  disassociated  that 
they  are  several  contracts.  Hence  the  assignee  of  rights  un- 
der the  clause  relating  to  prosecuting  a  new  business  is  not 
charged  with  knowlege  of  the  existence  of  a  judgment  against 
his  assignor  on  account  of  a  breach  of  the  other  provision,  and 
such  judgment  cannot  be  set  off  against  one  subsequently  ren- 
dered in  his  favor.^  As  between  two  persons  who  hold  judg- 
ments by  assignments,  the  one  prior  in  time  has  the  right  to  be 
paid  first  by  the  judgment  he  holds,  and  such  judgment  is  not 
subject  to  set-off  by  the  assignor  of  it  who  subsequently  pur- 
chased an  assignment  of  a  judgment  against  the  holder.^  The 
assignee  of  a  judgment  which  was  bought  without  notice  of 
any  offsets  thereto  cannot  be  denied  the  right  to  enforce  it  by 
injunction  proceedings  because  the  defendant  seeks  to  offset 
against  it  a  judgment  recently  rendered  against  the  plaintiff 
upon  demands  bought  by  him  before  the  transfer  of  the  judg- 
ment for  the  purpose  of  being  used  in  offset,  notwithstanding 
the  plaintiff  is  insolvent.'  The  valid  assignment  of  a  judg- 
ment does  not  affect  the  judgment  debtor's  right  to  thereafter 
have  a  judgment  in  his  favor  against  the  assignor  rendered  in 
another  action,  before  the  assignment  was  made,  setoff  against 
the  judgment  assigned.* 

§  201.  Set-off  not  granted  before  judgment.  The  right 
does  not  attach  on  the  recovery  of  a  verdict  merely,  and  if  that 
be  assigned  before  judgment  thereon  is  rendered  it  is  not  sub- 
ject to  a  set-off  of  a  judgment  against  the  assignor.^     But  this 

1  Howe  Machine  Co.  v.  Hickox,  106  *  Benson  v.  Haywood,  86  Iowa,  107, 

111,  461.  53  N.  W.  Rep.  85,  23  L.  R.  A,  335. 

^McAdamsv.  Randolph,  42  N.  J.  *  Graves  v,  Woodbury,  4  Hill.  559. 

L.  332;  Gauche  v.  Milbrath,  105  Wis.  40  Am.  Dec.  298;  Bagg  v.  Jefferson 

355,  81   N.  W.  Rep.  487;  Wright  v.  C.  P.,  10  Wend.  615;  People  v.  Judges, 

AVright,  70  N.  Y.  96;  Terney  v,  Wil-  etc.,  6  Cow.  598;  Garrick  v.  Jones,  3 

son,  45  N.  J.  L.  282.  Dowl.  P.  C.  157;  Wood  v,  Merritt,  45 

3  Button   V.   Mason,   21  Tex.    Civ.  How.  Pr.  471;  Spencer  v.  Johnston, 

App.  389,  52  S.  W.  Rep.  651.    See  2  58  Neb.  44,  78  N.  W.  Rep.  4Sa     See 

Freeman  on  Judgments,  §427;  Lund-  Mc  Adams  v.  Randolph,  42  N.  J.  L. 

green  v.  Stratton,  79  Wis.  227,  48  N.  332;  Patterson  v.  Ward,  8  N.  D.  87, 

W.  Rep.  426.  76  N.  W.  Rep.  1046. 


§  2.I2.J  8ET-0FF    OF   JUDGMENTS.  495 

rule  is  not  to  be  applied  with  technical  strictness.  In  a  late 
-case  it  was  said:  The  defendant  in  tliis  action  has  recovered  a 
verdict  against  this  plaintiff  in  a  suit  growing  out  of  the  same 
transaction.  The  case  came  to  the  law  court  upon  a  motion 
for  a  new  trial,  which  has  been  overruled,  and  judgment  will 
be  ordered  upon  the  verdict  —  the  announcement  of  the  de- 
cision being  made  simultaneously  with  this.  The  counsel  for 
the  plaintiff  in  these  cases  has  moved  that  the  judgments,  when 
recovered,  both  amounting  to  a  less  sum  than  the  judgment 
that  will  be  recovered  by  this  defendant,  be  set  off  against  the 
judgment  in  favor  of  this  defendant,  jpro  tanto.  This  sliould  bo 
done,  but  not  so  as  to  affect  the  attorney's  lien  upon  the  tax- 
able costs  in  each  casc.^ 

§  202.  Assignee  must  malie  an  absolute  purchase.  The 
assignee  of  a  judgment,  to  be  entitled  to  assert  this  right  of 
set-off,  must  acquire  the  judgment  absolutely.-  If  the  purchase 
is  made  on  the  condition  that  the  motion  for  set-off  is  success- 
ful, and  otherwise  to  be  Toid,  the  ownership  is  not  acquired 
with  sufficient  absoluteness  to  enable  the  assignee  to  use  it  as 
a  set-off.'  An  assignment  upon  condition  of  a  rescission  of  the 
transfer  in  case  the  assignee  cannot  avoid  a  set-off  is  not  suflS- 
ciently  absolute.''  iScr  will  an  assignment  of  a  judgment  to 
be  collected  for  the  assignor,  less  compensation  for  collecting, 
confer  the  requisite  ownership.^  A  party  seeking  to  set  oif  a 
judgment  in  his  favor  against  one  recovered  against  him  should 
be  the  owner  of  the  judgment  in  his  own  right,^  The  [316] 
mutual  judgments  should  be  in  the  same  right.^     It  is  imma- 

iHowe  V.  Klein,  89  Me.  376,  36  AtL  out  of  proceedings  instituted  before 
Hep.  620.  the    assignment,    if    properly  com- 
2  Jones  V.  Chalfant,  55  Cal.  505.  menced.   Such  proceedings  may  have 
s  Butler  V.  Niles,  26  How.  Pr.  61,  35  been  legitimate  and  necessary  cou- 
ld. 329.  sequences  of    the    judgment  when 
<  Oilman  v.  Van  Slyck,  7  Cow.  469.  taken;  and  he  has  no  right  to  take 
8  Porter  ^.  Davis,  2  How.  Pr.  30.  away  the  foundation  of  such  pro- 
It  was  held  in  Butler  v.  Niles,  supra,  oeeding,  if  still  pending,  by  satisfying 
that  even  if  a  plaintiff,  in  an  action  the  judgment  with   those   held  by 
to  procure  a  set-off  of  a  judgment,  be  him.     It  is   not  equivalent  to  pay- 
entitled  to  set  off  the  judgment  as-  ment  and  acceptance  in  satisfaction 
signed  to  him  against  one  recovered  pendente  lite, 

against-  himself,  he  cannot  make  use  ''Mason  v.  Knowlson,  1  Hill,  218. 

of  such  assigned  judgment  to  defeat  "  Holmes  v.  Robinson,  4  Ohio,  90. 

the  incident  claims  for  costs  growing  Although  where  one  of  the  parties 


400 


LEGAL    LIQUIDATIONS    AND    KEDUCTIONS. 


[§  203. 


terial  in  whose  names  they  were  respectively  recovered;  the 
right  of  set-off  exists  between  the  several  beneficial  owners 
and  is  confined  to  them.  It  is  no  objection  that  the  mutual 
judgments  are  not  norainallj'  due  to  and  from  the  same  num- 
ber of  persons;  ^  if  the  equitable  claims  of  many  become  vested 
in  one,  the}^  may  be  set  off  against  separate  demands,  and  vice 
versa} 

§  203.  Nature  of  action  immaterial.  Nor  is  it  material 
what  was  the  original  cause  of  action,  whether  in  tort  or  con- 
tract; when  a  final  judgment  is  obtained  the  original  cause  is 
merged,  the  judgment  becomes  technically  a  contract  of  rec- 
ord, and  on  motion  it  may  be  made  to  mutually  compensate 
and  satisfy  another.'  Nor  is  it  necessary  that  both  judgments 
should  be  recovered  in  the  same  court.^     The  motion  should 


in  two  cross-actions  has  assigned  his 
interest  to  a  third  party  there  may- 
be no  right  to  set  off  the  judgments, 
yet,  where  the  assignee,  being  the 
real  plaintiff  in  one  action,  is  also  the 
real  defendant  in  the  other,  there  is 
such  right  of  set-off.  Standeven  v. 
Murgatroyd,  27  L.  J.  (Ex.)  425. 

1  Id. :  Simson  v.  Hart.  14  Johns.  63, 
75;  Peirce  v.  Bent,  69  Me.  381,  holding 
that  a  judgment  in  favor  of  a  prin- 
cipal alone  may  be  applied  in  satis- 
faction of  one  against  him  and  his 
sureties. 

In  Brown  v.  Hendrickson,  39  N.  J. 
L.  239,  it  is  said  that  in  testing  the 
right  to  a  set-off  it  is  not  necessary 
that  the  judgments  should  be  in  the 
same  right;  it  is  enough  if  the  judg- 
ment prayed  to  be  set  off  may  be 
enforced  at  law  against  the  party  re- 
covering the  judgment  to  be  satisfied 
by  the  set-off,  provided  it  is  not  in 
a  representative  capacity.  To  the 
same  effect,  Skinker  v.  Smith,  48  Mo. 
App.  91. 

Under  the  Missouri  statute  a  judg- 
ment in  favor  of  the  attachment 
plaintiff  on  the  cause  of  action 
counted  on  in  the  attachment  suit 
may  be  set  off  against  the  damages 
recovered  by  the  attachment  defend- 


ant for  the  improper  attachment,  al- 
though such  judgment  is  against  the 
relator  and  another  who  was  not  a 
party  in  the  attachment  proceeding, 
since  the  judgment  plaintiff  has  a 
right  to  receive  satisfaction  of  his 
judgment  from  one  of  his  two  judg- 
ment debtors.  State  v.  Hudson,  86 
Mo.  App.  501. 

2  Id.:  Buller's  Nisi  Prius,  336. 

3  Puett  V.  Beard,  86  Ind.  172, 44  Am. 
Rep.  280;  Langston  v.  Roby,  68  Ga. 
406;  Sowlesv.  Witters,  40  Fed.  Rep. 
413,  holding  that  a  decree  in  equity 
may  be  set  off  against  a  judgment  at 
law;  Howell  v.  Shands,  35  Ga.  66; 
King  V.  Hoare,  13  M.  &  W.  494,  504. 

4  How  V.  Klein,  89  Me.  376,  36  Atl. 
Rep.  620:  Skinker  v.  Smith.  48  Mo. 
App.  91;  Aldrich  v.  Blatchford,  175 
Mass.  396.  56  N.  E.  Rep.  700,  78  Am. 
St.  503;  Robinson  V.  Kunkleman,117 
Mich.  193,  75  N.  W.  Rep.  451 ;  Taylor 
V.  Williams,  14  Wis.  155;  Kimball  v. 
Munger,  2  Hill,  304;  Barker  v.  Bra- 
ham,  2  W.  Black.  869;  Hall  v.  Ody, 
2  B.  &  P.  29;  Bridges  v.  Smyth,  8 
Bing.  29;  Bristowe  v.  Needham,  7  M. 
&  G.  648;  Coxe  v.  State  Bank,  8  N,  J. 
L.  472;  Noble  v.  Howard's  Ex'r,  2 
Hayw.  14;  Ewen  v.  Terry,  8  Cow. 
126;  Ross  v.  Hicks,    11  Barb.  481;  Ir- 


§  204.]  BET-OFF   OF   JUDGMENTS.  497 

be  made  in  the  court  where  the  judgment  against  the  moving 
party  was  obtained.^  And  the  moving  papers  should  be  enti- 
tled in  all  the  causes,  whether  in  the  same  court  or  not.^  In 
some  states  the  motion  may  be  made  in  the  court  in  which  one 
or  both  of  the  actions  are  pending.'  If  the  judgments  are  in 
different  courts  all  difficulty  in  accomplishing  the  practical  re- 
sult is  obviated,  if  the  party  desiring  the  set-off  makes  his  ap- 
plication in  the  court  where  the  judgment  exists  against  him, 
for  the  court  can  then  make  its  action  in  satisfying,  either  in 
whole  or  in  part,  its  own  judgment  conditioned  upon  such  ap- 
plicant making  reciprocal  satisfaction  of  the  judgment  in  his 
favor  standing  in  another  court/ 

§  204.  Liens  of  attorneys.  In  England  for  a  long  time 
there  were  two  conflicting  rules  as  to  the  right  of  a  judgment 
debtor  to  set  off  a  judgment  in  disregard  of  the  lien  of  his  at- 
torney. Such  right  was  denied  by  the  court  of  king's  bench 
if  the  exercise  of  it  affected  the  attorney's  lien  for  costs.'  The 
common  pleas  courts  held  that  the  equitable  rights  of  the  par- 
ties were  superior  to  the  attorney's  lien.^  In  1853  the  rules 
adopted  made  the  practice  in  the  king's  bench  applicable  to 
all  the  courts,  while  the  judicature  act  of  1873  adopted  the 
other  rule.  The  rule  of  the  common  pleas  has  been  adopted 
in  many  jurisdictions  in  this  country;'^  while  others  follow 

vine  V.  Myers,  6  Minn.  563,     Contra,  »  Mitchell  v.  Oldfield,  4  T.  R.  133. 

Tenant  V.  Marmaduke,  5  B.  Mon.  76.  "Schoole  v.  Noble,  1  H.  Black.  23. 

In  Schautz  v.  Kearney.  47  N.  J.  L.  "Benjamin  v.  Benjamin,  17  Conn. 

56,  a  decree  in  admiralty  rendered  110;   Turner   v.    Crawford,  14   Kan. 

by  a  federal  court  was  set  off  against  499;  Sanders  v.  Giliett,  8  Daly,  183; 

ajudgmentrecoveredinastatecourt.  NicoU  v.  NicoU,  16  Wend.  446;  Rob- 

1  Brookfield  V.  Hnghson,  44  N.  J.  L.  erts    v.    Carter,    24     How.    Pr.    44; 

285;  Taylor  v.  Williams,  14  Wis.  155;  Brooks  v.  Hanford,  15  Abb.  Pr.  342; 

Dunkin    v.   Vandenbergh,   1    Paige,  Hayden  v.  McDermott,  9  id.  14;  Peo- 

622;    Cooke   v.   Smith,  7   Hill,    186;  pie  v.  New  York  C.  P.  C,  13  Wend. 

Ross  V.  Hicks,  11  Barb.  481;  Russell  649;   Hovey  v.    Rubber    Tip  Pencil 

V.  Conway,  11  Cal.  93.  Co.,  14  Abb.  Pr.  (N.  S.)  66;  Watson  v. 

2Aleott  V.  Davison,  2  How.  Pr.  44.  Smith,  63  Iowa,  228,  18  N.  W.  Rep. 

In  North  Carolina  the  practice  has  916;  Mosely  v.  Norman,  74  Ala.  422; 

been  to  set  oflF  judgment  by  sdre  Wright   v.   Tread  well,  43    Md.  212; 

facias.    Noble  v.  Howard's  Ex'r,  3  Fairbanks  v.  Devereux.  58  Vt.  359,  3 

Hayw.  14.  Atl.  Rep.  500;  Bosworth  v.  Tallman, 

» Peirce  v.  Bent,  69  Me.  381.  66  Wis.  533,  29  N.  W.  Rep.  542. 

*  Welsher  v.  Libby,  107  Wis.  47,  82  In  New  York,  since  the  enactment 

N.  W.  Rep.  693.  of    1879,  no  set-off    is  allowed    as 
Vol.  1  —  33 


498  LEGAL   LIQUIDATIONS    AND    REDUCTIONS.  [§  204. 

that  of  the  king's  bench. ^  But  where  the  equitable  power  of 
a  court  is  invoked  by  motion  the  statute  of  set-off  is  not  the 
[317]  obligatory  guide,  and  the  court,  proceeding  upon  its  own 
discretion,  will  sustain  the  attorney's  lien  and  give  it  prefer- 
ence.'^ An  attorney  has  a  lien  for  his  costs  upon  money  re- 
covered by  his  client  or  awarded  him  in  a  cause  in  which  the 
attorney  was  employed,  in  case  the  money  has  come  into  his 
hands;  or  he  may  stop  it  in  transitu  by  giving  notice  to  the 
opposite  party  not  to  pay  it  until  his  claim  for  costs  is  satisfied, 
and  then  moving  the  court  to  have  the  amount  thereof  paid  to 
him  in  the  first  instance.  And  if,  notwithstanding  such  notice, 
the  other  party  pay  the  money  to  the  client,  he  is  still  liable 
to  the  attorney  for  the  amount  of  his  lien;  and  the  latter  in 
such  case  will  not  be  prejudiced  by  any  collusive  release  given 
by  his  client.  But  unless  such  notice  is  given  the  client  may 
compromise  with  the  opposite  party,  and  give  him  a  release 
without  the  intervention  of  his  attorney;  and  he  in  that  event 
can  afterwards  look  to  his  client  only  for  payment.^  This  lien 
has  sometimes  been  supposed  to  be  confined  to  some  fixed  and 
certain  amount  allowed  to  an  attorney  by  statute,  and  that  it 
does  not  extend  to  a  quantum  meruit  claim  for  his  services.* 

against  the  lien  of  an  attorney.  En-  Kanouse,  17  id.  146;  De  Figaniere  v. 
nis  V.  Curry,  22  Hun,  584;  Naylor  v.  Young,  2  Robert.  670;  Hovey  v.  Rub- 
Lane,  66  How.  Pr.  400,  18  J.  &  S.  97.  ber  Tip  Pencil  Co.,  14  Abb.  Pr.  (N.  S.) 

1  Howe  V.  Klein,  89  Me.  376,  36  Atl.  66;  Bishop  v.  Garcia,  id.  69. 

Rep.  620;  Currier  v.  Boston  &  M.  R.  3  Graham  Pr.  61;  Ex  parte  Kyle,  1 
Co.,  37  N.  H.  223;  Stratton  v.  Hussey,  CaL  332;  Mansfield  v.  Borland,  2  Cal. 
63  Ma  286;  Puett  v.  Beard,  86  Ind.  507:  Russell  v,  Conway,  11  Cal.  93; 
172,  44  Am.  Rep.  280;  Dunklee  v.  Wilkins  v.  Batterman,  4  Barb.  47; 
Locke,  13  Mass.  525;  Boyer  v.  Clark,  Ten  Broeck  v.  De  Witt,  10  Wend. 
3  Neb.  161;  Robertson  v,  Shutt,  9  617;  Bradt  v.  Koon,  4  Cow.  416;  Mar- 
Bush,  659:  Carter  v.  Davis,  8  Fla.  tin  v.  Hawks,  15  Johns.  405;  Chap- 
183;  Caudle  v.  Rice,  78  Ga.  81.  See  man  v.  Haw,  1  Taunt.  341;  Omerod 
Langston  v.  Roby,  68  id.  406.  v.  Tate.  1  East,  464:  Turwin  v.  Gib- 

2  Simmons  v.  Reid,  31  S.  C.  389,  17  son,  3  Atk.  720;  Read  v.  Dupper,  6 
Am.  St  36,  9  S.  K  Rep.  1058;  Diehl  T.  R.  361;  Wilkins  v.  Carmichael,  1 
V.  Friester,  37  OhioSt.  473;  Ward  v.  Doug.  101;  Schoole  v.  Noble,  1  H. 
Wordsworth,  1  E.  D.  Smith,  598;  Black.  23;  Ackerman  v.  Ackerman, 
Haight  V.  Holcomb,  16  How.  Pr.  163;  14  Abb.  Pr.  229;  Bishop  v.  Garcia,  14 
Peckham  v.  Barcalow,  Lalor's  Supp.  Abb.  Pr.  (N.  S.).69. 

112;  Smith  v.  Lowden,  1  Sandf.  696;  <  Ex  parte  Kyle,  1  Cal.  332;  Daven- 

Gihon  V.  Fryatt,  2  id.  638;  Sweet  v.  port  v.  Ludlow,  4  How.  Pr.  337;  Ben- 

Bartlett,  4  id.  661:  Roberts  V.  Carter,  edict  v.    Harlow,   5  id.  347.     But  a 

17  How.  Pr.  341,  24  id.  44;  Martin  v.  more  reasonable  view,  in  the  writer's 


§  204.]  SET-OFF    OF   JUDGMENTS.  499 

A  distinction  has  been  made  as  to  the  right  of  set-off  when  the 
judgments  are  in  the  same  action,  or  in  actions  growing  out 
of  the  same  subject-matter,  and  where  the  judgments  are  in 
actions  having  no  connection  with  each  other.  In  the  former 
class  of  cases  the  right  is  generally  deemed  superior  to  the 
claim  of  the  attorney  in  either  action  for  his  services  and  dis- 
bursements;^ in  the  latter  the  equitable  right  of  the  attorney 
Avho  has  rendered  services  and  incurred  expenses  in  obtaining 
one  of  such  judgments,  to  be  paid  out  of  it,  is  deemed  superior 
to  the  right  of  the  judgment  debtor  to  have  that  judgment 
paid  by  applying  upon  it  the  judgment  owned  b}^  him  against 
his  judgment  creditor,  the  assignment  being  made  lona  jide 
before  the  right  of  set-off  attaches.^ 

judgment,  is  to  be  found  in  the  able  fected  the  right  of  the  attorney  to 

opinion    of    Daly,    J.,    in    Ward    v.  his  lien. 

Wordsworth,    1    E.    D.    Smith,   598,  i  Yorton  v.  Milwaukee,  etc  R.  Co., 

where  it  is  held  that  the  abolition  by  62  Wis.  367,  21  N.  W.  Rep.  516,  23  id. 

the  code  of  all  statutes  regulating  401. 

the  fees  of  attorneys,  and  of  all  rules  2  Gauche  v.  Milbrath,  105  Wis.  355, 
or  provisions  of  law  preventing  an  81  N.  W.  Rep.  487;  Benjamin  v.  Ben- 
attorney  from  agreeing  with  his  jamin,  17  Conn.  110;  Diehl  v.  Fries- 
client  for  his  compensation,  and  ter,  37  Ohio  St.  473;  Wells  v.  Elsani. 
leaving  the  measure  thereof  to  the  40  Mich.  218;  Kinney  v.  Robison,  52 
contract  of  the  parties,  has  not  af-  Mich.  389,  18  N.  W.  Rep.  120. 


500  PEOUNIAEY   EEPJSESENTATIVE   OF    VALUE.  [§  205. 


CHAPTEK  YL 

PECUNIARY  REPRESENTATIVE  OF  VALUK 
Section  L 

MONEY. 

§  205.  Characteristics  of  money. 

206.  Payment  to  be  made  in  money  of  country  of  performance 

207.  Payment  in  currency. 

208.  Effect  of  changes  in  the  value  of  money. 

209.  Value  of  money  at  time  of  contracting. 

210.  The  legal  tender  act. 

81 L  Effect  of  fluctuations  in  currency. 

Section  2L 
par  and  rate  of  exchange. 

212,  Par  of  exchanga 

213.  Rate  of  exchange. 

Section  1. 

MONEY. 

[318]  §  205.  Characteristics  of  money.  All  civilized  na- 
tions have  some  method  or  system  of  pecuniary  remuneration, 
based  upon  an  arbitrary  unit  of  value  sanctioned  by  law.  By 
it  accounts  are  kept,  the  amounts  of  debts  and  judgments  ex- 
pressed, and  wealth  computed.  They  have,  also,  gold  and 
silver  coins,  either  representing  that  unit  or  some  multiple  of 
it,  or  other  value  estimated  with  reference  to  it.  These  are 
of  intrinsic  value,  and  being  made  and  issued  by  the  sovereign 
power  are  acceptable  to  everybody  and  therefore  have  uni- 
versal currency  as  a  convenient  and  necessary  medium  of  ex- 
change and  payment.  They  are  money  in  the  strict  sense. 
[319]  All  pecuniary  obligations  are  measured  by  and  expressed 
in  the  value  they  represent,  and  are  solvable  by  them.  Nor 
can  such  obligations  be  otherwise  liquidated  or  paid,  except 
by  agreement,  unless  the  state  which  has  the  power  to  coin 
money  prescribes  some  other  form  of  legal  money.  The 
precious  metals,  being  valued  according  to  a  uniform  and  fixed 


§  206.]  MONET.  501 

standard,  are  the  only  proper  measure  of  value.  Their  value 
is  determined  by  weight  and  purity,  and  the  impress  on  the 
coins  is  a  certificate  so  generally  relied  upon  that  the  pieces 
readily  pass  for  their  nominal  value  by  count. 

Money  is  cosmopolitan.  A  contract  which  is  a  money  con- 
tract where  it  is  entered  into  and  to  be  performed  is  a  money 
contract  everywhere.  To  this  extent  the  money  of  one  na- 
tion is  treated  as  money  by  another,  as  distinguished  from  a 
mere  chattel  or  a  commodity.  Thus,  money  lent  in  India  in 
2?agodas,  and  sued  for  in  England  as  money  lent,  was  held  re- 
coverable in  that  form.  It  w^as  contended  that  the  averment 
that  the  defendant  was  indebted  for  "  lawful  money  of  Great 
Britain"  was  not  supported;  but  Gibbs,  J.,  said,  "the  doc- 
trine contended  for  has  been  exploded  these  thirty  [320] 
vears."^  The  real  meaning  of  such  a  count  was  afterwards 
explained  to  be  that  the  defendant  is  indebted  for  money  of 
such  a  value  or  amount  in  English  money.^  So  a  contract 
made  and  to  be  performed  in  the  same  country,  for  the  pay- 
ment of  what  is  money  at  the  time  of  contracting,  will  be 
held  a  money  contract  after  that  currency  has  been  abolished 
and  another  entirely  different  has  been  substituted. 

§  206.  Payment  to  be  made  in  money  of  country  of  per- 
formance. Contracts  for  the  payment  of  money  are  deemed 
payable  in  the  legal  money  of  the  country  where  payment  is 
to  be  made,  unless  a  contrary  intention  appears;  that  [321] 
is,  a  contract  for  the  payment  within  the  United  States  of 
dollars  is  presumptively  payable  in  dollars  of  our  decimal  cur- 
rency. If  a  contract  be  made  here,  and  even  not  within  the 
law  merchant,  and  between  citizens  of  the  United  States,  and 
to  be  performed  here,  for  the  payment  of  a  sum  stated  in  the 
denominations  of  a  foreign  currency,  it  is  undoubtedly  to  be 
treated  as  a  money  contract,  the  same  as  if  made  and  to  be 
performed  in  the  country  where  such  currency  is  the  legal 
money.'     Debts  have  no  situs;  they  are  payable  everywhere; 

1  Harrington  v.Macmorris,  5  Taunt.  Sneed,  2;  Sheehan  v.  Dalrymple,  19 
228.  Mich.  239. 

2  Ehrensperger  v.  Anderson,  3  Ex.  »  See  Mervine  v.  Sailor,  52  Pa.  18; 
148.  But  see  McLaohlan  v,  Evans,  Christ  Church  Hospital  v.  Fuechsel, 
1  Y.  &  J.  3S0;  Pollock  v.  Colglazure,  54  id.  71;    Mather  v.   Kinike,  51   id. 

4^5;  Sears  V.  Dewing,  14  Allen,  413. 


502  rECUNIAKY    KEPBESENTATIVE    OF    VALUE.  [§   207. 

and  in  every  country  where  payment  may  be  either  tendered 
or  demanded,  they  are  strictly  payable  in  the  legal  currency 
or  money  of  that  country,  and  in  no  other  currency  unless 
strictly  at  maturity.  A  sterling  debt  contracted  or  incurred 
in  England,  a  debt  payable  in  francs  incurred  in  France,  or  a 
contract  payable  in  pistoles  entered  into  in  Spain,  when  sought 
to  be  enforced  or  paid  in  the  United  States,  is  a  contract  for 
an  equivalent  amount  payable  only  in  the  lawful  money  of  the 
United  States.  The  very  currency  in  which  the  contract  by 
its  terms  was  payable,  if  tendered  in  this  country  after  matu- 
rity, would  be  no  legal  offer  of  payment;  it  would  not  be  a 
tender  which  would  stop  interest.  Contracts  made  abroad, 
or  payable  in  foreign  currency,  are  treated  as  money  con- 
tracts; but  the  money  specified  therein,  if  not  tendered  when 
due,  is  no  longer  the  money  in  which  the  damages  due  would 
be  computed,  except  within  the  jurisdiction  where  such  money 
is  the  lawful  currency. 

§  207.  Payment  in  currency.  Bank  bills  and  other  paper 
currency  circulate  as  money.  It  is  not  strictly  such,  for  no 
debtor  has  a  legal  right  to  discharge  a  money  obligation  with 
such  currency  unless  it  is  made  legal  tender  by  law;  the  cred- 
itor may  refuse  to  receive  it;  but  when  it  is  paid  and  received, 
it  is  paid  and  received  as  money.  The  receipt  of  bank  bills, 
dollar  for  dollar,  upon  a  debt,  is  not  conditional  payment,  de- 
pending on  diligence  of  the  payee  in  presenting  the  bills  to 
[322]  the  bank  and  obtaining  legal-tender  funds,  nor  is  it  ac- 
cord and  satisfaction.^     A  contract  payable  in  currency  or  in 

1  Solomon  v.  Bank  of  England,  13  InMaynard  v,  Newman,  1  Nev.  271, 

East,  135;  Pickard  v.  Bankes,  id.  20;  Beatty,  J., said:  "Money  means  any- 

Corbitv.  Bank  of  Smyrna,  2  Harr.  235,  thing  which  passes  current  as  the 

30  Am.  Dec.  635;  Ware  v.  Street,  2  common   medium  of  exchange  and 

Head,   609;    Magee  v.  Carmack,  13  measure  of  value  for  other  articles, 

111.  289:  Lightbody  v.  Ontario  Bank,  whether  it  be  the  bills  of  private  or 

11  Wend.  1;  Ontario  Bank  v.  Light-  incorporated  banks,  government  bills 

body,  13  id.  101;  Wainwright  v.  Web-  of  credit,  treasury  notes  or  pieces  of 

star,  11  Vt.  576, 34  Am.  Dec.  707;  Fogg  coined   metal.     Money  is    anything 

V.  Sawyer,  9  N.  H.  865;  Frontier  Bank  which  by  law,  usage  or  common  con- 

V.  Morse,  22  Me.  88,  38  Am.  Dec.  284;  sent  becomes  a  general  medium  by 

Westfall  V,  Braley,  10  Ohio  St.  188,  75  whichthevalueofothercommodities 

Am.  Dec.  509;  Harley  v.  Thornton,  2  is  measured  and  denominated.  Paper 

Hill  (S.  C),  509,  n.     See  Keating  v.  money  is  distinguishable  from  other 

People,  160  111.  480,  486,  43  N.  E.  Rep.  negotiable  paper,  such  as  notes,  bills 

724.  of  exchange,  etc.,  because  it  is  always, 


§  207.J 


MONEY. 


503 


funds,  qualified  by  any  term  which  imports  money,  is  a  money 
contract.  A  check  for  "current  funds"  calls  for  current  money — 
par  funds,  money  circulating  without  discount.^     This  term,  as 


after  once  put  in  circulation,  payable 
to  bearer,  not  to  order:  because  it 
is  made  to  represent  convenient 
amounts  for  the  ordinary  transaction 
of  business,  is  printed  and  written  on 
paper  not  easily  worn  out,  and  there- 
fore capable  of  being  passed  from 
hand  to  hand  for  a  long  time  without 
destruction.  By  general  consent  it 
is  used  and  treated  as  money  and  not 
as  negotiable  paper.  If  one  indorses 
his  name  on  such  a  note  he  does  not 
thereby  become  responsible  for  the 
insolvency  of  the  bank,  but  merely 
guarantees  that  the  note  is  not  a 
counterfeit.  Neither  the  courts  of 
law,  nor  the  community,  treat  such 
paper  as  negotiable  securities,  but  as 
money,  something  which  is  used  as  a 
general  representative  and  measure 
of  values."  Woodruff  v.  Mississippi, 
06  Miss.  298,  6  So.  Rep.  335. 

A  genuine  silver  coin  worn  smooth 
by  use,  notappreciably  diminished  in 
weight  and  identifiable,  is  a  legal 
tender.  Jersey  City  &  B.  P.  Co.  v. 
Morgan,  52  N.  J.  L.  60, 21  Atl.  Rep.  783. 
See  United  States  v.  Lissner,  12  Fed. 
Rep.  840. 

A  genuine  sil  ver  coin  of  the  United 
States,  distinguishable  as  such, 
tliough  somewhat  rare  and  diflfei'ing 
in  appearance  from  other  coins  of 
that  government  of  like  denomina- 
tion and  of  later  dates,  is  a  legal  ten- 
der. Atlanta  Con.  Street  R.  Co.  v. 
Keeny,  99  Ga.  266,  25  S.  E.  Rep.  629, 
33  K  R.  A.  824. 

A  statute  requiring  an  officer  to 
pay  out  the  same  moneys  received 
and  held  by  him  by  virtue  of  his 
office  does  not  include  only  coin  and 
currency  in  circulation  as  money. 
Money,  it  was  said,  is  a  generic  term, 
and  may  mean  not  only  legal  tender 
coin  and    currency,   but  also    any 


other  circulating  medium  or  any  in- 
strument or  token  in  general  use  in 
the  commercial  world  as  the  repre- 
sentatives of  value.  It  includes 
whatever  is  lawfully  and  actually 
current  in  commercial  transactions 
as  the  equivalent  of  legal  tender 
coin  and  currency.  Certificates  of 
deposit  or  other  vouchers  for  money 
deposited  in  solvent  banks  payable 
on  demand  are  a  most  convenient 
medium  of  exchange  and  are  exten- 
sively used  in  commercial  and  finan- 
cial transactions  to  represent  the 
money  thus  deposited.  State  v.  Mc- 
Fetridge,  84  Wis.  473,  54  N.  W.  Rep. 
1,  998,  20  L.  R.  A.  223;  State  v.  Hill, 
47  Neb.  456,  537,  66  N.  W.  Rep.  541. 

1  Klauber  V.  Biggerstaff,47  Wis.  551, 
3  N.  W.  Rep.  357,  32  Am.  Rep.  773; 
Marc  V.  Kupfer,  34  IlL  286.  Contra, 
Huse  V.  Hamblin,  29  Iowa,  501, 4  Am. 
Rep.  244. 

That  term  was  held  to  have  a  spe- 
cific, legal  and  well  known  meaning 
which  cannot  be  contradicted  or  ex- 
plained by  parol.  See  Moore  v.  Mor- 
ris, 20  111.  255. 

In  Phoenix  Ins.  Co.  v.  Allen,  11 
Mich.  501,  83  Am.  Dec.  756,  it  was 
held  that  a  note  payable  in  "  cur- 
rent funds,"  in  the  absence  of  all 
evidence  showing  that  anything  else 
is  current  at  the  place  of  payment, 
must  be  regarded  as  payable  only  in 
such  funds  as  are  current  by  law. 

"Current  money"  means  "cur- 
rency of  the  country,"  vphatever  is 
intended  to  and  does  actually  circu- 
late as  money;  every  species  of  coin 
or  currency;  the  specification  of  dol- 
lars in  connection  with  those  words 
serves  only  to  measure  the  quantity 
of  the  notes  or  currency,  not  their 
value,  which  may  be  ascertained  by 
proof.     There  is  no  distinction    be- 


504  PECUNIAKY    KEPKESENTATIVE    OF    VALUE.  [§  208. 

well  as  "  currency,"  excludes  depreciated  paper  money.^  A  note 
payable  in  "  current  Florida  money  "  is  payable  in  good  funds.^ 
"  Canada  currency  "  is  equivalent  to  lawful  money  of  Can- 
ada.^ 

§  208.  Effect  of  changes  iu  the  value  of  money.  The 
amount  due  by  contract  is  sometimes  subject  to  question  by 
[323]  reason  of  fluctuations  in  the  value  of  the  money  in 
which  the  contract  was  made  payable.  These  fluctuations 
may  be  caused  by  the  state  debasing  the  coins  which  repre- 
sented that  mone}'',  or  by  arbitrary  changes  in  the  value  of 
existing  denominations  of  the  legal  currency ;  and  so  the  value 
of  paper  money  will  rise  and  fall  with  the  fluctuations  in  the 
credit  of  its  maker.  Suppose  a  contract  for  the  payment  of 
$100  made  while  the  present  decimal  system  is  in  force;  and 
while  that  contract  is  pending  congress  revises  that  system 
and  retains  a  dollar  as  a  unit  of  value  representing  only  fift}'" 
cents.  Uninfluenced  by  any  provision  that  the  new  dollar 
shall  be  a  legal  tender  for  all  debts  at  their  nominal  value, 
would  a  hundred  of  these  dollars  discharge  the  principal  of 
the  debt  under  the  supposed  contract?  The  injustice  of  hold- 
ing the  affirmative  is  apparent.  The  new  dollars  would  not 
be  those  of  the  contract;  by  paying  a  hundred  of  them  the 
promisor  does  not  pay  the  value  which  he  undertook  to  pay, 
and  which  was  expressed  by  the  contract.  He,  of  course, 
would  be  entitled  to  pay  in  the  money  which  was  lawful  and 
current  when  the  contract  required  payment  to  be  made;  but 
as  the  word  "  dollar  "  is  but  a  representative  of  value,  that  value 
should  be  ascertained  by  the  legal  sense  of  the  term  when  the 
contract  was  made.  Though  the  parties  contracted  with  a 
knowledge  of  the  power  of  congress  to  make  the  subsequent 
changes,  it  does  not  follow  that  they  impliedly  agreed  that 
the  value  stipulated  to  be  paid,  as -fitly  expressed  in  the  con- 
tract, should  be  modified  by  an  arbitrary  change  in  the  mean- 
ing of  the  terras  which  had  been  employed  to  express  their  in- 

tween  a  note  for  so  many  dollars  in  i  Springfield   M.  &  F.  Ins.  Co.   v. 

currency  and  one  for  so  many  dol-  Tincher,  30111.  399;  Webster  v.  Pierce, 

lars"  payable  in  currency."    Miller  v.  35  111.158. 

McKinney,  5  Lea,  93;  Commissioners  ^  Williams  v.  Moseley,  2  Fla.  304. 

V.  McCorinick,  4  Mont.  115, 133,  5  Pac.  »  Black  v.  Ward,  27  Mich.  191. 
Rep.  287. 


I 


§  209.] 


MONEY. 


505 


tention.     This  view  is  so  obviously  just  that  it  is  a  matter  of 
surprise  it  should  ever  have  been  questioned.' 

§209.  Talueof  money  at  time  of  contracting.  When  [324] 
a  bill  is  drawn  in  one  country  payable  in  and  in  the  coin  of 


1  See  2  Daniel  on  Neg.  Inst.,  §  1214; 
Stoiy's  Contl.  Laws,  §?;  813,  313a. 

The  case  of  Mixed  Moneys,  Davis, 
28,  rests  on  a  contrary  view.  A  bond 
was  given  for  "£100  sterling  current 
and  lawful  money  of  England,"  to 
be  paid  in  Dublin,  Ireland.  Between 
the  time  of  making  the  bond  and  its 
becoming  due,  Queen  Elizabeth  re- 
called the  existing  currency  in  Ire- 
land and  issued  a  new  debased  coin- 
age called  mixed  money,  declaring 
it  to  be  lawful  currency  in  Ireland. 
Of  this  debased  coin  a  tender  was 
made  in  Dublin,  and  it  was  held 
good.  In  a  note  to  g  313a  of  Story's 
Confl.  Laws,  it  is  said:  "The  court 
do  not  seem  to  have  considered  that 
the  true  value  of  the  English  current 
money  might,  if  that  was  required  by 
the  bond,  have  been  paid  in  Irish 
currency,  though  debased,  by  adding 
so  much  more  as  would  bring  it  to 
the  par.  And  it  is  extremely  diffi- 
cult to  conceive  how  a  payment  of 
■current  lawful  money  of  England 
could  be  interpreted  to  mean  current 
or  lawful  money  of  Ireland,  when  the 
currency  of  each  kingdom  was  dif- 
ferent, and  tKe  royal  proclamation 
made  a  distinction  between  them, 
the  mixed  money  being  declared  the 
lawful  currency  of  Ireland  only. 
Perhaps  the  desire  to  yield  to  the 
royal  prerogative  of  the  queen  a  sub- 
missive obedience  as  to  all  payments 
in  Ireland  may  account  for  a  de- 
cision so  little  consonant  with  the 
principles  of  law  in  modern  times. 
Sir  William  Grant,  quoting  Vinnius, 
in  Pilkington  v.  Commissioner  for 
Claims,  2  Knapp,  18  to  21,  affirms 
the  better  doctrine.  'He  (Vinnius) 
takes  the  distinction,  that  if,  between 
the  time  of  conti-acting  the  debt  and 


the  time  of  its  payment,  the  cur- 
rency of  the  country  is  depreciated 
by  the  state,  that  is  to  say,  lowered 
in  its  intrinsic  goodness,  as  if  there 
wei'e  a  greater  proportion  of  alloy 
put  into  a  guinea  or  a  shilling,  the 
debtor  should  not  liberate  himself 
by  paying  the  nominal  amount  of 
his  debt  in  the  debased  money;  that 
is,  he  may  pay  in  the  debased  money, 
being  the  current  coin,  but  he  must 
pay  so  much  more  as  will  make  it 
equal  to  the  sum  he  borrowed.'  But 
he  says  (and  this  seems  contradictory 
of  the  foregoing),  if  the  nominal 
value  of  the  currency,  leaving  it  un- 
adulterated, were  to  be  increased,  as 
if  they  were  to  make  the  guinea 
pass  for  30s.,  the  debtor  may  liberate 
himself  from  a  debt  of  £1  10s.  by 
paying  a  guinea,  although  he  bor- 
rowed the  guinea  when  it  was  but 
21s."  And  the  case  of  Reynolds  v. 
Lyne's  Ex'r,  3  Bibb,  340,  is  in  accord 
with  that  principle.  A  contract  was 
made  when  a  dollar  was  5s.  9d  for 
the  payment  of  a  sum  at  a  future 
day  on  the  performance  of  a  con- 
current act  of  the  payee.  Before 
the  money  became  payable,  the  state 
where  the  contract  was  made  en- 
hanced the  value  of  the  dollar  to  6s. 
Subsequently  payments  were  made 
and  a  dispute  arose  whether  the 
money  paid  should  be  estimated  at 
the  rate  of  currency  when  the  money 
was  paid,  or  when  the  contract  vvas 
made.  Finally,  the  obligation  in 
question  was  given  for  a  balance  of 
the  original  debt  remaining  by  esti- 
mating the  payment  according  to 
the  value  of  a  dollar  at  the  date  of 
the  contract,  viz.,  5s.  dd.,  for  which 
judgment  at  law  had  been  rendered. 
The  question  arose  on  a  bill  in  equity 


506  PECCNIAliY    REPKESENTATIVE    OF    VALUE,  [§   209. 

[335]  another,  the  value  of  which,  intermediate  the  drawing 
and  payment,  is  reduced  by  the  government,  it  has  been  held 
that  payment  should  be  made  according  to  the  value  of  the- 
money  at  the  time  the  bill  was  drawn. ^  The  common  law 
cannot  be  deemed  settled  on  this  point;  nor  are  the  writers  on 
the  civil  law  in  accord  upon  it.  The  opposite  view  is  apparently 
based  on  the  assumption  that  in  money  we  do  not  regard  the 
coins  which  constitute  it,  but  only  the  value  which  the  sov- 
ereignty has  been  pleased  that  they  shall  signify.'^  But  coins 
have,  in  the  world's  exchanges,  an  intrinsic  value  which  no 
sovereignty  can  affect  by  arbitrary  regulation.  And  if  by  a 
regulation  concurrently  adopted  by  all  nations,  the  coins  of 
each  were  uniformly  either  debased  or  enhanced  in  value 
without  a  corresponding  change  of  their  intrinsic  value,  the 
change  would  be  immediately  followed  by  an  equal  advance 
or  decline  in  the  price  of  property.  If  the  change  were  made 
in  the  value  of  the  coins  of  one  country  only,  it  would  be  at 
once  succeeded  .by  a  fluctuation  in  prices  of  property  measured 
by  it,  showing  that  their  purchasing  power  had  undergone  no 
essential  modification;  and  the  same  conclusion  would  result 
from  a  comparison  of  the  value  of  such  coins  with  the  coined 

for  relief  on  the  ground  of  mistake  on   Bills,  *399.     See  Anonymous,   1 

against  that  obligation  and  the  judg-  Hayw.  (by  Batt.)  354. 

ment  founded  upon  it.    Judge  Ows-  A  will  speaks  from  the  time  of  the 

ley  said:  "When  the  original  obli-  testator's  death,  and  a  legacy  of  a 

gation    .    .    .     was  made  the  legis-  certain  number  of  dollars  is  payable 

lature  of  Virginia  had  the  power  to  in  such  dollars  as  were  then  standard, 

regulate  the  currency  of  their  coin  Graveley  v.  Graveley,  25  S.  C  1,  60, 

within  the  limits  of  that  state;  and  Am.  Rep.  478. 

as  the  contract    .     .    .     was  made  If  at  the  time  a  contract  which 

within  the  limits  of  that  state,  the  provides  for  its  discharge  in  lawful 

promise    ...     to  pay  in  current  silver  money  is  made  silver  coins  of 

money  of  Virginia  must  have  been  all  denominations  are  legal  tender, 

agreed  on  with  a  knowledge  of  the  the  fact  that  subsequently  such  coins 

state  sovereignty,  and  subject  to  its  are  a  legal  tender  for  only  a  small 

control  in  regulating  the  currency,  proportion  of  the  amount  due  does 

We  are  of  the  opinion,   therefoi-e,  not  prevent  the  payment  of  the  obli- 

that  the  original  obligation    .    .     .  gation    in    the   manner   stipulated, 

might  have  been  satisfied  by  pay-  Parisli  v.  Kohler,  11  Phila.  346. 

ment  in  current  money  at  its  value  Damages    are    assessable    in    the 

when  Lyne  became  entitled  to  de-  same  kind  of  money  as  the  contract 

mand    paj'ment;"    and    that   relief  calls  for.    Martin  v.  Evans,  14  PhiUu 

was  granted  against  the  judgment.  122. 

1  Du  Costa  v.  Cole,  Skin.  272;  Chitty  2  See  Story  Conf.  Laws,  g  313^. 


§  210.J  MONEY.  507 

money  of  other  nations.  When  a  contract  is  made  for  the 
payment  at  a  future  day  of  a  given  amount  of  money  in  speci- 
fied legal  denominations,  having  at  the  date  of  the  contract  a 
fixed  legal  value,  are  not  the  intention  and  legal  obligation  of 
the  parties  to  be  ascertained  by  the  import  at  that  time  of  the 
terms  used?  Undoubtedly  a  debt  created  by  contract  which 
can  be  paid  with  money  can  be  satisfied  by  whatever  medium 
of  payment  is  legal  tender  at  the  time  it  is  due  and  payable/ 
if  paid  then ;  and  it  may  be  added,  that  at  all  times  afterwards 
it  will  be  solvable  in  any  money  wdiich  for  the  time  being  is 
legal  tender  at  the  place  where  payment  may  be  demanded  or 
tendered,  whether  it  be  the  place  of  contract  or  elsewhere.^ 

The  legal  currency  which  may  be  applicable  at  the  place  of 
contract  when  the  debt  becomes  due  and  is  actually  demanded, 
or  sought  by  tender  to  be  paid,  may  be  as  unlike  that  [326] 
mentioned  in  the  contract  as  though  the  demand  of  payment 
or  tender  were  made  in  another  country.  Upon  general  prin- 
ciples and  legal  analogies  the  value  should  be  ascertained  by 
the  legal  reading  of  the  contract  at  the  time  it  was  made,  and 
this  is  payable  in  any  currency  which  is  legal  tender  when 
payment  is  actually  made.^  If  w^hen  and  where  payment  is 
made  the  currency  consists  of  coins  of  the  same  or  a  different 
name,  and  represent  different  values  from  those  named  in  the 
contract,  or  the  same  values,  but  have  been  either  debased  or 
the  contrary,  the  par  should  be  ascertained  of  the  money  of 
the  contract,  and  that  par  should  be  the  measure  of  the 
amount  due.  This  question  may  be  precluded  by  the  new 
currency,  or  that  which  is  offered  in  payment  being  made  a 
lawful  tender  for  the  particular  debt  at  the  nominal  value  of 
such  currency.  Under  such  legislation,  these  general  views 
have  but  a  subordinate  influence;  the  practical  question  then 
being  what  is  the  effect  of  the  statute. 

§  210.  The  legal  tender  act.  Under  the  legal  tender  law 
of  1862  the  value  of  the  dollar  was  not  changed,  but  a  new  legal 
representative  of  it  was  introduced  as  a  medium  of  payment. 
Paper  money  in  the  form  of  the  government's  promise  to  pay 
was  issued  and  declared  to  be  legal  tender  for  all  debts,  pub- 

1  Higgins  V.  Bear  River  &  A.  Water        2  Downman  v.  Downman,  1  "Wash. 
&  M.   Co.,   27   Cal.    153;    Wilson   v.     (Va.)  26. 
Morgan,  4  Robert.  58.  3  Bronson  v.  Rodes,  7  Wall.  229. 


508  PECUNIARY  EEPKESENTATIVE  OF  VALUE.       [§  210. 

lie  and  private,  with  certain  exceptions  of  the  former.  The 
coinage,  which  had  previously  been  the  exclusive  legal  tender, 
was,  however,  still  retained  as  money.  During  the  first  years 
after  the  issue  of  this  paper  currency,  owing  to  the  situation  of 
the  country,  and  doubtless  to  the  circumstance  that  no  time  was 
fixed  for  its  redemption  in  specie,  it  became  depreciated;  that 
is,  gold  and  silver  money  was  largely  at  a  premium.  As 
greenbacks  were  a  legal  tender  for  all  debts  payable  in  money 
generally  they  became,  of  course,  the  ordinary  currency,  and 
were  thereby  made  the  legal,  as  they  were  the  nominal,  equiv- 
alent, dollar  for  dollar,  for  the  payment  not  only  of  all  subse- 
[327]  quent  but  also  all  antecedent  debts.^  The  difference  in 
market  value  could  not  be  recognized  when  the  paper  dollar 
was  offered  in  payment  of  any  debts  to  which  it  was  applica- 
ble by  law.  The  court  said:  "A  court  cannot  say  judicially 
that  one  kind  of  money  made  a  legal  tender  is  of  greater  or 
less  value  than  another;  nor  can  evidence  be  received  to  prove 
a  difference."  -  The  legal  equivalence  in  value  of  coined  money 
and  greenbacks  is  more  absolutely  asserted  by  the  early  than 
by  the  later  decisions.^     In  an  action  for  specific  performance 

1  Legal  Tender  Cases,  12  Wall.  457;  parties  waiving  its  provisions,  and 

Dooley  v.  Smith,  13  id.  604;  Bigler  v.  requiring  a  debt  to  be  paid  in  gold, 

Waller,  14  id.  297;  Bowen  v.  Clark,  is  illegal,  and  cannot  be  sustained. 

46  Ind.  405;  Reynolds  v.  Bank,  etc.,  See  Linn  v.  Minor,  4  Nev.  462  (1868). 

18  id.  467;  Thayer  v.  Hedges,  23  id.  In  Kimpton  v.  Bronson,  45  Barb. 

141:    Brown    v.  Welch,  26    id.    116;  618,  Daniels,  J.,  said:  "The  law  has 

Bank  v.  Burton,  27  id.  426;  Mclnhill  impressed  them  (treasury  notes)  with 

V.  Odell,  62  111.  169;  Black  v.  Lusk,  a  legal  value  precisely  equal  to  that 

69  id.  70;  Morrow  v.   Rainey,  58  id.  of  gold  and  silver  of  the  same  de- 

357:  Chamblin  v.  Blair,  id.  385;  Long-  nominations  for  the  purpose  of  pay- 

vi'orth  v.  Mitchell,  26  Ohio  St.  334;  ing  individual  debts  with  them,  and 

Belloc  V.  Davis,  38  Cal.  243.  it   cannot  permit  a  discrimination 

^Carpentier  v.  Atherton,  25   Cal.  against  them  in  favor  of  gold  and 

564;    Reese    v.  Stearns.    29  id.   273;  silver,  without  allowing  its  authority 

Spencer  v.  Prindle,  28  id.  276;  Poett  to  be  substantially  annulled.     How- 

V.  Stearnes,  31  id.  78.  ever  the  fact    may  be   as   to   their 

3  In  Buchegger  v.  Shultz.  13  Mich,  value  as  a  mere  commodity,  for  the 
420  (1865),  it  was  held  that  the  act  purpose  of  paying  individual  debts 
of  congress  making  treasury  notes  a  treasury  note  is  as  completely  a 
a  legal  tender  in  payment  of  private  legal  dollar  as  a  piece  of  metal  of  a 
debts  was  not  designed  to  confer  a  certain  weight  and  quality,  im- 
personal privilege  upon  debtors,  but  pressed  as  the  law  directs,  is  a  legal 
was  based  upon  principles  of  state  dollar.  The  one  is  no  more  so  than 
liolicy;  and  an  agreement  between  the  other  for  those  purposes  that  the 


§  210.]  MONEY.  509 

the  plaintiff  had  a  verdict;  and  in  September,  18G0,  deposited 
the  purchase-money  in  court  in  gold  to  be  taken  out  by  the 
defendant  on  filing  his  deed.  The  prothonotary  deposited  the 
money  with  reliable  bankers  to  his  own  credit.  They  em- 
ployed the  money  as  they  did  other  deposits,  without  profit 
as  coin;  it  was  always  subject  to  the  prothonotary's  draft. 
The  defendant  filed  his  deed  after  the  passage  of  the  legal- 
tender  law,  and  the  prothonotary  offered  to  pay  him  the  money 
in  court  in  legal  tenders,  which  he  refused  and  brought  [328] 
trover  for  the  gold;  held,  that  he  could  not  recover.' 

The  earlier  cases  proceeded  on  the  construction  that  "«7^ 
debts''''  in  the  legal  tender  law  of  1862  included  all  pecuniary 
liabilities,  whether  originating  in  contracts  expressly  to  pay  in 
gold  and  silver,  or  in  "dollars"  generally.  But  the  subject  re- 
ceived a  different  treatment  when  it  came  to  be  considered  in 
the  national  supreme  court.  That  court  said  congress  must 
have  had  in  contemplation  debts  originating  in  contract,  or  de- 
mands carried  into  judgment,  and  only  debts  of  this  character. 
And  the  term  did  not  include  taxes  levied  under  state  laws;^ 
nor  obligations  payable  expressly  in  coined  money.  Referring 
to  a  tender  of  United  States  notes  in  1865  on  a  debt  contracted 
in  1851,  payable  by  the  language  of  the  contract  in  gold  and 
silver  coin.  Chase,  C.  J.,  said  there  were  two  descriptions  of 
money  in  use  at  the  time  the  tender  was  made,  both  authorized 
by  law,  and  both  made  legal  tender  in  payments.  The  statute 
denomination  of  both  descriptions  was  dollars;  but  they  were 

laws  have  declared  them  to  be  of  generalcurrent  of  decisions;  namely, 
equal  value.  Where  these  laws  are  that  all  debts,  whether  payable  in 
supreme,  that  value  must  be  ob-  terms  in  gold  and  silver  as  money, 
served  and  secured  by  courts  of  jus-  or  in  dollars  generally,  were  solvable 
tice.  If  the  obligation  in  this  case  in  greenbacks.  Shollenberger  v. 
had  been  such  as  required  the  de-  Brinton,  53  Pa.  1;  Appel  v.  Wolt- 
livery  of  one  thousand  eight  hundred  mann,  38  Mo.  194;  Riddlesbarger  v. 
gold  dollars,  and  not  as  it  was,  one  McDaniel,  id.  138;  Wilson  v.  Morgan, 
thousand  eight  hundred  dollars  in  4  Robert.  58,  1  Abb.  Pr.  (N.  S.)  174, 30 
gold  or  silver  coin,  its  construction  How.  Pr.  3S6;  Murray  v.  Gale,  5  Abb, 
must  have  been  different.  Further,  Pr.  (N.  S.)  236,  52  Barb.  427;  Whet- 
it  would  have  been  in  no  sense  a  debt  stone  V.  CoUey,  36  111.  328:  Hum- 
within  the  contemplation  of  these  phrey  v.  Clement,  44111.  299;  Galliano 
statutes,  and  could  not  be  affected  v.  Pierre,  18  La.  Ann.  10,89  Am.  Dec. 
by  their  provisions  declaring  treas-  643;  Munter  v.  Rogers,  50  Ala.  283. 
ury  notes  a  lawful  tender  for  the  ^  Aurentz  v.  Porter,  50  Pa.  115. 
payment  of  debts."    Such  was  the  '- Lane  County  v.  Oregon,  7  Wall.  71. 


510 


PECUNIARY    KEPKESENTATIVE    OF    VALUE. 


[§  210. 


essentially  unlike  in  nature.  The  coined  dollar  was  a  piece  of 
gold  or  silver  of  a  prescribetl  degree  of  purity,  weighing  a  pre- 
scribed number  of  grains.  The  note  dollar  was  a  promise  to 
pay  a  coined  dollar;  but  it  was  not  a  promise  to  pay  on  demand, 
nor  at  any  fixed  time,  nor  was  it  in  fact  convertible  into  a  coined 
dollar.  It  was  impossible,  in  the  nature  of  things,  that  these  two 
dollars  should  be  actual  equivalents  of  each  other,  nor  was  there 
anything  in  the  currency  acts  purporting  to  make  them  such.^ 


iBronson  v.  Rodes,  7  Wall  229; 
Legal  Tender  Cases,  12  Wall  457. 

In  The  Vaughan  and  Telegraph,  14 
Wall.  258,  which  was  a  collision  case, 
there  was  a  right  to  recover  for  the 
loss  of  property  according  to  its  value 
at  the  time  and  place  of  shipment. 
The  place  of  shipment  being  in  Can- 
ada, the  value  in  dollars  was  stated 
in  the  currency  of  Canada,  which 
was  equivalent  to  the  gold  currency 
of  the  United  states,  but  being  stated 
in  dollars,  the  district  court  refused 
to  recognize  any  difference  between 
the  value  of  a  dollar  of  that  currency 
and  the  dollar  of  the  currency  in 
which  the  judgment  of  the  court 
would  be  payable;  in  other  words, 
would  allow  nothing  to  be  added  to 
the  amount  stated  in  the  dollars  of 
Canada  currency,  to  give  the  equiv- 
alent when  paid  in  legal  tender 
notes  —  holding  that  the  loss  in  this 
way  was  an  incident  of  the  suit  in 
the  forum  where  it  was  brought,  and 
was  unavoidable.  In  the  circuit 
court  the  same  rule  of  damages  was 
applied,  but  the  decree  gave  the 
value  of  the  Canada  currency  in 
legal  tender  notes.  "These  notes," 
said  Swayne,  J.,  "  have  since  largely 
appreciated,  so  that  while  the  libel- 
ants would,  under  the  decree  of  the 
district  court,  if  it  had  been  paid 
when  rendered,  have  received  much 
less  than  the  estimated  value  of  the 
barley,  they  will  now,  if  the  circuit 
court  be  afiSrmed,  receive  much 
more.  .  .  .  Upon  the  rule  of  dam- 
ages applied  by  both  courts  as  re- 


spects the  kind  of  currency  in  which 
the  value  of  the  barley  was  esti- 
mated, the  libelants  were  entitled, 
on  the  plainest  principles  of  justice, 
to  be  paid  in  specie  or  its  equivalent. 
The  hardship  arising  fi-om  the  decree 
before  us  is  due  entirely  to  the  delay 
in  its  payment  which  has  since  oc- 
curred, and  the  change  which  time 
and  circumstances  have  wrought  in 
the  value  of  the  legal  tender  cur- 
rency. The  decree  was  right  when 
rendered,  and  being  so,  cannot  now 
be  disturbed,"  A  minority  of  the 
court  dissented,  on  the  ground  that 
the  original  decree  should  have  been 
rendered  for  the  Canada  value  in 
gold  to  avoid  the  loss  incident  to  the 
fluctuations  in  the  value  of  green- 
backs. See  Edmondson  v.  Hyde,  2 
Sawyer,  205;  Kellogg  v.  Sweeney,  46 
N.  Y.  291,  7  Am.  Rep.  333. 

In  Simpkins  v.  Low,  54  N.  Y.  179, 
it  was  held  that  the  legal  tender  acts 
of  congress  relate  to  the  effect  of  the 
notes  issued  thereunder  as  a  tender 
in  the  payment  of  debts  arising  on 
contract;  they  do  not  forbid  the  rec- 
ognition in  other  relations  of  the  dif- 
ference between  coin  and  currency. 
The  action  was  brought  for  the  con- 
version of  certain  bonds  issued  by  a 
California  company,  and  though  not 
in  terms  payable  in  gold,  still  as  they 
were  by  the  custom  of  business 
treated  as  such,  recovery  was  permit- 
ted on  a  gold  basis. 

In  Lulingv.  Atlantic  Mut.  Ins.  Co., 
30  How.  Pr.  69.  it  was  held  that  where 
there  is  a  specific  agreement  made 


■§  210.] 


MONEY. 


ill 


Except  for  the  payment  of  debts,  in  the  sense  of  [329-333] 
the  legal  tender  law,  there  was  no  conclusive  presumption  that 
the  two  currencies  were  of  equal  value.  Parties  may  by  their 
contracts  recognize  not  only  the  actual,  but  any  estimated,  dif- 


between  any  policy-holders  of  a  mut- 
ual insurance  company  and  thecojM- 
pany  that  the  premiums  of  the  for- 
mer shall  be  paid  in  gold  and  the 
losses  shall  be  paid  by  the  latter  in 
gold,  the  company  on  declaring  its 
dividends  are  bound  to  allow  such 
policy-holders  a  certificate  of  their 
share  of  the  profits  in  accordance 
with  a  gold  standard  as  compared 
with  currency.  A  notice  issued  by 
the  company  to  the  effect  that  the 
dealers  making  insurances  payable 
in  gold  wei'e  to  participate  with 
others  in  the  earnings,  and  that  these 
would  be  computed  and  made  pay- 
able in  currency,  and  the  delivery  by 
the  company  and  acceptance  of  the 
certificates  of  such  earnings  by  such 
policy-holders  under  said  notice  does 
not  affect  the  legal  bearing  of  the 
contract,  nor  make  the  certificates  a 
bar  to  an  action  by  the  policy-holders 
against  the  company  to  correct  the 
account  upon  which  these  were 
based  and  for  a  proper  readjustment. 
The  certificates  were  good  to  the  ex- 
tent which  the}''  provided  for  only. 
Baltimore  &  O.  R  Co.  v.  State,  36 
Md.  519;  Bank  of  Prince  Edward 
Island  V.  TurnbuU,  35  How.  Pr.  8; 
Lanev.  Gluckauf,  28Cal.  288;  Vilhac 
V.  Biven,  id.  410;  Rankin  v.  Demott, 
€1  Pa.  263. 

A  debt  payable  "in  gold  or  its 
equivalent  in  lawful  money  of  the 
U.  S.'*  requires  payment  to  be  made 
at  the  commercial  value  of  gold  when 
due.  Baker's  Appeal,  59  Pa.  313. 
The  defendants  in  1866  bought  goods 
from  plam  tiffs,  "Liverpool  tests. 
monthly  shipments  from  Liverpool 
to  Philadelphia,  ...  at  three 
and  one-fourth  cents  per  pound, 
cash,  gold  coin,  on  vessel  at  Philadel- 


phia;" held  to  be  payable  in  gold 
or  its  equivalent.  Parties  could  take 
themselves  out  of  the  operation  of 
the  legal  tender  law  after  its  passage 
by  contracting  for  payment  in  coin 
alone.  Frank  v.  CoHioun,  59  Pa.  381. 
See  Governor,  Opinion  in  Response 
to.  49  Mo.  216;  The  Emily  B.  Souder, 
8  Blatchf.  337. 

In  Glass  v.  Abbott.  6  Bush.  622,  it 
was  held  that  the  difference  in  value 
between  gold  and  greenbacks  is 
sufficient  to  make  usury,  where 
there  would  be  none  if  no  such  differ- 
ence existed.  But  see  Reinback  v. 
Crabtree,  77  III  182. 

Money  had  and  received  main- 
tainable for  proceeds  of  a  gold  bond 
sold,  and  recovery  may  be  had  of 
such  proceeds  at  its  value  in  paper 
money.  Hancock  v.  Franklin  Ins. 
Co.,  114  Mass.  155. 

In  Carpenter  v.  Atherton,  28  How. 
Pr.  303,  a  California  contract  pay- 
able in  gold  was  in  question;  being 
such  as  under  the  statutes  of  that 
state,  called  the  specific  contract  act, 
would  be  there  enforced  by  requir- 
ing payment  in  gold,  it  was  held 
proper  to  decree  in  New  York  that 
it  be  specifically  performed,  and  a 
tender  of  greenbacks  was  held  no 
defense.  This  remedy  was  afforded 
while  the  courts  of  the  latter  state 
held  that  legal  tender  notes  were 
applicable  to  debts  payable  ex- 
pressly in  coined  money.  But  in 
Massachusetts  the  courts  held  that 
the  benefits  of  the  California  specific 
contract  act  could  not  be  allowed. 
Tufts  V.  Plymouth  Gold  Mining  Ca, 
14  Allen,  407. 

In  Cooke  v.  Davis,  53  N.  Y.  318,  it 
was  held  that  a  contract  to  deliver 
or  receive  either  of  the  two  recog- 


512 


PECUNIAKY  EEPKESENTATIVE  OF  VALUE. 


[§  211. 


ference,  incur  obligations  on  the  basis  of  it  as  a  consideration;  ^ 
obtain  damages  for  torts  in  respect  to  it,  or  recover  for  the  loss 
of  it  as  an  element  of  damage;^  and  by  that  standard  where 
there  have  been  dealings  on  a  gold  basis  resulting  in  an  in- 
debtedness,* or  an  indebtedness  payable  in  a  foreign  coin  cur- 
rency.* And  to  insure  the  full  benefit  of  the  gold  value  of  the 
debt  or  liability,  judgment  in  coined  money  is  authorized  and 
required  to  be  rendered.® 

§  211.  Effect  of  fluctuations  in  currency.  Where  there  are 
fluctuations  in  the  value  of  the  money  of  account,  or  of  the 
currency  in  which  the  commercial  business  of  a  country  is 


nized  kinds  of  currency  at  a  price 
expressed  in  dollars  and  fractions  of 
a  dollar,  or  at  a  specified  percentage, 
is  to  be  construed  as  meaning  that 
the  price  is  payable  in  the  other  cur- 
rency. The  defendant  contracted  to 
deliver  to  the  plaintiff's  assignor 
"  $10,000  current  funds  of  the  United 
States  "  at  fifteen  cents  on  the  dollar 
ten  months  after  date.  It  was  held 
that  the  contract  was  to  deliver 
$10,000  legal  tender  notes  for  $1,500 
in  coin;  that  it  was  valid,  and  for  a 
breach  thereof  the  defendant  was 
liable.  The  contract  was  so  con- 
strued, because  otherwise  it  would 
be  meaningless.  The  court  below 
construed  the  promise  of  fifteen  per 
cent,  as  payable  also  in  legal  tenders, 
and  nonsuited  the  plaintiff  on  the 
ground  that  the  contract  was  void 
for  want  of  consideration.  See  Smith 
V.  McKinney,  22  Ohio  St.  200;  also, 
Caldwell  V.  Craig,  22  Gratt.  340;  Tur- 
pin  V.  Sledd's  Ex'r,  23  id.  238. 

The  subject  of  the  comparative 
value  of  treasury  notes  and  coin  is 
discussed  in  a  practical  way  by 
Beatty,  C.  J.,  in  State  v.  Knitt- 
schnett,  4  Nev.  178  (1868).  See  Fabbri 
V.  Kalbfleisch,  52  N.  Y.  28;  Kupfer 
V.  Bank  of  Galena.  34  111.  328,  85  Am. 
Dec.  309;  Trebilcock  v.  Wilson,  12 
Wall.  687;  People  v.  Cook,  44  Cal.  638. 

1  Cooke    v.   Davis,   53    N.   Y.   318: 


Smith  v.  McKinney,  22  Ohio  St.  200; 
Luling  V.  Atlantic  Mut.  Ins.  Co.,  30 
How.  Pr.  69. 

2Simpkins  v.  Low,  54  N.  Y.  179: 
Kellogg  V.  Sweeney,  46  id.  291,  7 
Am.  Rep.  333;  The  Vaughan  and 
Telegraph,  14  Wall.  258;  Fabbri  v. 
Kalbfleisch,  52  N.  Y.  28. 

3  Hancock  v.  Franklin  Ins.  Co.,  114 
Mass.  155.  But  see  Wright  v.  Jacobs, 
61  Mo.  19. 

*  Christ  Church  Hospital  v.  Fuech- 
sel,  54  Pa.  71;  Mather  v.  Kinike,  51 
id.  425;  The  Emily  B.  Souder,  8 
Blatchf.  337,  17  Wall.  666;  Sheehan 
V.  Dalrymple,  19  Mich.  239;  Colton 
V.  Dunham,  2  Paige,  267;  Black  v. 
Ward,  27  Mich.  191;  Oliver  v.  Shoe- 
maker,  35  Mich.  464. 

5Bronson  v.  Rodes,  7  Wall.  229 
The  Emily  B.  Souder,  17  id.  666 
Trebilcock  v.  Wilson,  12  id.  687 
Dewing  v.  Sears,  11  id.  379:  Quinn 
V.  Lloyd,  1  Sweeny,  253;  Currier  v. 
Davis,  111  Mass.  480;  Independent 
Ins.  Co.  V.  Thomas,  104  id,  192; 
Chisholm  v.  Arrington,  43  Ala.  610; 
Kellogg  V.  Sweeney,  46  N.  Y.  291,  7 
Am.  Rep.  333;  Phillips  v.  Dugan,  21 
Ohio  St.  466,  8  Am.  Rep.  66:  Chesa- 
peake Bank  v.  Swain,  29  Md.  483; 
Atkinson  v.  Clark,  69  Ga.  460.  See 
Gist  V.  Alexander.  15  Rich.  50; 
Townsend  v.  Jennison,  44  Vt.  815; 
Grund  v.  Pendergast,  58  Barb.  216. 


§  211.]  MONEY.  513 

transacted,  allowances  have  sometimes  been  made.  These 
fluctuations  have  been  very  great,  and  are  always  liable  to 
occur  when  the  currency  is  paper.  A  promisor  has  a  right  to 
pay  in  the  currency  of  the  contract  at  par,  although  [334] 
depreciated,  if  he  pays  when  it  is  due;  but  if  he  does  not,  and 
that  currency  is  mone}',  is  the  subsequent  depreciation  an  item 
of  legal  damages  to  the  creditor;  or  if  it  subsequently  appreci- 
ates, is  the  increase  of  value  an  item  for  which  allowance  can 
be  made  against  him?  In  an  early  case  in  North  Carolina  the 
court  say:  "Where  the  currency  in  which  the  judgment  is  to 
be  given  is  equal,  sum  for  sum  to  the  money  mentioned  in  the 
bond,  the  jury  assess  damages  usually  for  the  detention  to  the 
amount  of  the  interest  accrued,  but  they  are  not  obliged  to 
assess  damages  to  that  amount  only.  If  upon  inquiry,  for  in- 
stance, they  find  that  one  pound  of  the  present  currency  of 
this  country  is  not  equal  to  one  pound  of  the  money  payable 
by  the  obligation,  whether  this  inequality  be  occasioned  by 
depreciation  or  any  other  cause,  and  though  the  money  men- 
tioned in  the  obligation  be  not  foreign  money,  they  may,  in 
the  assessment  of  damages,  increase  them  beyond  the  amount 
of  the  interest  so  as  to  make  the  damages  and  principal  equal 
in  value  to  the  principal  and  interest  mentioned  in  the  bond."  ^ 
But  whatever  may  be  the  rule  in  respect  to  a  mere  conven- 
tional money,  a  debt  or  liability  payable  in  a  legal  tender 
currency  may  always  be  discharged  in  that  currency  at  par, 
and  no  allowance  is  made  for  fluctuations  in  its  value.'^ 

More  than  once  in  the  history  of  this  country  there  has  been 
a  conventional  and  fluctuating  paper  currency  in  general  use  as 
a  substitute  for  and  purporting  to  represent  the  denominations 

1  Anonymous,  1   Hay  w.  (by  Batt.)  the  contract  was  made,  and  one  dol- 

354.     In  a  note  to  this  case  it   is  lar  now  being  equal  to  ten  shillings, 

stated  that  there  were  at  the  same  See  Taliaferro  v.  Minor,  1  Call,  456: 

term  several  cases  of  assumpsit  for  Massachusetts  Hospital  v.  Provincial 

currency   more   depreciated   at  the  Ins.  Co.,  2.o  Up.  Can.  Q.  B.  613. 

time  of  the  contract  than  it  is  now,  2  gee  Faw  v.  Marsteller,  2  Cranch, 

and  according  to  the  direction  of  the  10,    29;    Downman  v.  Downman,  1 

court  the    plaintiff   recovered  only  Wash.    (Va.)    26;    Higgins  v.    Bear 

the  real   value  in   the  present  cur-  River  &  A.  Water  &  M.  Co.,  27  CaL 

rency,    the    sum    demanded    being  153;  Metropolitan  Bank  v.  Van  Dyck, 

reduced  one-sixth, —  twelve  shillings  27  N.  Y.  400. 
having  been  equal  to  one  dollar  when 
Vol.  I  —  33 


51J:  PECUNIARY    REPRESENTATIVE    OF    VALUE.  [§  211. 

of  an  otherwise  ideal  legal  money.  During  the  prevalence  of 
such  currency  values  have  been  estimated  and  dealt  with  as 
though  this  depreciated  money  were  their  legal  standard  and 
measure.  Questions  of  amount  have  arisen  out  of  such  trans- 
[335]  actions  after  this  vicious  currency  had  passed  away,  and 
sums  agreed  to  be  paid  while  it  w^as  the  general  medium  of  ex- 
change, and  magnified  in  consequence  of  its  depreciation,  have 
been  demanded  when  payment  could  be  exacted  in  the  pure, 
legal  currency.  Scaling  laws  have  then  been  enacted  as  the 
only  relief  against  the  injustice  and  inequality  of  interpreting 
the  inflated  language  of  value  which  a  depreciated  currency 
had  popularized  by  the  actual  legal  standard  subsequently 
brought  into  practical  use.  This  mode  of  relief  was  resorted 
to  in  the  late  insurgent  states  after  the  rebellion  where  the 
notes  of  the  confederacy  had  necessarily  been  the  only  circulat- 
ing medium;  and  until  the  subject  was  considered  in  the  su- 
preme court  of  the  United  States  scaling  acts  were,  by  the 
decisions  of  several  of  the  state  courts,  regarded  as  essential 
to  protect  debtors  from  the  enforcement  of  contracts  made 
with  reference  to  the  depreciated  currency  from  liability  to 
pay  an  equal  sum  in  the  lawful  currency  of  the  United  States.' 

1  In  Omohundro  v.  Crump,  18  say  the  least,  whether  parol  evidence 
Gratt.  703,  Jaynes,  J.,  said,  in  respect  of  the  actual  understanding  and 
to  notes  made  in  Virginia  in  Novem-  agreement  of  the  parties  as  to  the 
ber,  1861,  payable  in  one,  two  and  kind  of  currency  in  which  a  con- 
three  years:  "The  act  of  March  3,  tract  is  to  be  fulfilled,  which  is  ex- 
1866,  provides  that  in  any  action  pressed  to  be  payable  in  '  dollars  * 
founded  on  any  contract,  express  or  generally,  would  be  admissible,  in- 
implied,  made  and  entered  into  be-  dependently  of  the  provisions  of  that 
tween  the  1st  day  of  January,  1862,  act.  The  word  '  dollars '  has  a 
and  the  10th  day  of  April,  1865,  it  definite  signification  fixed  bj-  law, 
shall  be  lawful  for  either  party  to  and  it  is  laid  down  that  'when  the 
show  by  parol  or  other  relevant  evi-  words  have  a  known  legal  meaning, 
dence  what  was  the  true  understand-  such  for  example  as  measures  of 
ing  and  agreement  of  the  parties,  quantity  fixed  by  statute,  parol 
either  expressed  or  to  be  implied,  as  evidence  that  the  parties  intended 
to  the  kind  of  currency  in  which  it  to  use  them  in  a  sense  different  from 
was  to  be  fulfilled  or  performed,  or  their  meaning,  though  it  was  still 
in  reference  to  which  as  a  standard  the  customary  and  popular  meaning, 
of  value  it  was  made  and  entered  is  not  admissible.'  1  Greenleaf  Ev., 
into.  This  case  does  not  come  with-  §  280.  See  also  Smith  v.  Walker.  1 
in  the  provisions  of  that  act,  because  Call,  24;  Comraonwealtli  v.  Beau- 
the  note  was  made  before  the  1st  day  marchais,  8  Call,  107.  We  need  not 
of  January,  1862.      It  is  doubtful,  to  decide  whether  such  evidence  could 


§  211.] 


MONEY. 


515 


In  1868  a  case  from  Alabama  brought  this  subject  [33G] 
before  the  federal  court  of  last  resort.  The  question  was, 
"  Whether  evidence  can  be  received  to  prove  that  a  promise, 
made  in  one  of  the  insurgent  states,  and  expressed  to  be  for 
the  payment  of  dollars,  without  qualifying  words,  was  in  fact 
made  for  the  payment  of  an}'-  other  than  lawful  dollars  of  the 
United  States?"  "It  is  quite  clear,"  said  Chase,  C.  J.,  deliv- 
ering the  opinion  of  the  court,  "  that  a  contract  to  pay  dollars, 
made  between  citizens  of  any  state  of  the  Union,  while  main- 
taining its  constitutional  relations  with  the  national  govern- 
ment, is  a  contract  to  pay  lawful  money  of  the  United  States, 
and  cannot  be  modified  or  explained  by  parol  evidence.  But 
it  is  equally  clear,  if  in  any  other  country,  coins  or  notes  de- 
nominated dollars  should  be  authorized  of  different  value  from 
the  coins  or  notes  which  are  current  here  under  that  name, 
that,  in  a  suit  upon  a  contract  to  pay  dollars,  made  in  that 


have  been  received  in  this  case, 
because  it  is  expressly  stated  in  the 
facts  agreed  that  there  was  no 
actual  agreement. 

"It  is  contended,  however,  that 
the  law  will  imply  an  agreement 
under  the  circumstances  of  this  case 
to  accept  confederate  money  in  pay- 
ment of  the  note  on  which  the  ac- 
tion is  founded.  The  argument  is 
that  the  note,  having  been  made 
after  the  establishment  of  the  con- 
fedei'ate  states,  must  be  considered 
as  made  with  reference  to  the  actual 
currency  of  those  states;  and  that  as 
confederate  notes  were  the  actual 
currency  in  those  states  at  the  time 
the  note  became  jaayable  it  was  pay- 
able in  that  currency.  It  must  be 
remembered,  however,  that  confed- 
erate notes  were  never  made  a  legal 
tender.  They  were  never  the  lawful 
money  of  the  country,  but  only  a 
substitute  for  money  like  bank  notes. 
Gold  and  silver  were  the  lawful 
money  of  the  confederate  states  at 
the  time  this  note  was  made,  and 
also  at  the  time  it  became  payable, 
according  to  the  provisions  of  the  act 


of  the  congress  of  the  United  States, 
expressly  adopted  by  the  congress  of 
the  confederate  states.  The  prin- 
ciple of  public  law  relied  on  by 
the  counsel  for  the  appellant,  and 
quoted  from  Story,  Confl.,  §  242.  pre- 
sumes, in  the  absence  of  evidence 
to  the  contrary,  that  every  contract 
is  made  with  refei-enceto  the  lawful 
currency  of  the  country  in  which  ifc 
is  entered  into.  It  does  not  presume 
it  to  be  made  with  reference  to  any 
substitute  for  any  currency  which 
may  happen  to  circulate.  A  con- 
tract made  in  Eichmond  before  the 
war  for  the  payment  of  so  many 
dollars  would  not  have  been  deemed 
payable  in  bank  notes,  though  bank 
notes  were  then  the  common  and 
practically  the  exclusive  currency. 
And  so  in  this  case,  if  we  apply  to 
the  confederate  states  the  principle 
relied  on,  the  note  must  be  deemed 
payable  in  specie,  which  was  the 
lawful  money  of  the  confederate 
states  at  the  time  it  became  pay- 
able." Boulware  V.  Newton,  18  Gratt. 
70S;  Hansbrough  v.  Utz,  75  Va.  959. 


516  PECUNIAKY  KEPRESENTATITE  OF  VALUE,       [§  211. 

country,  evidence  would  be  admitted  to  prove  wliat  kind  of 
dollars  were  intended;  and,  if  it  should  turn  out  that  foreign 
dollars  were  meant,  to  prove  their  equivalent  value  in  lawful 
[337]  money  of  the  United  States.  Such  evidence  does  not 
alter  or  modify  the  contract.  It  simply  explains  an  ambiguity, 
which,  under  the  general  rules  of  evidence,  may  be  removed 
by  parol  evidence.  We  have  already  seen  that  the  people  in 
the  insurgent  states,  under  the  confederate  government,  were, 
in  legal  contemplation,  substantially  in  the  same  condition  as 
inhabitants  of  districts  of  a  country  occupied  and  controlled 
bv  an  invading  belligerent.  The  rules  which  would  apply  in 
the  former  case  would  apply  in  the  latter;  and  as,  in  the  former 
case,  the  people  would  be  regarded  as  subjects  of  a  foreign 
power,  and  contracts  among  them  be  interpreted  and  enforced 
with  reference  to  the  conditions  imposed  by  the  conqueror,  so 
in  the  latter  case,  the  inhabitants  must  be  regarded  as  under 
the  authority  of  the  insurgent  belligerent  power  actually  es- 
tablished as  the  government  of  the  country,  and  contracts 
made  with  them  must  be  interpreted  and  enforced  with  refer- 
ence to  the  condition  of  things  created  by  the  acts  of  the  gov- 
erning power.  It  is  said,  indeed,  that  under  the  insurgent 
government  the  word  'dollar'  had  the  same  meaning  as  under 
the  government  of  the  United  States;  that  the  confederate 
notes  were  never  made  a  legal  tender;  and,  therefore,  that  no 
evidence  can  be  received  to  show  an}^  other  meaning  of  the 
word  when  used  in  a  contract.  But,  it  must  be  remembered 
that  the  whole  condition  of  things  in  the  insurgent  states  was 
matter  of  fact  rather  than  matter  of  law,  and  as  matter  of 
fact,  these  notes,  payable  at  a  future  and  contingent  day, 
which  has  not  arrived  and  can  never  arrive,  were  forced  into 
circulation  as  dollars,  if  not  directly  by  the  legislation,  yet  in- 
directly and  quite  as  effectually  by  the  acts  of  the  insurgent 
government.  Considered  in  themselves,  and  in  the  light  of 
subsequent  events,  these  notes  had  no  real  value,  but  they 
were  made  current  as  dollars  by  irresistible  force.  They  were 
the  only  measure  of  value  which  the  people  had,  and  their  use 
was  a  matter  of  almost  absolute  necessity.  And  this  gave 
them  a  sort  of  value,  insignificant  and  precarious  enough,  it  is 
true,  but  always  having  a  sufficiently  definite  relation  to  gold 
and   silver,  the  universal  measures  of  value,  so  that  it  was 


^211.]  MONEY.  517 

always  easy  to  ascertain  how  much  gold  and  silver  was 
the  real  equivalent  of  a  sum  expressed  in  this  currency.  In 
the  light  of  these  facts,  it  seems  hardly  less  than  absurd  to  say 
that  these  dollars  must  be  regarded  as  identical  in  kind  [338] 
and  value  with  the  dollars  which  constitute  the  money  of  the 
United  States.  "We  cannot  shut  our  eyes  to  the  fact  that  they 
were  essentially  different  in  both  respects;  and  it  seems  to  us 
that  no  rule  of  evidence  properly  understood  requires  us  to 
refuse,  under  the  circumstances,  to  admit  proof  of  the  sense  in 
which  the  word  '  dollar '  is  used  in  the  contract  before  us." ' 

The  presumption  from  the  promise  to  pay  dollars  was  [330] 
that  dollars  of  lawful  money  were  meant.^  But  this  presump- 
tion was  reversed  by  the  provisions  of  the  scaling  laws  enacted 
in  some  states.  Payments  actually  received  by  the  creditor 
in  confederate  notes  were  held  valid.*  But  it  was  held  in  some 
of  the  southern  states  that  payments  received  by  an  agent  or 
trustee  in  such  currency  would  not  have  effect  as  such.'*  In 
Tennessee,  North  Carolina  and  Georgia,  however,  it  was  held 
that  a  sheriff  is  authorized  to  receive,  in  the  absence  of  instruc- 
tions to  the  contrary,  whatever  kind  of  money  is  passing  cur- 
rently in  the  payment  of  debts  of  the  same  character  as  that 

1  Thorington  v.  Smith,  8  Wall.  1.  Whitley  v.  Moseley,  46  Ala.  480.  See 
See  Hanauer  V.  Woodruff.  15  id.  448;  Williams  v.  Campbell,  46  Miss.  57; 
Confederate  Note  Case,  10  id.  548;  Powell  v.  Knighton,  43  Ala.  626; 
Gavinzel  v.  Crump,  33  id.  308;  Ef-  Fretz  v.  Stover,  23  Wall.  198;  also 
finger  v.  Kenney,  115  U.  S.  566,  9  Robinson  v.  International  L.  Assur. 
Sup.  Ct.  Rep.  179,  and  cases  cited;  Society,  etc.,  42  N.  Y.  54,  1  Am.  Rep. 
Bailey  v.  Stroud,  26  W.  Va.  614;  490;  Bank  of  Old  Dominion  v.  Mc- 
Chalmers  v.  Jones,  23  S.  C.  463.  Veigh,  30  Gratt.  457;  Alley  v.  Rog- 

If  payment  is  made  in  a  depreci-  ers,  19  id.  366. 
ated    currency    which  is    not  legal        Executors  or   administrators  and 

tender  a  promise  to  make  good  the  other  trustees  who  were  clothed  with 

depreciatiou  is  founded  on  a  valua-  the  legal  title  to  claims  due  the  es- 

ble  consideration;  but  it  is  otherwise  tates  they    represented    discharged 

where  payment  is  made  in  what  the  debtors  thereto  by  receiving  payment 

law  designates  as  money.  McElderry  in  confederate  currency  in  the  ab- 

V.  Jones.  67  Ala.  303.  sence  of  fraud  or  collusion.   Trustees 

2  Id. ;  Wilcoxen  v.  Reynolds.  46  Ala.  of  Howard  College  v.  Turner,  71  Ala. 
539;  Taunton  v.  Mclnnish,  id.  619;  439,  and  -cases  cited;  Hyatt  v.  Mc- 
Neeley  v.  McFadden,  2  S.  G  169;  Burney,  18  S.  C.  199.  But  it  was  not 
Williamson  v.  Smith,  1  Cold.  1,78  so  in  the  case  of  one  whose  authority 
Am.  Dec.  478.  was  special,  as  an  agent  or  attorney. 

3  Ponder  v.  Scott,  44  Ala.  241.  Ferguson  v.  Morris,  67  Ala,  389.    See 
*  Scruggs  V.  Luster,  1  Heisk.   150;     next  note. 


51 S 


PECUNIARY  KEPRESENTATIVE  OF  VALUE. 


[§  212., 


which  he  has  to  collect,  subject  to  the  limitation  that  he  would 
not  be  warranted  in  receiving  any  currency  so  depreciated  as 
to  amount  to  notice  that  the  creditor  would  not  accept  it.' 


Section  2. 
par  and  rate  of  exchange. 


§  212.  Par  of  exchange.  There  is  no  common  or  interna- 
tional unit  of  value;  hence  the  business  and  commerce  of  the 
world  are  conducted  in  many  kinds  of  money.  It  often  becomes 
necessary,  therefore,  to  enforce  the  collection  of  debts  incurred  or 


1  Atkin  V.  Mooney,  Phil.  (N.  C.  L.) 
32;  Emerson  v.  Mallett,  Phil.  Eq.  236; 
Turner  v.  Collier,  4  Heisk.  89;  Boyd 
V.  Sales,  39  Ga.  74;  King  v.  King,  37 
id.  205;  Campbell  v.  Miller,  38  id.  304, 
95  Am.  Dec,  389;  Hutchins  v.  Hull- 
man.  34  Ga.  346;  Neely  v.  Wood- 
ward, 7  Heisk.  495.  See  Van  Vacter 
V.  Brewster,  1  Sm.  &  M.  490. 

"  No  court  since  the  war  has  held, 
so  far  as  we  know,  that  confederate 
treasury  notes  were  issued  by  lawful 
authority;  but  money  has  been  rec- 
ognized generally  by  the  courts  as  a 
generic  term,  covering  anything  that 
by  common  consent  is  made  to  rep- 
resent property  and  pass  as  such  in 
current  business  transactions,  and 
that  when  a  judgment  or  debt  has 
been  paid  in  confederate  money  and 
accepted,  the  transaction  cannot  be 
opened.  Several  decisions  go  to  the 
extent  that  if  at  the  time  and  place 
of  payment  confederate  money  was 
generally  received  in  business  trans- 
actions and  was  in  fact  the  current 
money  of  the  country,  the  agent's 
authority  to  receive  such  money,  in 
the  absence  of  directions  to  the  con- 
trary, may  be  presumed.  This  rule 
has  been  applied  not  only  when  the 
creditor  and  debtor  were  within  the 
same  state,  but  when  the  creditor 
resided  in  a  state  not  a  member  of 
the  confederacy,  and  the  debtor  was 
witliin  the  confederate  lines.     King 


v.  King,  37  Ga.  205;  Westbrook  v. 
Davis,  48  Ga.  471;  Rodgers  v.  Bass, 
46  Tex.  505;  Burford  v.  Memphis 
Bulletin  Co.,  9  Heisk.  691;  Pidgeon  v. 
Williams,  21  Gratt.  251;  Hale  v.  Wall, 
22  Gratt.  224;  Robinson  v.  Interna- 
tional L.  Assui-.  Society,  42  N.  Y.  54,, 
1  Am.  Rep.  490;  Glasgow  v.  Lipse, 
117  U.  S.  327,  6  Sup.  Ct.  Rep.  757;. 
Martin's  Adm'r  v.  United  States,  2 
T.  B.  Mon.  89, 15  Am.  Dec.  129.  Other 
decisions  hold  that  the  rule  should 
not  be  applied  where  the  creditor 
was  within  the  fedei'al  lines,  with 
communication  between  him  and 
his  agent  in  the  confederacy  de- 
stroyed. In  such  a  case  it  has  been 
held  that  no  implied  authority  to 
receive  confederate  money  existed, 
and  that  payment  to  the  agent  or 
attorney  did  not  discharge  the  debt. 
Harper  v.  Harvey,  4  W.  Va.  539; 
Alley  V.Rogers,  19 Gratt. 366;  Water- 
house  V.  Citizens'  Bank,  25  La.  Ann. 
77;  Fretz  v.  Stover,  22  Wall.  198." 
Hendry  v.  Benlisa,  37  Fla.  609,  20  So. 
Rep.  800,  34  L.  R.  A.  283.  The  last 
case  holds  that  if  at  the  time  and 
place  of  payment  in  confederate 
money  it  was  generally  received  in 
business  transactions,  and  was  the 
current  money  of  the  country,  an 
agent's  authority  to  receive  it,  in  the 
absence  of  directions  to  the  contrary 
from  a  resident  principal,  will  be 
presumed. 


i 


§  212.] 


PAR  AND  RATE  OF  EXCHANGE. 


519 


contracted  in  one  currency  by  resort  to  courts  whose  judgments 
are  rendered  in  another;  and  the  gold  and  silver  coins  of  one 
country  often  circulate  as  money  in  other  countries  and  are 
current  at  their  value,  which  is  capable  of  equivalent  ex-  [340] 
pression  in  the  local  currency.  Whatever  the  coinage,  a  like 
amount  of  these  precious  metals  will,  in  all  forms  of  coined 
money,  be  of  like  intrinsic  value,  depending  for  its  equality  on 
weight  and  fineness.  An  amount  stated  in  one  currency 
which  is  an  equivalent  for  the  same  value  expressed  in  another 
is  the  par  of  exchange;  it  is  a  literal  translation  of  the  lan- 
o-uao-e  of  value  in  one  country  or  currency  into  that  of  equal 
value  in  another.  The  true  par  of  exchange  between  two 
countries  is  the  equivalent  of  a  certain  amount  of  the  currency 
of  one  in  the  currency  of  the  other,  supposing  the  currency  of 
both  to  be  at  the  precise  weight  and  purity  fixed  by  their  re- 
spective mints  ;^  or  in  other  words,  it  is  the  amount  which  the 
standard  coin  of  either  country  would  produce  when  coined  at 
the  mint  of  the  other.^ 


1  McCuUoch's  Com.  Die,  tit.  Par  of 
Exchange. 

2  Commonwealth  v,  Haupt,  10  Al- 
len, 38.  In  Daniel  on  Negotiable  In- 
struments the  par  of  exchange  is 
thus  explained,  vol.  2,  §§  1443,  1443: 
"  By  the  par  of  exchange  is  meant 
the  precise  equality  of  any  given  sum 
of  money  in  the  coin  or  currency  of 
one  country  and  the  like  sum  in  the 
coin  or  currency  of  another  country 
into  vphich  it  is  to  be  exchanged,  re- 
gard being  had  to  the  fineness  and 
weight  of  the  coins  as  fixed  by  the 
mint  standard  of  the  respective 
countries.  Cunningham  on  Bills,  417; 
Story  on  Bills,  §  30.  Marius  says: 
*Pair,'  as  the  French  call  it,  'is  to 
equalize,  match  or  make  even  the 
money  of  exchange  from  one  place 
with  that  of  another  place;  when  I 
take  up  so  much  money  for  exchange 
in  one  place  to  pay  the  just  value 
thereof  in  another  kind  of  money  in 
another  place,  without  having  respect 
to  the  current  of  exchange  for  the 
same,  but  only  to  what  the  monej-s 


are  worth.'  Marius  on  Bills,  4.  It  is 
necessary  to  this  purpose  to  ascer- 
tain the  intrinsic  values  of  the  dif- 
ferent coins;  and  then  it  is  a  matter 
of  arithmetical  computation  to  ar- 
rive at  the  amount  of  one  which 
will  be  the  exact  equivalent  of  a 
certain  amount  of  the  other,  into 
which  it  is  to  be  exchanged.  When 
this  has  been  accomplished,  and  the 
exact  equivalent  of  a  certain  amount 
in  one  currency  has  been  ascertained 
in  another,  should  it  be  desired  to 
transmit  such  amount  from  one 
country  to  another,  the  rate  of  ex- 
change between  the  countries  will 
be  added  to  or  subtracted  from  such 
amount,  accordingly  as  the  course 
of  exchange  is  in  favor  of  the  one 
country  or  the  other.  So  the  par 
of  exchange  is  the  equivalency  of 
amounts  in  different  currencies, 
while  the  rate  of  exchange  is  the 
difference  between  the  amounts  at 
different  places.  Gilbert  remarks 
on  this  subject,  in  his  Treatise  on 
Banking:  'The  real  par  of  exchange 


520 


PECUNIAKY  EEPRESENTATIVE  OF  VALUE. 


[§21$ 


[341]  The  par  of  exchange  is  the  measure  of  damages  only 
when  the  sum  for  which  it  is  substituted  as  an  equivalent 
would  be  such  if  judgment  could  be  taken  in  the  same  cur- 
rency as  that  in  which  the  debt  exists.  It  is  the  measure 
where  there  is  no  question  of  the  rate  of  exchange,  and  the  only 
inquiry  is  what  is  the  equivalent  amount  in  our  currency  to 
that  found  due  in  a  foreign  currency. 

The  nominal  par  based  on  the  equality  in  value  of  gold  or 
silver,  whether  in  foreign  or  domestic  coins,  by  the  universal 
standard,  may  not  be  the  real  par  if  the  money  of  the  former 
be  not  gold  and  silver  of  the  standard  value,  or  if  it  be  some 
depreciated  substitute.  Then  it  may  be  a  question  whether 
the  creditor  is  entitled  to  judgment  for  an  equivalent  accord- 
ing to  the  real  par,  or  whether  he  must  accept  as  an  equiva- 
lent the  nominal  par.  Judge  Story  says,  "  if  a  note  were  made 
in   England  for  £100  sterling,  payable  in   Boston,  if  a  suit 


between  two  countries  is  that  by 
which  an  ounce  of  gold  in  one  coun- 
try can  be  replaced  by  an  ounce  of 
gold  of  equal  fineness  in  the  other 
country.  In  England  gold  is  the 
legal  tender,  and  its  price  is  fixed  at 
£3  17s.  lOid.  per  ounce.  In  France, 
silver  is  the  currency,  and  gold,  like 
other  commodities,  fluctuates  in  price 
according  to  supply  and  demand. 
Usually  it  bears  a  premium  or  agio.' 
In  the  above  quotation  the  premium 
is  stated  to  be  7  per  viille;  that  is,  it 
would  require  1,007  francs  in  silver 
to  purchase  1,000  francs  in  gold.  At 
this  price  the  natural  exchange,  or 
that  at  which  an  ounce  of  gold  in 
England  would  purchase  an  ounce 
of  gold  in  France,  is  25.3U.  But  the 
commercial  exchange  —  that  is,  the 
price  at  which  bills  on  London  would 
sell  on  the  Paris  exchange  —  is  25 
francs,  25  cents,  showing  that  gold 
is  0.30  per  cent,  dearer  in  Paris  than 
in  London.  Tables  have  been  con- 
structed to  show  the  results  of  each 
fluctuation  in  the  premium  of  gold 
in  Paris  and  Amsterdam  (Gilbert  on 
Banking,  424).     And  in  Cunningham 


on  Bills  it  is  said:  By  the  par  of 
exchange  is  meant  the  precise  equal- 
ity between  any  sum  or  quantity 
of  English  money,  and  the  money 
of  a  foreign  country  into  which  it 
is  to  be  exchanged,  regard  being  had 
to  the  fineness  as  well  as  to  the 
weight  of  each.  When  Sir  Isaac 
Newton  had  the  inspection  of  the 
English  mint  he  made,  by  order  of 
council,  assays  of  a  great  number  of 
foreign  coins  to  know  their  intrinsic 
values  and  to  calculate  thereby  the 
par  of  exchange  between  England 
and  other  countries,  of  which  a  table 
is  given  by  Dr.  Arbuthnot.  And 
he  says  you  may  thereby  judge  the 
balance  of  trade,  as  well  as  the  dis- 
temper of  a  patient  by  the  pulse. 
And  this,  it  seems,  induced  Mons. 
Dutot,  in  a  late  book,  entitled.  Re- 
flections Politique  sur  les  Finances, 
to  follow  the  same  path  in  calculat- 
ing the  par  of  exchange,  and  to  say 
that  the  balance  of  trade  may  be 
thereby  as  well  judged  of  as  the 
weather  by  a  barometer."  Gilbert 
on  Banking,  417. 


§  213.]  PAR  AND  RATE  OF  EXCHANGE.  521 

were  brought  in  Massachusetts,  the  party  would  be  entitled  to 
recover  .  .  .  the  established  jiar  of  exchange  by  [342] 
our  laws.  But  if  our  currency  had  become  depreciated  by  a 
debasement  of  our  coinage,  then  the  depreciation  ought  to  be 
allowed  for,  so  as  to  bring  the  sura  to  the  real  par,  instead  of 
the  nominal  par."  ^  And  for  the  same  reason,  if  the  money 
in  which  the  debt  was  incurred  were  depreciated,  an  allowance 
by  way  of  deduction  should  be  made  in  ascertaining  the 
equivalent  in  a  currency  of  gold  and  silver  of  standard  value. 
There  being  no  statute  fixing  for  general  purposes  a  legal  par 
of  exchange,  the  rule  which  is  established  by  the  best  author- 
>  ities  is  that  in  rendering  judgment  in  a  different  currency  it 
should  be  given  for  such  sum  as  approximates  most  nearly  to 
the  value  of  the  amount  contracted  for.-' 

§  213.  Kate  of  exchange.  Where  the  debt  is  not  only  pay- 
able in  the  currency  of  a  foreign  country,  but  is  expressl}''  or 
by  implication  also  payable  there,  and  not  having  been  paid 
is  sued  in  this  country,  the  creditor  is  entitled  to  the  money 
of  the  forum  to  a  sum  equal  to  the  value  of  the  debt  at  the 
place  where  it  should  have  been  paid.  Where  the  creditor 
sues  the  law  ought  to  give  him  just  as  much  as  he  would  have 
had  if  the  contract  had  been  performed,  just  what  he  must 
pay  to  remit  the  amount  of  the  debt  to  the  countrj'  where  it 
was  payable.  Hence  he  is  entitled  to  recover  according  to 
the  rate  of  exchange  between  the  two  countries  at  the  time  of 
the  trial.* 


1  Story's  Conf,  Laws,  §  310.  Am.  Dec.  84:    Watson  v.  Brewster, 

2  Benners  v.  Clemens,  58  Pa.  24;  1  Pa.  381 ;  Hawes  v.  Woolcock,  26 
Robinson  v.  Hall,  28  How.  Pr.  342;  Wis.  629;  AUshouse  v.  Ramsay,  6 
Pollock  V.  Colglazure,  Sneed,  2;  Whart.  331,  87  Am.  Dec.  417;  Jelison 
€omstock  V.  Smith,  20  Mich.  338;  v.  Lee,  3  Woodb.  &  M.  368;  Nicker- 
Reiser  v.  Parker,  1  Lowell,  262;  son  v.  Soesman,  98  Mass.  364;  Capron 
Hawes  v.  Woolcock,  26  Wis.  629;  v.  Adams,  28  Md.  529;  Cushing  v. 
Jelison  v.  Lee,  3  Woodb.  &  IL  368;  Wells,  98  Mass.  550;  Smith  v.  Shaw, 
■Gary  v.  Courtenay,  103  Mass.  316,  2Wash.  CO.  167;  Stringer  v.  Coombs, 
4  Am.  Rep.  559;  Swanson  v.  Cooke,  62  Me.  160,  16  Am.  Rep.  414;  Grant 
30  How.  Pr.  385.  45  Barb.  574:  3  v.  Healey,  3  Suran.  523;  Benners  v. 
Kent's  Com.  116,  note:  TheVaughan  Clemens,  58  Pa.  24;  WoodhuU  v. 
and  Telegraph,  14  Wall.  258;  Story's  W^agner,  1  Bald.  296;  Wood  v.  Wat- 
ConfL  Laws,  §§  310,  311;  Scott  v.  son,  53  Me.  300;  Delegal  v.  Nay  lor.  7 
Bevan,  2  B.  &  Ad.  78.  Bing.  460;  Cash  v.  Kennion,  11  Ves. 

3  Marburg  v.  Marburg.  26  Md.  8,  90  314;  Lee  v.  Wilcocks,  5  S.  &  R  48; 


522 


rjiCUNIARY    REPRESENTATIVE    OF    VALUE. 


[§  213. 


Scott  V.  Bevan,  3  B.  &  Ad.  78,  and 
note;  Ekins  v.  East  India  Co.,  1  P. 
Wm&  395;  Lanusse  v.  Barker,  3 
Wheat.  101. 

[345J]  The  opinion  in  Grant  v.  Healey, 
supra,  places  the  law  on  this  subject 
in  a  clear  light,  and  answers  with 
great  force  the  contrary  decisions  in 
Massachusetts  and  New  York  which 
are  cited  in  the  discussion.     "I  take 
the   general  doctrine  to   be  clear,'' 
said  the  learned  judge,  "that  when- 
ever a  debt  is  made  payable  in  one 
country,  and  is  afterwards  sued  for 
in  another  country,  the  creditor  is 
entitled  to  receive  the  full  sum  nec- 
essary to  replace  the  money  in  the 
country  where  it  ought  to  have  been 
paid,  with  interest  for  the  delay;  for 
then   and  then  only  is  he  fully  in- 
demnified for  the  violation  of  the 
contract.     In   every  such   case  the 
plaintiff  is  therefore  entitled  to  have 
the  debt  due  to  him  first  ascertained 
at  the  par  of  exchange  between  the 
two  countries,  and  then  to  have  the 
rate    of    exchange    between    these 
countries    added   to    or   subtracted 
from  the  amount,  as  the  case  may  re- 
quire, in  order  to  replace  the  money 
in  the  country  where  it  ought  to  be 
paid.     It  seems  to  me  that  this  doc- 
trine is  founded  on  the  true  princi- 
ples of  reciprocal  justice.     The  ques- 
tion, therefore,  in  all  cases  of  this 
sort,  where  there  is  not  a  known  and 
settled  commei'cial  usage  to  govern 
them,  seems  to  me  to  be  rather  a 
question  of  fact  than  of  law.  In  cases 
of  accounts  and  of  advances,  the  ob- 
ject is  to  ascertain  where,  according 
to  the  intention  of  the  parties,  the 
balance  is  to  be  repaid  — in  the  coun- 
try of  the  creditor  or  of  the  debtor. 
In  Lanusse  v.  Baker,  3  Wheat.  101, 
147,  the  supreme  court  of  the  United 
States  seem  to  have  thought  that 
where  money  is  advanced  for  a  per- 
son in  another    state,  the  implied 
undertaking  is  to  replace  it  in  the 
country  where  it  is  advanced,  unless 


that  conclusion  is  repelled  by  the 
agreement  of  the  parties  or  by  other 
controlling  circumstances.     .     . 
In  relation  to  mere  balances  of  ac- 
count between  a  foreign  factor  and 
a  home    merchant,   there    may   be 
nioredifficulty  in  ascertaining  where 
the  balance  is  reimbursable,  whether 
where  the  creditor  resides  or  where 
the  debtor  resides.     Perhaps  it  will 
be  found,  in  the  absence  of  all  con- 
trolling   circumstances,    the   truest 
rule  and  the  easiest  in  its  applica- 
tion is  that  advances  ought  to  be 
deemed  reimbursable  at  the   place 
where  they  are  made,  and  sales  of 
goods  accounted   for  at  the    place 
where  they  are  made  or  authorized 
to   be  made.    .    .    .     (Consequa    v. 
Fanning,  3  Johns.  Ch.  587,  610,  17 
Johns.  511,  8  Am.  Dec.  442.)    .    .    . 
I  am  aware  that  a  different  rule,  in 
respect  to  balances  of  account  and 
debts  due  and  payable  in  a  foreign 
country,  was  laid  down  in  Martin  v. 
Franklin,  4  Johns.  125,  and  Scofield 
V.  Day,  20  Johns.  102,  and  that  it  has 
been  followed  by  the  supreme  court 
of  Massachusetts  in  Adams  v.  Cordis, 
8   Pick.  260.     It  is  with  unaffected 
diffidence  that  I  venture  to  express 
a  doubt  as  to  the  correctness  of  the 
decisions  of  these  learned  courts  upon 
this  point.    It  appears  to  me  that  the 
reasoning  in  the  4  Johns.  125,  which 
constitutes  the  basis  of  the  other  de- 
cisions, is  far  from  being  satisfac- 
tory.  It  states  very  properly  that  the 
court  have  nothing  to  do  with  in- 
quiries into  the  disposition  which  the 
creditor  may  make  of  his  debt  after 
the  money  has  reached  his  hands; 
and  the  court  are  not  to  award  dam- 
ages upon  such  uncertain  calcula- 
tions as  to  the  future  disposition  of 
it.     But  that  is  not,  it  is  respectfully 
submitted,  the  point  in  controversy. 
The  question  is  whether,  if  a  man 
has  undertaken  to  pay  a  debt  in  one 
country,  and  the  creditor  is  com- 
pelled to  sue  him  for  it  in  another 


§  213.] 


PAR   AND    KATE    OF    EXCHANGE. 


523 


[344]  country,  where  the  money  is  of 
less  value,  the  loss  is  to  be  borne  by 
the  creditor,  who  is  in  no  fault,  or  by 
the  debtor,  who  by  the  breach  of  his 
contract  has  occasioned  the  loss.  The 
loss  of  which  we  here  speak  is  not  a 
future  contingent  loss.  It  is  posi- 
tive, direct,  immediate.  The  very 
rate  of  exchange  shows  that  the  very 
sum  of  money  paid  in  one  country  is 
not  an  indemnity  or  equivalent  for 
it  when  paid  in  another  country,  to 
which  by  tlie  default  of  the  debtor 
the  creditor  is  bound  to  resort.  Sup- 
pose a  man  undertakes  to  pay  an- 
other $10,000  in  China,  and  violates 
his  contract,  and  then  he  is  sued 
therefor  in  Boston,  when  the  money 
if  duly  paid  in  China  would  be  worth 
at  the  very  moment  twenty  per  cent, 
more  than  it  is  in  Boston;  what  com- 
pensation is  it  to  the  creditor  to  pay 
him  the  $10,000  at  par  in  Boston  ? 
Indeed  I  do  not  perceive  any  just 
foundation  for  the  rule  that  interest 
is  payable  according  to  the  law  of 
the  place  where  the  contract  is  to  be 
performed,  except  it  be  the  very  same 
on  which  a  like  claim  may  be  made 
as  to  the  principal,  viz.,  that  the 
debtor  undertakes  to  pay  there,  and 
therefore  is  bound  to  put  the  cred- 
itor in  the  same  situation  as  if  he  had 
punctually  complied  with  his  con- 
tract there.  It  is  suggested  that  the 
case  of  bills  of  exchange  stands  upon 
a  distinct  ground,  that  of  usage,  and 


is  an  exception  from  the  general 
doctrine.  I  think  otherwise.  The 
usage  has  done  nothing  more  than 
ascertain  what  should  be  the  rate  of 
damages  for  a  violation  of  the  con- 
tract generally,  a  matter  of  conven- 
ience and  daily  occurrence  in  busi- 
ness, rather  than  to  have  a  fl  uct  uating 
standard  dependent  upon  the  daily 
rates  of  exchange;  exactly  for  the 
same  reason  that  the  rule  of  deduct- 
ing one-third  new  for  old  is  applied 
to  cases  of  repairs  of  ships,  and  the 
deduction  of  one-third  from  the  gross 
freight  is  applied  in  cases  of  gen- 
eral averaga  It  cuts  off  all  minute 
calculations  and  inquiries  into  evi- 
dence. But  in  cases  of  bills  of  ex- 
change drawn  between  countries 
where  no  such  fixed  rate  of  dam- 
ages exists,  the  doctrine  of  damages 
applied  to  the  contract  is  precisely 
that  which  is  sought  to  be  applied  to 
the  case  of  a  common  debt  due  and 
paj-able  in  another  country;  that  is 
to  say,  to  pay  the  creditor  the  exact 
sum  which  he  ought  to  have  received 
in  that  country.  That  is  sufficiently 
clear  from  the  case  of  Mellish  v. 
Simeon,  2  H.  Black.  378,  and  the 
whole  theory  of  re-exchange."  See 
Lodge  V.  Spooner,  8  Gray,  166;  Hus- 
sey  V.  Farlow,  9  Allen,  263;  Bush  v. 
Baldrey,  11  id.  367;  Weed  v.  Miller, 
1  McLean,  423;  Grutacup  v.  Woul- 
luise,  2  id.  581. 


524:  CONVENTIONAL   LIQUIDATIONS   AND    DISCHAKGES. 


CHAPTER  yil. 

CONVENTIONAL  LIQUIDATIONS  AND  DISCHARGEa 
Section  L 

PAYMENT. 

§  214-216.  What  is;  modes  of  making, 

217.  What  is  not  payment. 

218.  Eflfect  of  payment. 

219.  Payment  before  debt  due. 

220.  Payment  by  devise  or  legacy. 

221.  Payment  by  gift  inter  vwos. 

222.  Payment  by  retainer. 

223.  224.  Payment  in  counterfeit  money,  bills  of  broken  banks  or  forged 

notes. 

225-227.  Payment  by  note,  bill  or  check. 

228,  229.  Collaterals  collected  or  lost  by  negligence  of  creditor  are  pay- 
ments. 

230.  Who  may  make  payment. 

231.  To  whom  payment  may  be  mada 
233.  Pleading  payment. 

233.  Evidence  of  payment 

Section  2. 

application  of  payments, 

234.  General  rule. 

235.  236.  By  debtor. 

237.  Same  subject;  evidence. 
238-240.  By  creditor. 

241.  Appropriation  by  the  court. 

242.  When  payments  applied  pro  rafa. 

243.  General  payment  applied  to  oldest  debt. 

244.  General  payment  applied  to  a  debt  bearing  interest,  and  first  to  in- 

terest. 

245.  General  payment  applied  to  the  debt  least  secured;  comments  on 

conflicting  views  of  the  general  subject. 

Section  3. 

accord  and  satisfaction. 

246.  Definition. 

247.  Consideration. 

248.  Payment  of  part  of  a  debt  will  not  support  an  agreement  to  discharge 

the  whole. 
248a.  Same  subject. 

249.  Any  other  act  or  promise  which  is  a  new  consideration  will  suffice. 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHAEGES,  525 

§  250.  Composition  witli  creditors. 
251.  Compromise  of  disputed  claim. 

253.  Agreement  must  be  executed. 

Section  4 

RELEASE. 

§  253.  Definition. 

254.  Differs  from  accord  and  satisfaction. 

255.  Extrinsic  evidence  and  construction. 

256.  Who  may  execute. 

257.  Effect  when  executed  by  or  to  one  of  several  olaiming  or  liable. 

258.  What  will  operate  as  a  releasa 

259.  Covenant  not  to  sue. 

Section  5. 

TENDER. 

260.  Right  to  make. 

261.  On  what  demands  it  may  be  made. 
363.  When  it  may  be  mada 

263.  In  what  money. 
264  By  whom. 

265.  To  whom. 

266,  267.  It  must  be  sufficient  in  amount, 

268.  How  made. 

269.  Where  to  be  made. 

270.  Must  be  unconditional 

271.  Effect  of  accepting. 

272.  Must  be  kept  good. 

273.  Waiver  and  omission  of  tender  on  sufficient  excuse 

274.  Tender  must  be  pleaded  and  money  paid  into  court 

275.  Effect  of  plea  of  tender. 

276.  Effect  of  tender  when  money  paid  into  court. 

277.  Effect  of  tender  on  collateral  securities. 

278.  Paying  money  into  court 

Section  6. 
stipulated  damages. 

279.  Contracts  to  liquidate  damages  valid- 

280.  Damages  can  be  liquidated  only  by  a  valid  contract. 

281.  Modes  of  liquidating  damages;  computation  of  time, 

282.  Alternative  contracts. 

283.  Liquidated  damages  contradistinguished  from  penalty. 
284  The  evidence  and  effect  of  intention  to  liquidate. 

285.  Stipulated  sum  when  damages  otherwise  certain  or  unc^taii? 
386,  287.  Contracts  for  the  payment  of  money. 

288.  Large  sum  to  secure  payment  of  a  smaller. 

289.  Stipulation  where  damages  certain  and  easily  proved. 

290.  292.  Stipulation  when  damages  uncertain. 


52G 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  214. 


§  293.  Same  subject;  illustrations. 

294,  295.  Stipulation  for  payment  of  a  fixed  sum  for  partial  or  total  breach. 

296.  Effect  of  part  performance  accepted  where  damages  liquidated. 

297.  Liquidated  damages  are  in  lieu  of  performance. 

298.  Eifect  of  stipulation  upon  right  of  action, 

299.  Waiver  of  right  to  stipulated  damages. 

Section  1. 

PAYMENT. 

[345]  §214.  What  is;  modes  of  making.  Payment  is  the 
actual  performance  of  an  agreement  or  duty  to  pay  money.^ 
It  is  distinguishable  from  accord  and  satisfaction,  and  from 
release ;  it  is  strict  performance  in  respect  to  a  debt,  accord- 
ing to  the  literal  and  substantial  import  of  the  contract  by 
virtue  of  which  it  was  incurred;  accord  and  satisfaction  is  the 
adoption,  by  mutual  consent  and  the  doing,  of  some  other  act 
as  a  substitute;  release  is  a  renunciation  of  the  contract  or  lia- 
bility, whereby  performance  is  waived.  But  accord  and  sat- 
isfaction is  a  payment  suh  modo;  and  a  release,  as  it  must  be 
founded  on  an  actual  consideration,  shown  or  implied,  is  to  the 
extent  of  such  consideration  a  payment  or  satisfaction.^ 

Payment  includes  the  transfer  by  the  debtor  to  the  creditor 
and  the  receipt  by  the  latter  of  money  or  something  else  of 
value  accepted  by  him  as  representing  money.      Ordinarily 


1  City  Savings  Bank  v.  Stevens,  59 
N.  Y.  Super.  Ct.  549,  15  N.  Y.  Supp. 
139. 

A  payment  on  Sunday  discharges 
the  debt.  Jameson  v.  Carpenter,  68 
N.  H.  62,  36  Atl.  Rep.  554. 

Under  an  agreement  to  pay  bills 
daily  for  goods  delivered  the  pur- 
chaser has  the  whole  of  the  day  in 
which  bills  are  presented  to  pay 
them.  Anglo-American  Provision 
Co.  V.  Prentiss,  157  111.  506,  42  N.  E. 
Rep.  157. 

Punctual  payment  means  pay- 
ment on  the  day  fixed;  nine  days 
thereafter  is  too  late.  Leeds  &  Han- 
ley  Theater  v.  Broadbent,  [1898]  1 
Ch.  343. 

"Originally  payment  was  the  per- 


formance of  a  promise  to  pay  money 
at  the  time  and  in  the  manner  re- 
quired by  the  term?  of  the  contract; 
but  it  has  been  extended  to  include 
the  delivery  of  money  in  satisfac- 
tion of  a  debt  after  a  default  has 
been  made  in  pajnnent  according  to 
the  terms  of  the  contract."  Ulsch  v. 
Muller,  143  Mass.  379,  9  N.  E.  Rep. 
736. 

A  cross-demand  is  not  payment 
and  cannot  be  treated  as  such  unless 
by  agreement  of  the  parties.  Mc- 
Curdy  v.  Middleton,  82  Ala.  131,  2 
So.  Rep.  721;  Wharton  v.  King,  69 
Ala.  365. 

2  See  Bottomley  v.  Nuttall,  5  C.  K 
(N.  S.)  122,  134,  135. 


§  214.]  PAYMENT.  527 

the  debtor  must  seek  the  creditor  to  pay  him.'  Eut  if  a  lease 
is  silent  as  to  the  place  where  rent  is  to  be  paid  the  landlord 
must  make  a  demand  of  payment  on  the  land  before  he  can 
declare  a  forfeiture,  notwithstanding  the  tenant  has  thereto- 
fore sought  him  for  the  purpose  of  making  payment.^  If  there  is 
no  agreement  on  the  subject  the  purchase  price  of  property  is 
payable  at  the  office  of  the  vendors,  to  their  agents  or  to  them 
in  person.'  But  if  the  place  of  payment  is  designated  and  the 
presence  of  the  payee  is  necessary,  he  must  attend ;  and  it 
-either  of  two  places  is  agreed  upon  he  must  select,  and  there 
is  no  default  until  he  has  done  so.*  If  the  creditor  refuses  to 
receive  payment  at  the  place  appointed  by  him  and  does  not 
inform  his  debtor  of  a  purpose  to  require  it  to  be  made  else- 
where, he  waives  the  right  to  payment  at  another  than  the 
designated  place  and  cannot  reap  any  benefit  from  his  act.' 
The  duty  of  the  debtor  to  seek  his  creditor  does  not  require 
that  he  should  do  so  beyond  the  limits  of  the  state  or  country 
in  which  the  debt  was  contracted,  and  by  implication  or  ex- 
press agreement  was  to  be  paid.^  But  as  nothing  but  actual 
payment  w^ill  discharge  the  debt,  this  dutv  of  seeking  the  cred- 
itor will  more  properly  be  considered  in  connection  with  the 
subject  of  tender.'^  It  may,  however,  be  added  here  that  if 
the  debtor  is  a  municipality,  county,  state  or  government  the 
obligation  is  not  dischargeable  at  any  other  place  than  its 
treasur}^,^  unless  some  other  place  be  designated.     A  county 

iCranley  v.  Hillary,  2  M.  &  S.  120;  tell  v.  Nichols'  Adm'r,  Hardin,  66; 

Soward    v.  Palmer,    2    Moore,    276;  Galloway  v.  Standard  F.  Ins.  Co.,  45 

Galloway  v.  Standard    F.  Ins.    Co.,  W.  Va.  237,  31  S.  E.  Rep.  969. 

45  W.  Va.  237,  31  S.  K  Rep.  969.  •?  g§  260-270. 

2Rea  V.  Eagle  Transfer  Co.,  201  Pa.  8  Pekin  v.  Reynold*,  31  111.  529,  83 

273,  50  Atl.  Rep.  764.  Am.  Dec.  244;  Boyle  s  Lunacy,  20  Pa, 

3  Greenawalt  V.  Este,  40  Kan.  418,  Super.    Ct.    1;    People    v.   Tazewell 

19  Pac.  Rep.  803;  Baker  v.  Holt,  56  County.  22  111.  147;  Johnson  v.  Stark 

Wis.  100,  14  N.    W.    Rep.   8;    North-  County,  24  id.  75;  South  Park  Convrs 

western  Iron  Co.  v.  Meade,  21  Wis.  v.  Dunlevy,  91  id.  49;  Friend  v.  Pitts- 

480.  burgh,  131  Pa.  305.  6  L.  R.  A.  636,  17 

*  Thorn  v.  City  Rice  Mills,  40  Ch,  Am.  St.  811,  18  Atl.  Rep.  1060;  Sibley 

Div.  357.  V.  Pine  County,  31  Mmn.  201,  17  N. 

5  Union  Mut.  L.  Ins.  Co.  v.  Union  W.  Rep.  337;  Monteith  v.  Parker.  36 

Mills  Plaster  Co.,  37  Fed.  Rep.  286,  Ore.  170.  59  Pac.  Rep.  192:  William- 

4-{  L.  R  A.  90.  son  County  v.  Farson,  101  III.  App. 

6 King  V.  Finch,  60  Ind.  423;  Lit-  328,  199  111.  71,  64  N.    K  Rep.  1086. 


528 


CONVENTIO:S^AL    LIQUIDATIOXS    AND    DISCHARGES.        [§  214. 


which  issued  bonds  containinfi:  a  reservation  of  the  ri^ht  to 
pay  them  after  a  certain  date,  prior  to  their  maturity,  was  not 
bound  to  seek  the  holders  of  them  and  give  notice  of  its  elec- 
tion to  pay  them  after  a  date  duly  fixed  by  the  authorities.  Its 
duty  was  discharged  by  giving  ample  notice  through  news- 
papers of  the  exercise  of  its  option  that  the  bonds  would  be 
paid  at  the  place  named  therein.  By  placing  the  funds  there 
the  debtor  discharged  its  duty  to  the  bondholders  and  was 
not  liable  to  them  for  interest  thereafter.^ 

If  a  debtor  is  directed  by  his  creditor  to  remit  money  by 
mail,  or  if  that  be  the  usual  mode  of  remitting  it,  and  the  re- 
[346]  mittance  be  lost,  the  creditor  must  sustain  the  loss.'^  In 
such  case  compliance  with  the  direction  in  respect  to  the  mode 
of  remittance  fulfills  all  the  requisites  of  payment —  tender  and 
acceptance,  —  both  of  which  are  essential.  To  constitute  a 
payment,  money  or  some  other  valuable  thing  must  be  deliv- 
ered by  the  debtor  to  the  creditor  for  the  purpose  of  extinguish- 
ing the  debt,  and  the  creditor  must  receive  it  for  that  purpose.^ 


1  Stewart  v.  Henry  County,  66  Fed. 
Rep.  127;  Ward  v.  Smith,  7  Wall 
450.  See  Williamson  County  v.  Far- 
son,  supra. 

2  Colvin  V.  United  States  Mut.  Ac- 
cident Ass'n,  66  Hun,  543,  21  N.  Y. 
Supp.  734;  Primeau  v.  National  L. 
Ass'n,  77  Hun,  418,  28  N.  Y.  Supp. 
794;  McCluskey  v.  Same,  77  Hun, 
566.  28  N.  Y.  Supp.  931,  affirmed 
without  opinion,  149  N.  Y.  616;  Guil- 
foyle  V.  National  L.  Ass'n,  36  App. 
Div.  343,  55  N.  Y.  Supp.  236;  Jung  v. 
Second  Ward  Savings  Bank.  55  Wis. 
364.  42  Am.  Rep.  719,  13  N.  W.  Rep. 
235;  Warwicke  v.  Noakes.  Peake,  67. 
See  Parker  v,  Gordon,  7  East,  385. 
Compare  State  v.  Insurance  Co.,  106 
Tenn.  2S2,  61  S.  W.  Rep.  75. 

If  no  mode  of  remitting  is  indi- 
cated by  the  creditor  a  remittance 
made  in  the  way  a  prudent  man 
would  do  if  he  was  paying  his  own 
debt  relieves  an  agent  from  responsi- 
bility. Underwriters'  Wrecking  Co. 
V.  Board  of  Underwriters,  35  La. 
Ann.  803. 


In  the  absence  of  an  express  direc- 
tion to  remit  by  mail  or  a  usage  or 
course  of  dealing  from  which  au- 
thority to  so  remit  may  be  inferred, 
a  remittance  of  money  so  made  is 
at  the  risk  of  the  party  mailing  it. 
Burr  V.  Sickles,  17  Ark.  428,  65  Am. 
Dec.  437. 

There  is  no  evidence  of  payment 
when  the  instrument  remitted  de- 
scribes the  payee  by  a  wrong  chris- 
tian name,  though  he  keeps  it  and 
might  have  obtained  the  money  by 
signing  it  in  the  name  used.  Gordon 
V.  Strange,  1  Ex.  477. 

3  Slaughter  v.  Slaughter,  7  Houst 
482,  32  Atl.  Rep.  857;  Lofland  v.  Mc- 
Daniel,  1  Pennewill,  416,  41  Atl.  Rep. 
882;  Holdsworth  v.  De  Belaunzaran, 
106  N.  Y.  119,  12  N.  E.  Rep.  615; 
Robinson  v.  Robinson,  20  S.  C.  567; 
Steiner  v.  Erie  Dime  Savings  &  L. 
Co.,  98  Pa.  591;  Ryan  v.  O'Neil,  49 
Mich.  281,  13  N.  W.  Rep.  591;  Kings- 
ton Bank  v.  Gay,  19  Barb.  459.  See 
Collins  V.  Adams,  53  Vt.  433. 

A  promise  by  a  creditor  to  cover  a 


§  214.] 


PAYMENT, 


529 


It  is,  however,  competent  for  parties  to  agree  that  payments 
shall  be  made  in  something  else  of  value  than  money, ^  If  an 
employer  and  employee  stipulate  that  advances  made  to  the 
latter  should  be  repaid  by  services,  the  former  is  bound  to  ac- 
cept payment  in  that  mode,  and  if  he  permits  the  employee  to 
be  involuntarily  driven  from  the  service  by  a  co-employee  the 
debt  is  extinguished.^  A  note  payable  in  property  may  bo 
satisfied  by  the  payment  of  money;  ^  b^''  failing  to  pay  in  prop- 


check  signed  by  a  third  person  in 
favor  of  the  debtor  does  not  prevent 
the  check,  on  its  transfer  to  the  cred- 
itor and  appropriation  by  him,  from 
operating  as  payment.  Tiddy  v.  Har- 
ris, 101  N.  C.  589,  8  S.  E.  Rep.  227. 

Payment  implies  a  voluntary  act 
of  the  debtor  looking  to  tlie  satisfac- 
tion, in  whole  or  in  part,  of  the  de- 
mand against  him.  A  creditor  can- 
not lawiully  pay  himself  with  the 
debtor's  money  without  the  latter's 
consent,  express  or  implied;  and 
when  the  debtor  delivers  him  money 
for  a  purpose  which  negatives  the 
idea  of  payment  the  creditor's  con- 
trol of  it  is  limited  to  the  purpose 
declared.  Detroit,  etc.  R.  Co.  v. 
Smith,  50  Mich.  112, 15  N,  W.  Rep.  39. 

Monthly  payments  made  on  a  chat- 
tel mortgage  in  consideration,  as 
stated  in  receipts  therefor,  of  the  ex- 
tension of  the  time  for  payment  of 
the  mortgage  debt  from  month  to 
month  will  be  applied  in  extinguish- 
ment of  such  debt.  Bateman  v. 
Blake,  81  Mich.  227,  45  N.  W.  Rep. 
831. 

If  money  paid  unconditionally  is 
retained  its  acceptance  cannot  be 
made  conditional  unless  notice  to 
that  effect  is  in  fact  given  the  payor. 
Shea  V.  Massachusetts  Ben.  Ass'n,  160 
Mass.  289,  85  N.  E.  Rep.  855,  39  Am. 
St.  475. 

1  United  Water  Works  Co.  v. 
Farmers'  Loan  &  Trust  Co.,  11 
Colo.  App.  225,  240,  53  Pac.  Rep.  511; 
Webb  V.  Vermillion,  13  Ky.  L.  Rep. 
367  (Ky.  Super.  Ct);  Rider  v.  Culp, 
Vol.  1  —  34 


68  Mo.  App.  527;  Pinson  v.  Puckett, 
35  S.  C.  178,  14  S.  E.  Rep.  393;  Van 
Werden  v.  Equitable  L.  Assur.  So- 
ciety, 99  Iowa,  621,  68  N.  W.  Rep. 
892;  Bixby  v.  Grand  Lodge  Ancient 
Order  United  Workmen,  105  Iowa, 
505,  70  N.  W.  Rep.  737;  Stirna  v. 
Beebe,  11  App.  Div.  206,  42  N.  Y. 
Supp.  614;  Weir  v.  Hudnut,  115  Ind. 
525, 18  N.  E.  Rep.  24;  Sharp  v.  Car- 
roll, 66  Wis.  62,  27  N.  ^^•.  Rep.  832; 
Phillips  V.  Ocmulgee  Mills,  55  Ga. 
633.     See  §  215. 

Payment  is  made  "at  the  time," 
within  the  meaning  of  the  statute  of 
frauds,  w^here  the  vendor  accepts  as 
payment  a  check  which  is  then  good 
and  which  is  subsequently  paid, 
though  the  time  of  payment  is  not 
shown.  Hunter  v.  Wetsell,  84  N.  Y. 
549,  38  Am.  Rep.  544;  Elwell  v.  Jack- 
son, 1  Cab.  &  Ellis,  362. 

The  "good  will "  of  a  business  has 
a  market  value  so  that  it  may  be  ac- 
cepted in  payment  of  a  subscription 
for  stock.  Beebe  v.  Hatfield,  67  Mo. 
App.  609. 

2  Hanlin  v.  Walters,  3  Colo.  App. 
519,  34  Pac.  Rep.  686. 

'  Leapald  v.  McCartney,  14  Colo. 
App.  442,  60  Pac.  Rep.  640,  citing 
Pinney  v.  Gleason,  5  Wend.  394,  21 
Am.  Dec.  223;  Brooks  v.  Hubbard,  3 
Conn.  58,  8  Am.  Dec.  154;  Hise  v. 
Foster,  17  Iowa,  23;  Ferguson  v. 
Hogan,  25  Minn.  135:  Heywood  v. 
Hey  wood,  42  Mp.  229,  66  Am.  Dec. 
277:  White  v.  Tompkins,  52  Pa.  30:!; 
Trowbridge  v.  Holcomb,  4  Ohio  St. 
38. 


530 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  214:. 


erty  on  the  stipulated  day  the  debtor  forfeits  his  election  to  pay 
either  in  that  mode  or  in  inonej^  and  the  creditor  may  demand 
money. ^  If  a  contract  may  be  satisfied  by  delivery  of  a  com- 
modity as  ordered  by  the  payee,  the  failure  to  fill  an  order  ren- 
ders the  balance  due  payable  in  money,  and  the  acceptance 
of  another  order  in  the  course  of  business  does  not  reinstate  the 
clause  of  the  contract  as  to  the  mode  of  payment.^ 

The  defendants  forwarded  to  the  plaintiffs  sufficient  funds  to 
pay  a  note  held  by  the  latter  against  the  former,  but  they  re- 
fused to  receive  it,  and  informed  the  defendants  that  the  money 
was  subject  to  their  order.  There  was  no  payment;  if  the  de- 
fendants would  protect  themselves  against  costs  they  should 
have  withdrawn  the  deposit  and  made  a  tender.^  The  weight 
of  authority  is,  as  will  be  seen  in  the  section  on  accord  and  sat- 
isfaction, that  the  payment  of  a  less  sum  than  is  due  does  not 
discharge  a  liquidated  demand  unless  a  sealed  acquittal  is 
given  as  evidence  of  the  fact.*  But  this  principle  does  not 
apply  if  something  else  of  value  than  money  is  received,  though 
the  security  accepted  is  of  inferior  rank  to  that  which  it  is  re- 
ceived in  lieu  of,^  or  is  less  in  amount,"  if  the  parties  agree  that 


^  Growl  V.  Goodenberger,  112 
Mich.  G83,  71  N.  W.  Rep.  485;  Wy- 
man  v.  Winsiow,  11  Me.  898,  26  Am. 
Dec.  542;  Robbins  v.  Luce,  4  Mass. 
474;  Caldwell  v.  Button,  20  Tex.  Civ. 
App.  369,  49  S.  W.  Rep.  723;  Brashear 
V.  Davidson,  31  Tex.  191;  Haskins  v. 
Dern,  19  Utah,  89,  56  Pac.  Rep.  953; 
Texas  &  P.  R,  Co.  v.  Marlor,  123  U.  S. 
687,  8  Sup.  Ct.  Rep.  oil;  Pearson  v. 
Williams,  24  Wend.  244;  Roberts  v. 
Beatty,  2  P.  &  W.  63,  21  Am.  Dec, 
410:  Ren  wick  v.  Goldstone,  48  Cal. 
554;  Smith  v.  Coolidge,  68  Vt.  516,  35 
Atl.  Rep.  432,  54  Am.  St.  902. 

2  Smith  v.  Coolidge,  supra. 

s  Kingston  Bank  v.  Gay,  19  Barb. 
459;  Greenough  v.  Walker,  5  Mass. 
214;  Clark  v.  Wells,  5  Gray.  69. 

After  the  commencement  of  an 
action  upon  a  note  by  the  indorsee 
against  the  maker  its  payment  by  the 
payee  and  indorser  does  not  consti- 
tute a  defense  so  as  to  affect  the 


costs.  Concord  Granite  Co.  v.  French 
12  Daly,  228. 

An  answer  by  a  surety  alleged 
that  the  plaintiff  had  been  fully  paid 
by  money  received  from  the  princi- 
pal debtor's  estate  and  with  the  ad- 
ministrator's consent;  held  to  show- 
that  the  latter  agreed  that  the  money 
so  received  should  be  payment.  John- 
son V.  Breedlove,  104  Ind.  521,  6  N. 
K  Rep.  906. 

^Grinnell  v.  Spink,  128  Mass.  25; 
Tuttle  V.  Tuttle,  12  Met.  551,  46  Am. 
Dec.  701;  Harriman  v.  Harriman,  12 
Gray,  341;  Baldwin  v.  United  States, 
15  Ct.  of  Cls.  297;  Bostwick  v.  Same, 
94  U.  S.  53. 

5  Peters  v.  Barnhill,  1  Hill  (S.  C), 
237;  Dogan  v.  Ashbey,  1  Rich.  36. 

6Fensler  v.  Prather,  43  Ind.  119; 
Wells  v.  Morrison,  91  id.  51;  Sibree  v. 
Tripp,  14  M.  &  W.  23;  Thomas  v. 
Heathorn,  2  B.  &  C.  477;  Bush  v. 
Abraham,  25  Ore.  336,  35  Pac.   Rep. 


§  215.]  PAYMENT.  531 

it  sliall  be  payment.  There  are  well  considered  cases  by  courts 
of  good  standing  to  the  effect  that  "if  one  owing  a  sum  of 
money,  the  amount  of  which  is  not  ascertained  and  fixed,  offers 
his  creditor  a  certain  sum,  declaring  that  it  is  in  full  for  all  that 
is  owing  him,  which  sum  is  accepted  by  the  creditor,  such  ac- 
ceptance is  in  full  discharge  of  the  demand."  ^  If  a  debtor 
mails  to  his  creditor  a  statement  of  the  account  between  them 
and  sends  the  balance  which  he  admits  to  be  due,  requesting  a 
receipt  in  full,  the  claim  will  be  satisfied  if  the  creditor  retains 
the  money.^  "  When  one  gets  his  due  ignorantly,  if  he  is  not 
hurt  by  his  ignorance,  it  is  the  same  as  if  he  acted  with  knowl- 
edge. Thus,  where  a  negotiable  note  was  transferred  before 
maturity  as  collateral,  and  was  afterwards  paid  off  in  property, 
not  to  the  holder  but  to  the  payee,  who  collected  without  au- 
thority, and  who,  after  converting  the  property  into  money, 
transmitted  the  proceeds  to  the  holder  as  his  own  money,  and 
the  holder  applied  the  same  to  the  secured  debt  only,  not 
applying  it  also  to  the  collateral,  and  not  knowing  that  he  was 
dealing  with  a  fund  derived  from  the  collateral,  this  was  a 
discharge  of  the  collateral  debt,  notwithstanding  such  igno- 
rance on  the  part  of  the  holder."  * 

§  215.  Same  subject.  The  creditor  may  assent  in  advance 
to  a  mode  of  payment  which  reserves  no  subsequent  election 
by  excluding  an}^  concurrent  act  on  his  part  in  accomplishing 
it,  or  by  making  any  such  act  obligatory.  Thus,  an  award 
made  against  a  party  in  pursuance  of  a  submission  in  which 
he  agreed  to  indorse  it  on  a  note  is  a  payment  jpro  tanto.^  So 
money  paid  by  a  debtor  to  a  third  person  on  the  prior  request 
of  the  creditor  is  a  payment,^  and  so  is  the  transfer  of  a  credit 
if  all  the  parties  are  agreed.^      The  acceptance  by  a  debtor  of 

1066;  Bolt  V.  Dawkins,  16  S.  C.  198,  ^  Coleman  v.  Jenkins,  78  Ga,  607, 

214.  3  S.  E.  Rep.  444;  Butts  v.  Whitney, 

1  American  Manganese  Co.  v.  Vir-  96  Ga.  445.  23  S.  E.  Rep.  397. 

ginia  Manganese  Co.,  91  Va.  272,  284,  *  Flint  v.  Clark,  12  Johns.  374. 

21  S.  E.  Rep.  466,  citing  Donohue  v.  »  Brady  v,  Durbrow,  2E.  D.  Smith, 

Woodbury,  6  Gush.   148;  McDaniels  78;  Storey  v.  Menzies,  3  Pin.  329. 

V.  Lapham,  21  Vt.   232;  McDaniels  v.  «  Eyles  v.  Ellis,  4  Bing.  112:  Sliryer 

Bank  of  Rutland.  29  Vt.  230,  70  Am.  v.    Morgan,    77    Ind.  479;   Beach  v. 

Dec.  406.  Wakefield,  107  Iowa,  567,  76  N.  W, 

niunisey  V.  Barber,  78  III.  App.  88,  Rep.   688,   78  id.    197;   Daniel  v.  St. 

citing   Ostrander   v.   Scott,   161    111,  Louis   Nat.  Bank,  67  Ark.  223,  54  S. 

339,  43  N.  E.  Rep.  1089.  W.  Rep.  214. 


532  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  215 

a  written  order  of  his  creditor  to  pay  money  to  a  third  person 
entitles  the  former  to  a  credit  to  the  extent  of  the  sum  called 
for  by  the  order,  although  payment  was  not  then  made,  if  the 
debtor  was  solvent  and  his  liabilit}''  fixed,^  and  it  is  immaterial 
that  the  debtor  thought  he  had  not  accepted  the  order,  and 
paid  it  only  after  judgment  was  rendered  against  him.^  The 
tender  of  bonds,  etc.,  of  a  banking  association  to  them  in  pay- 
ment of  a  debt,  in  pursuance  of  their  agreement  to  receive 
them  in  payment,^  or  work  done  for  the  payee  of  a  note  by  the 
maker  under  an  agreement  that  the  proceeds  are  to  be  applied 
to  discharge  the  note,  is  a  payment.*  Where  it  is  agreed 
between  debtor  and  creditor  that  the  former  shall  do  some  col- 
lateral act  for  a  stipulated  price  or  a  price  which  may  be  made 
certain,  and  that  such  act  shall  be  deemed  a  payment  or  part 
payment  of  the  debt,  the  amount  so  stipulated  becomes  at 
[34:7]  once  a  payment  when  the  act  has  been  performed. 

In  case  of  mutual  connected  debts  it  is  not  necessary  that 
the  formality  should  be  gone  through  of  each  party  handing 
the  amount  he  owes  over  to  the  other,  whether  the  sums  they 
are  mutually  entitled  to  be  equal  or  not.  If  they  are  equal 
they  wholly  cancel  each  other;  if  not  equal  the  lesser  is  to  be 
deducted  from  the  greater.  These  compensations,  when  they 
fairly  and  properly  occur,  are  reciprocal  payments.^   An  agree- 

If  an  insurance  agent  gives  credit  liet,  8  W.  &  S.  311,  42  Am.  Dec.  297; 

for  the  premium  due  on  a  policy  and  Woodruflf  v,  Trapnall,  12  Ark.  811, 10 

insurer     charges     hiin      with     the  How.  190;  Exchange  Bank  v.  Knox, 

amount,  the   transaction   is  equiva-  19   Gratt.    739;    Mann    v.   Curtis,   6 

lent  to  payment.     Wythevillelns.  &  Robert.  128. 

Banking  Co.  v.  Teiger,  90  Va.  277,        -« Moore    v.    Stadden,   Wright.   88; 

18  S.  E.  Rep.  195;  Miller  v.  Life  Ins.  Hall  v.  Holmes,  4  Pa.  251. 
Co.,    12  Wall.   285;  White    v.   Con-        5  Rutherford  v.  Schattman,  119  N. 

necticut    Ins.    Co.,    120    Mass.    330;  Y.  604,  23  N.  E.  Rep.  440;  Iron  Cliffs 

Train  v.  Holland  Purchase  Ins.  Co.,  Co.  v.  Gingrass,  42  Mich.  30,  3  N.  W. 

62  N.  Y.  598;  Bang  v.  Farmville  Ins.  Rep.  238;  Roberts  v.  Wilkinson,  34 

Co.,  1   Hughes,  290;  Griffith  v.  New  Mich.  129;  Connecticut  Mut.  Ins.  Co. 

York  L.  Ins.  Co.,  101  Cal.  627,  36  Pac.  v.    State    Treasurer,    31     Mich.     6; 

Rep.  613,  40  Am.  St.  96.  Phoenix  Ins.  Co.  v.  Meier,  28  Neb.  124, 

iMerwin  v.  Austin,  58  Conn.  22, 18  44  N.  W.  Rep.  97;  McKeon  v.  Bying- 

Atl.  Rep.  1029,  7  L.  R  A.  84.  ton,  70  Conn.  429,  39  Atl.   Rep.  853. 

2CarrolIv.  Weaver,  05  Conn.  76,31  See  Sword  v.  Keith,  31  Mich.  247; 

Atl.  Rep.  489.  Jewett  v.  Winship,  42  Vt.  205;  S!as- 

^Leavitt  v.    Beers,  Hill  &  Denio,  son   v.  Davis,  1  Aik.  73;   Strong  v. 

221.     See  Northampton  Bank  V.  Bal-  McConnell,    10  Vt.   231;    Chellis  v. 


§  215.] 


PAYMENT, 


533 


ment  between  parties  having  mutual  demands  to  set  off  one 
against  the  other  would  seem  on  principle  and  the  weight  of 
authorit^'^  to  take  effect  also  as  reciprocal  payments,  and  the 
same  result  follows  in  all  cases  of  connected  accounts.^     Thus, 


Woods,  11  Vt.  4GG;  Robinson  v.  Hurl- 
burt,  34  Vt.  115;  Bronson  v.  Rugg, 
89  Vt.  241;  Downer  v.  Sinclair,  15 
Vt.  495;  Huff  mans  v.  Walker,  26 
Gratt.  314;  Eaves  v.  Henderson,  17 
Wend.  190. 

1  In  Davis  v.  Spencer,  24  N.  Y.  386, 
it  was  held  that  an  agreement  be- 
tween the  payee  of  a  note  and  the 
maker,  made  with  the  assent  of  the 
Jatter's  partner,  to  apply  the  indebt- 
edness of  the  payee  to  such  maker 
and  his  partner  in  payment  of  the 
note,  operates  in  presenti  as  a  satis- 
faction of  the  note  pro  tanto.  Allen, 
J.,  said:  "  Formerly  there  appears  to 
have  been  a  doubt  whether  an  agree- 
ment to  set  off  precedent  debts  op- 
erated as  payment,  satisfaction  or 
extinguishment.  An  accord  that 
each  of  the  parties  should  be  quit  of 
actions  against  the  other  was  said 
not  to  be  good  because  it  was  not 
any  satisfaction.  Bac.  Abr.,  Accord, 
A.  But  there  is  no  difference  in 
principle  between  an  agreement  con- 
cerning debts,  one  of  which  is  to  be 
contracted  in  the  future,  as  in  Eaves 
V.  Henderson,  17  Wend.  190,  and  an 
agreement  concerning  debts  already 
existing;  and  it  has  been  decided 
that  an  agreement  to  discontinue 
and  a  discontinuance  of  ci-oss-ac- 
tions  for  false  imprisonment  consti- 
tute an  accord  and  satisfaction,  and 
bar  another  action  by  either.  Foster 
V.  Trull,  12  Johns.  456.  Whenever  a 
valid  new  contract  is  substituted  in 
the  place  of  the  old,  ...  an  ac- 
tion will  not  lie  on  the  old  contract, 
but  the  remedy  of  the  parties  is  on 
the  new  or  substituted  agreement 
although  the  transaction  may  not 
amount  to  a  technical  accord  and 
.satisfaction.     Good  v.  Cheesman,  2 


B.  &  Ad.  328.  Where  t%vo  brothers, 
A.  and  B.,  principal  and  surety  in  an 
annuity,  had,  in  an  agreement  be- 
tween them  and  a  third  brother  for 
the  settlement  of  their  affairs,  de- 
clared that  the  bond  was  the  debt  of 
B.,  the  surety,  it  was  held  that  this 
agreement,  whether  subsequently 
acted  upon  or  not,  was  a  binding  ac- 
cord between  A.  and  B.  Cartwright 
V.  Cooke,  3  B.  &  Ad.  701.  Hills  v. 
Mesnard,  10  Q.  B.  266,  is  in  principle 
not  unlike  Eaves  v.  Henderson, 
supra.  The  action  was  by  payees 
against  acceptors  of  a  bill.  The  de- 
fendants became  acceptors  for  the 
accommodation  of  one  Hundle,  and 
the  plaintiffs,  the  payees,  agreed  to 
appropriate  certain  moneys  which 
they  expected  to  receive  in  discharge 
of  the  bill.  They  subsequently  re- 
ceived the  money,  and  the  court  held 
it  a  payment  of  the  bill  pro  tanto. 
Lord  Denman,  C.  J.,  says:  It  was 
competent  for  the  parties  to  agree 
beforehand  that  the  money  should 
be  specifically  applied  to  the  dis- 
charge of  the  liability  on  the  bill  pro 
tanto.  '  And  it  seems  to  be  the  good 
sense  of  the  transaction  to  treat  it  as 
so  much  money  paid  to  the  plaintiffs 
by  Hundle  on  their  account  and  as 
their  agent.'  Gardiner  v.  Callender, 
12  Pick.  374,  is  in  point,  and  decides 
that  when  E.  H.  R.,  one  of  the  exec- 
utors of  A.  S.,  gave  to  the  executors 
of  W.  P.  a  memorandum  as  follows: 
'  It  is  agreed  that  the  sum  $3,235,  due 
from  E.  H.  R.  to  the  estate  of  W.  P., 
shall  be  applied  on  a  certain  note  of 
$6,000  now  held  by  the  representa- 
tives of  A.  S.,'  the  memorandum 
amounted  to  a  payment  on  the  note 
and  was  not  merely  an  executor's 
agreement.    The  fact  that  a  memo- 


534 


CONVENTIONAL    LIQUIDATIONS   AND   DISCHARGES. 


215. 


[348]  if  A.  has  a  valid  and  subsisting  demand  against  B.  for 
goods,  services  or  cash,  constituting  proper  items  of  an  ac- 
count upon  which  he  has  a  present  right  of  action,  and  before 
commencing  suit  thereon  credits  on  such  account  a  demand  B. 
has  against  him  for  services  at  their  fair  and  full  value,  such 
credit  by  A.  so  far  operates  as  payment  that  B.  cannot  main" 
tain  an  action  for  his  demand  brought  while  such  other  suit 
[fM9]  is  pending.'  But  where  A.  owes  B.  by  promissory  note 
payable  in  instalments,  and  at  the  same  time  holds  a  note 
against  B.  for  a  larger  amount,  on  which  he  indorses  as  part 
payment  the  amount  of  the  instalments  of  his  own  note  as 
they  fall  due,  but  without  B.'s  consent,  this  is  not  a  payment 
of  the  instalments.^  A  payment  by  credit  occurs  where  a 
bank  receives  a  check  drawn  on  itself  and  credits  the  holder 
the  amount,'  or  where  the  bank  is  the  creditor  and  receives 


randum  in  writing  was  made  of  the 
agreement  does  not  vary  its  legal  ef- 
fect It  was  not  required  by  law  to 
be  m  writing.  The  court,  as  in  Hills 
V.  Mesnard.  sought  the  good  sense  of 
the  transaction,  and  to  give  effect  to 
the  sensible  arrangement  of  the  par- 
ties, holding  that  it  could  not  be 
necessary,  in  order  to  connect  the 
one  debt  with  the  other  by  an  agree- 
ment in  'presenti,  that  there  should 
be  the  vain  formality  of  passing  the 
mone}^  from  one  party  to  the  other 
and  returning  it  again  to  the  party 
from  whom  it  just  came,  or  that  a 
formal  release  or  receipt  should  be 
executed.  This  case  is  not  cited  by 
counsel  or  alluded  to  by  the  court  in 
the  subsequent  case  of  Gary  v.  Ban- 
croft, 14  Pick.  315,  but  the  latter  was 
decided  upon  a  ground  which  dis- 
tinguished it  from  the  former  case; 
the  court  holding  that  in  the  case 
last  cited  the  agreement  was  execu- 
tory and  not  executed,  requiring 
some  further  act  to  be  done  before 
the  one  note  would  operate  as  pay- 
ment or  extinguishment  p?'o  tantoot 
the  other.  Dehon  v.  Stetson,  9  Met. 
341,  followed  Gary  v.  Bancroft,  and 
was  decided  ujjon  the  same  ground. 


Another  point  was  in  the  case,  to 
wit:  tliat  one  of  the  parties  inter- 
ested in  the  debt  which  it  was  sought 
to  apply  in  payment  as  the  individ- 
ual debt  of  one  of  his  partners  had 
not  been  consulted,  and  had  no  knowl- 
edge of  the  contemplated  arrange- 
ment." See  Peabody  v.  Peters.  5 
Pick.  1;  Dudley  V.  Stiles,  33  Wis.  371; 
Ely  V.  McNight,  30  How.  Pr.  97; 
Hawkes  v.  Dodge  Gounty  Mut.  Ins. 
Go.,  11  Wis.  183;  Shinklev.  First  Nat. 
Bank,  22  Ohio  St.  516;  Heaton  v. 
Angier,  7  N.  H.  897,  28  Am.  Dec.  353; 
Fatlock  v.  Harris,  4  D.  &  E.  180;  Wil- 
son V.  Coupland,  5  B.  &  Aid.  228; 
Wharton  v.  Walker,  4  B.  &  G.  163; 
Cuxon  V.  Chadley,  3  B.  &  C.  591. 

1  Briggs  V.  Richmond,  10  Pick.  391, 
20  Am.  Dec.  526;  Allen  v.  Garman,  1 
E.  D.  Smith,  693;  Means  v.  Smith, 
Tappan,  60. 

-  Greenough  v.  Walker,  5  Mass.  214. 
See  Glark  v.  Wells,  5  Gray,  69. 

A  payment  to  a  vendor  on  his  own 
obligations  is  a  payment  in  cash. 
Hand  v.  Gas  Engine  &  Power  Go., 
167  N.  y.  142,  60  N.  E.  Rep.  425; 
Foley  v.  Mason,  6  Md.  37. 

■■*Addie  V.  National  Gity  Bank,  45 
N.  Y.  735,  6  Am.  Rep.  160;  Bank  v. 


§    215.]  PAYMENT. 


boJ 


the  debtor's  check  drawn  on  itself.^  There  is  a  distinction 
between  the  acceptance  by  a  creditor  from  his  debtor  of  a 
new  security  for  an  old  debt,  and  the  acceptance  by  a  bank  ot 
a  check  drawn  upon  itself  in  payment  of  a  note.  The  former 
is  a  mere  substitution  of  one  executory  agreement  to  pay  for 
another,  or  a  commutation  of  securities;  there  is  no  extin- 
guishment of  the  precedent  debt  unless  there  is  an  agreement 
to  accept  the  new  obligation  or  security  as  a  satisfaction  of 
the  old.  But  when  a  bank  receives  upon  a  debt  a  check  drawn 
upon  itself  by  one  of  its  customers  and  charges  it  in  account, 
it  thereby  admits  that  it  has  funds  of  the  drawer  sufficient  to 
meet  the  check,  and  the  acceptance  is  per  se  an  appropriation 
of  the  funds  to  pay  it.  The  transaction  operates  directly  as 
a  payment  of  the  debt.'^  If  the  dividends  on  a  policy  of  life 
insurance  equal  the  premiums  and  have,  in  the  immediately 
preceding  years,  at  the  request  of  the  insured  or  his  benefi- 
ciary, been  applied  to  the  payment  of  the  premiums  as  they 
became  due,  the  latter  are  paid  as  fast  as  they  become  due  so» 
long  as  the  conditions  stated  exist.'  So  long  as  money  ille- 
gally exacted  from  a  member  of  a  benefit  society  remains  in 
its  treasury  and  is  sufficient  to  meet  assessments  made  upon 
him  he  is  not  in  default.* 

By  a  valid  new  agreement  the  debtor  may  obtain  the  right 
to  pay  otherwise  than  in  money ;  and  the  acceptance  by  the 

Burkhardt,  100  U.  S.  688;    American  App,  41.  See  Shipp  v.  Stacker,  8  Mo. 

Excliange  Nat.  Bank  v.  Gregg,  138  145. 

111.  596,  33  Am.  St.  171,  28  N.  E.  Rep.  ^U.;  Commercial  Bank  v.  Union 

839  (although  the  bank  may  fail  to  Bank,  11  N.  Y.  203. 

charge  the  drawer  with  the  amount);  If  a  sight  draft  is  indorsed  for  col- 

Watkins    v.  Parsons,   13   Kan.   426;  lection  to  the  debtor's  bankers  and 

Weedsport   Bank   v.    Park   Bank,  2  by  his  direction  the  amount  it  calls 

Keyes,  561.  for    is   charged     against    him,    the 

'Pratt  V.  Foote,  9  N.  Y.  463;  Rozet  banker  drawing  his  check  for  the 

V.  McClellan,  48  111.  345,  95  Am.  Dec.  amount  to  the  order  of  the  creditor 

551.  and  transmitting  it  to  him,  the  debt 

If  the  guarantor  of  a  note  owned  is  paid,  although  the  bank  which  so 

and  held  by  a  bank  has  on  deposit  draws   fails  and  its  check  is  made 

in  it  a  sum   nearly  equal    to    the  valueless.      Welge  v.   Batty,  11    III. 

amount    called   for   by  the   note,  a  App.  461. 

tender  of  his  check  for  such  sum  and  3  Matlock  v.  Mutual  L.  Ins.  Co.,  180 

the  necessary  amount  of  cash  to  the  Pa.  360,  36  Atl.  Rep.  1082. 

assignee  of  the  bank   satisfies  the  ■•  Knight  v.  Supreme  Court  Order 

note.     Lionberger  v.  Kinealy,  13  Mo.  of  Chosen  Friends,  2   Silvernail,  453, 

6  N.  Y.  Supp.  427. 


636 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.        [§  216. 


creditor  of  any  chose  in  action  or  property  will  operate  as 
payment,^  The  receipt  b}"^  the  creditor  of  bank  bills  or  treas- 
ury notes  in  payment  of  a  gold  debt,  although  under  protest 
and  with  an  express  reservation  of  a  claim  for  the  difference, 
will  be  payment  dollar  for  dollar.^  So  gold  dollars,  if  applied 
[350]  towards  the  payment  of  a  debt  without  any  special  con- 
tract as  to  the  value  at  which  they  are  to  be  taken,  cannot  be 
treated  as  having  any  greater  value  than  any  other  currency 
which  is  a  legal  tender  for  the  payment  of  debts.'  The  com- 
mon-law rule  that  marriage  has  the  legal  effect  of  paying  or 
extinguishing  a  debt  the  husband  might  owe  the  wife,  or  the 
wife  the  husband  at  the  time  of  marriage,  is  in  force  in  Ken- 
tucky.* 

§  216.  Same  subject.  On  the  foreclosure  of  a  mortgage  on 
real  estate  by  entry  the  land  inures  as  payment  to  the  extent 
of  its  value.^  So  taking  possession  of  chattels  mortgaged  or 
forfeited  is  also  payment  to  the  amount  of  their  value;®  and 
the  proceeds  of  sale  realized  by  foreclosure  are  pro  tanto  pay- 
ment.'' Taking  the  debtor's  body  is  a  satisfaction  unless  he 
escape.^  It  has  this  effect  though  the  creditor  consented  to 
his  being  set  at  liberty  under  an  agreement  which  the  debtor 
has  failed  to  perform;*  or  on  his  giving  a  warrant  of  attorney 
which  turned  out  to  be  void  for  informality.^"  It  is  not,  how- 
ever, an  absolute  satisfaction  like  payment,  for  it  will  not  dis- 
charge a  guarantor,"  nor  prevent  the  creditor  from  pursuing 
his  remedy  against  other  parties.^'^ 


1  Inman  v.  Griswold,  1  Cow.  199; 
Sword  V.  Keith,  31  Mich.  247;  Block 
V.  Dorman,  51  Mo.  31;  Casey  v.  Har- 
ris, 2  Litt.  173;  Allegheny  R.  Co.  v. 
Case^',  79  Pa.  84;  Eaves  v.  Hender- 
son, 17  Wend.  190;  Perkins  v.  Cady, 
111  Mass.  318;  Locke  v.  Andres,  7 
Ired.  159;  Perit  v.  Pittfield,  5  Rawle, 
166;  Cramer  v.  Willetts,  61  111.  481; 
Brown  v.  Feeter,  7  Wend.  801 ;  Bur- 
chard  V.  Frazer,  23  Mich.  224. 

2  Gilman  v.  Douglas  County,  3  Nev. 
27,  3  Am.  Rep.  237. 

3  Bush  V.  Baldrey,  11  Allen,  367. 

4  Farley  v.  Farley,  91  Ky.  497,  16  S. 
W.  Rep.  129. 

&  Hedge  V.  Holmes,  10   Pick.  381; 


Briggs  V.  Richmond,  id.  391,  20  Am. 
Dec.  526. 

«Case  V.  Boughton,  11  Wend.  106; 
Charter  v.  Stevens,  3  Denio,  33. 

'  Lansing  v.  Goelet,  9  Cow.  346; 
Globe  Ins.  Co.  v.  Lansing,  5  id.  380, 
15  Am.  Dec.  474. 

sjaques  v.  Witby,  1  T.  R.  557; 
Williams  v.  Evans,  2  McCord,  203. 

"Vigers  v.  Aldrich,  4  Burr.  2482; 
Blackburn  v.  Stupart,  2  East,  243; 
Tanner  v.  Hague,  7  T.  R.  420. 

10  Jaques  v.  Witby,  supra;  Loomis 
V.  Storrs,  4  Conn.  440.  S.ee  Sheldon 
V.  Kibbe,  3  Conn.  214,  8  Am.  Dec.  176. 

11  Terrell  v.  Smith,  8  Conn.  426. 

1-  Porter  v.  Ingraham,  10  Mass.  88. 


f   216.]  PAYMENT.  537 

A  levy  on  sufficient  personal  property  by  execution  is  pre- 
sumably a  satisfaction  of  the  debt;  it  is  a  means  of  payment, 
and  requires  only  the  performance  of  a  ministerial  duty  by  an 
officer  to  accomplish  it.  The  levy  is  not  of  itself  satisfaction, 
and  anything  which  subsequently,  without  the  fault  of  the 
■officer  or  creditor,  prevents  actual  satisfaction,  as  if  the  debtor 
has  not  been  deprived  of  property  levied  upon,  will  destroy 
its  effect  as  evidence  of  that  result.^  So  long  as  the  [351] 
property  remains  in  legal  custody  the  other  remedies  of 
the  creditor  will  be  suspended,  lie  cannot  have  a  new  exe- 
<;ution  against  the  person  or  property  of  the  debtor,  nor  main- 
tain an  action  on  the  judgment,  nor  use  it  for  the  purpose  of 
becoming  a  redeeming  creditor.-  The  levy  does  not  divest 
title;  it  only  creates  a  lien  on  the  property.  It  often  happens 
that  the  levy  is  overreached  by  some  other  lien,  is  aban- 
doned for  the  benefit  of  the  debtor  or  defeated  by  his  mis- 
conduct. In  such  cases  there  is  no  color  for  saying  that  the 
judgment  is  gone.  The  judgment  is  satisfied  when  the  execu- 
tion has  been  so  used  as  to  change  the  title  or  in  some  other 
way  to  deprive  the  debtor  of  his  property.  This  includes  the 
case  of  a  levy  and  sale,  and  also  of  a  loss  or  destruction  of 
the  goods  after  they  have  been  taken  out  of  the  debtor's  pos- 
session by  virtue  of  the  process.'  In  admiralty,  where  a  res 
is  seized  by  a  judicial  process  for  a  debt  which  carries  with  it 
•A  jus  in  re,  as  between  debtor  and  creditor,  the  maxim  domino 
perrit  res  means  that  the  destruction  of  the  seized  property, 
without  fault  of  the  debtor,  works  a  payment  of  the  debt  to 
the  extent  of  its  value.  Where  third  parties  voluntarily  join 
the  seizing  creditor  in  his  proceeding  and  unite,  so  to  speak, 

'Starr  v.  Moore,   3   McLean,  354;  ams,  3  Ohio,  323;  Webb  v.  Bumpass, 

•Clerk  V.  Withers,  2  Lcl.  Raym.  1073,  9  Port.  201,  23  Am.  Dec.  310;  Green 

1  Salk.  323,  6  Mod.  290;  Mountney  v.  v.  Burke,  23  Wend.  490;  Browning  v. 

Andrews,  Cro.  Eliz.  237;  Atkinson  v.  Hanford,  5  Hill,  588;  Duncan  v.  Har- 

Atkinson,  id.  391;  Ladd  v.  Blunt,  4  ris.  17  S.  &  R.  436;  Farmers'  &  M. 

East,  402;  Bay  ley  v.  French,  2  Pick.  Bank  v.  Kingley,  2  Doug.  (Mich.)  379; 

590;   Denton  v.  Livingston,  9  Johns.  Churchill  v.  Warren,   2  N.  H.    298; 

98;    Hoyt    v.    Hudson,    12    id.    207;  Ordinary  v.  Spann,  1  Rich.  429;  Por- 

Troup  V.  Wood,  4  Johns.  Ch.  228;  Ex  ter  v.  Boone,  1 W.  &  S.  25J;  Ex  parte 

parte  Lawrence,  4  Cow.  417,  15  Am.  King.  2  Dev.  341,  21  Am.  Dec.  335; 

Dec.  386;  Jackson  v.  Bowen,  7  Cow.  Binford  v.  Alston,  4  Dev.  354. 
13,  21,  Cornell  v.  Cook,  id.  312;  Wood        2  People  v.  Hopson,  1  Denio,  577. 
V.  Torrey,  6  Wend.  562;  Cass  v.  Ad-        3  Id. 


538  CONVENTIONAL    LIQUIDATIONS    AND    DISCUAKGES,       [§217. 

in  the  seizure,  also  asserting  claims  which  carry  with  them' 
liens,  the  destruction  of  the  property,  without  fault  of  the 
debtor,  works  a  payment  of  their  respective  claims,  to  the  ex- 
tent of  the  value  of  the  propert}''  destroyed,  in  the  order 
of  the  priority  of  their  claims,  and  operates  as  a  payment  up 
to  its  value  precisely  as  would  its  sale  and  the  application  of 
its  proceeds.^ 

A  sufficient  tender,  made  and  kept  good  by  bringing  the 
money  into  court,  is  equivalent  to  a  payment,  and  is  such  of 
the  date  of  the  tender  to  prevent  costs  and  interest.  The 
debtor  pleading  it  cannot  withdraw  the  money  whatever  may 
be  the  verdict;  the  money  must  be  paid  to  the  plaintiff.^ 

§  217.  What  is  not  payment.  The  deposit  of  money  in  a 
bank  where  a  note  is  payable  is  not  of  itself  a  payment,  but 
simply  a  tender,''  unless  in  some  way  appropriated  to  the  note;  ■* 
nor  is  the  surrender  of  a  check  at  the  clearing-house.*  A  note 
held  by  an  administrator  and  payable  to  him  is  not  paid  be- 
cause he  charges  himself  with  the  amount  it  represents  in 
settling  his  accounts  with  the  estate.^  So  charging  a  note 
supposing  the  maker  had  funds  in  bank,  when  in  fact  he  had 
not,  the  charge  being  canceled  the  next  day  on  discovery  of 
the  mistake,  will  not  amount  to  payments  And  where  the 
president  of  a  bank,  having  his  notes  lying  therein  under  pro- 
test, indorsed  for  his  accommodation,  procured  the  cashier  to 
make  a  new  note,  which  the  president  indorsed  and  exchanged 
for  those  protested,  delivering  the  latter  to  the  cashier  for  his 
security,  the  original  notes  were  not  thereby  paid,  although 
the  president  entered  them  as  paid  and  all  new  notes  as  dis- 
[352]  counted.^  A  clerk  of  a  bank  stole  from  the  drawer  o^ 
another  clerk  bills  belonging  to  the  bank,  which  he  delivered 
to  the  cashier,  and  which  the  latter,  not  knowing  them  to  have 
been  thus  stolen,  accepted  in  discharge  of  the  balance  due 
from  such  clerk  to  the  bank ;  the  transaction  did  not  work  a 

1  Per  Billings,  D.  J.,  in  Gill  v.  Pack-  5  Merchants'  Nat.  Bank  v.  Procter, 
ard,  4  Woods,  270.  1  Cin.  Super.  Ct.  1. 

2  Reed  v.  Armstrong,  18  Ind.  446;  «  Robinson  v.  Robinson,  20  S.  C.  567. 
Taylor  v.  Brooklyn  E.  R.  Co.,  119  N.  '  Troy  City  Bank  v.  Grant,  Hill  & 
Y.  561.  23  N.  a  Rep.  1106.  Denio,  119. 

3  Hill  V.  Place,  36  How.  Pr.  26.  8  Highland    Bank    v.     Dubois,    5- 
*  See  Sutherland  v.  First  Nat.  Bank,     Denio,  558. 

31  Mich.  230. 


§    2 17. J  PAYMENT.  53^ 

payment.'  The  mutilation  of  a  note  by  a  stranger  to  it,  with 
intent  to  cancel  and  extinguish  it,  raises  no  presumption  of  its 
payment.-  The  receipt  of  part  of  the  amount  clue  is  not  a 
waiver  of  the  right  to  recover  the  balance,  nor  doos  it  work  an 
estoppel.'  A  note  is  not  paid  because  its  maker  placed  in  the 
hands  of  the  payee's  attorney,  who  had  the  note  for  collection, 
notes  and  accounts  to  be  collected,  on  which  certain  sums 
were  paid  the  attorney,  but  not  credited  or  applied  on  such 
note,  the  payee  of  which  had  not  concurred  in  such  arrange- 
ment. The  attorney  was  agent  for  the  debtor  in  making  col- 
lections, and  money  paid  him  was  the  pro{)erty  of  the  latter. 
Until  applied  or  appropriated  it  could  not  become  a  payment 
on  the  note*  Surrendering  a  city  warrant  calling  for  the  pay- 
ment of  a  large  sum  for  others  amounting  in  all  to  the  same  sum, 
these  being  dated  and  indorsed  as  was  the  original,  is  a  mere 
exchange.'^  An  insurance  assessment  is  not  paid  by  depositing 
the  necessary  sum  in  the  mail  in  the  absence  of  anything  in  the 
dealings  between  the  parties  giving  such  deposit  that  effect.^ 
If  money  which  reaches  insurer  after  it  is  due  is  tendered  in- 
sured within  a  reasonable  time  it  is  not  payment.''  An  insurer 
owing  an  insured  employee  money  is  not  bound  to  apply  any 
part  of  its  indebtedness  on  the  payment  of  an  assessment  due 
from  him."  An  insurance  premium  is  not  paid  by  a  confession 
of  judgment  for  the  amount  of  premium  notes  held  by  insurer." 
Thus  it  appears  that  unless  there  is  an  actual  payment  and 
receipt  of  money,  or  something  else  accepted  in  its  place  as 

1  State  Bank  v.  Wells,  3  Pick.  394.        *  Hatch  v.  Hutchinson,  64  Ark.  119, 

2  Whitlock  V.  Manciet,  10  Ore.  166.     40  S.  W.  Rep.  578;  Moore  v.  Norman, 
The  destruction  of  a  note  held  by    53  Minn.  83,  53  N.  W.  Kep.  809,  38 

a  wife  against  her  husband,   under  Am.  St.  526,  18  L.  R.  A.  359. 

the  influence  of  feelings  caused  by  ^  Monteith  v.  Parker,  36  Ora  170, 

his  cruel  treatment  of  her,  is  not  a  59  Pac.  Rep.  192. 

satisfaction  of  the  debt.     Schlemmer  ••  Rice  v.  Grand  Lodge  Ancient  Or- 

V.  Schendorf,  20  Ind.  App.  447,  49  N.  der  United  Workmen,  103  Iowa,  643, 

E.  Rep.  968.  72  N.  W.  Rep.  770. 

»  Hodges  V,  Tennessee  Implement  ">  S.  C,  92  Iowa,  417,  60  N.  W.  Rep. 

Co.,  123    Ala.    573,  26  So.  Rep.  490;  726. 

Greer  v.  Laws,  56  Ark.  37,  18  S.  W.  »  Pister    v.    Keystone    Mut.    Ben. 

Rep.    1038;    Clark    v.  Equitable    L.  Ass'n,  3  Pa.  Super.  Ct.  50. 

Assur.  Society,  76  Miss.  23,  23  So.  Rep.  "  Proebstel    v.    State   Ins.    Co.,   14 

453;  Whiting  v.  Plumas  County,  64  Wash.  669,  45  Pac.  Rep.  308. 
Cal.  65,  28  Pac.  Rep.  445. 


540 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  218. 


payment,  a  debt  is  not  satisfied;  any  ceremony  by  which  pay- 
ment is  nominall}'^  made  or  acknowledged  may  be  avoided  for 
mistake  or  fraud,  and  so  where  the  actual  or  authorized  assent 
of  the  creditor  is  wanting.^ 

§  218.  Effect  of  payment,  "Whether  a  payment  made  by  a 
guarantor  or  surety  or  a  volunteer  will  operate  as  a  purchase 
or  as  an  extinguishment  depends  on  the  intention  with  which 
it  is  made.^  But  a  debtor  cannot  himself  become  the  owner,' 
nor  pay  his  debt  without  discharging  it,  though  he  may  wish 
and  intend  to  keep  it  on  foot;''  and  any  assignment  to  a  third 
person  with  a  view  to  keeping  it  alive  will  be  void.*     A  pay- 


1  Hay  den  v.  Lauffen  burger,  157  Mo. 
88,  57  S.  W.  Rep.  721. 

2  Fogartj  V.  Wilson,  30  Minn.  289, 
15  N.  W.  Rep.  175;  Swope  v.  Leffing- 
well,  72  Mo.  848;  Lucas  v.  Wilkinson, 
1  Hurl.  &  N.  423;  Morris  v.  Oakford, 
9  Pa.  498;  Kinley  v.  Hill,  4  W.  &  S. 
426;  Elkinton  v.  Newman,  20  Pa. 
281;  Carter  v.  Jones,  5  Ired.  Eq.  196, 
49  Am.  Dec.  425;  Matliews  v.  Aiken, 
1  N.  Y.  595;  1  Lead.  Cas.  in  Eq.  88; 
id.  pt.  1,  167  (2d  Am.  ed.);  Low  v. 
Blodgett,  21  N.  H.  121;  Ex  parte 
Balch,  2  Low.  440;  Harbeck  v.  Van- 
derbilt,  20  N.  Y.  395;  Mechanics' 
Bank  v.  Hazard,  13  Johns.  353.  See 
Gillett  V.  Gillett,  9  Wis.  194. 

In  Louisiana  the  payment  of  a  note 
secured  by  a  mortgage  by  one  not 
bound  for  it,  and  who  had  no  interest 
in  discharging  it,  will  not  subrogate 
him  to  the  rights  of  the  party  to 
whom  he  paid,  but  will  extinguish 
the  debt  and  the  mortgage  securing 
it,  and  the  claim  for  reimbursement 
will  constitute  the  party  who  paid 
an  ordinary  creditor  of  him  for 
whose  benefit  the  payment  was 
made.  NichoUs  v.  His  Creditors,  9 
Rob.  476;  Weil  v.  Enterprise  Ginnery 
&  Manuf.  Co.,  42  La.  Ann.  492,  7  So. 
Rep.  622. 

3  Kingsley  v.  Purdom,  53  Kan.  56, 
35  Pac.  Rep.  811;  Gordon  v.  Wansey, 
21  Cal.  77. 

*  Livermore  v.    Truesdell,  9  Colo. 


App.  332,  48  Pac.  Rep.  276;  Champney 
V.  Coope,  34  Barb.  539;  Collins  v. 
Adams,  53  Vt.  433;  Hammatt  v.  Wy- 
man,  9  Mass.  138;  Brackett  v.  Wins- 
low,  17  id.  153;  Adams  v.  Drake,  11 
Cush.  504;  Tuckerman  v.  Newhall, 
17  Mass.  581;  Chapman  v.  Collins,  12 
C' sh.  163;  Pray  v.  Maine,  7  id.  253; 
Harbeck  v.  Vanderbilt.  20  N.  Y.  395, 
398.  See  Shaw  v.  Clark,  6  Vt  507,  27 
Am.  Dec.  578. 

If  payment  is  made  at  the  request 
of  the  maker  the  obligation  is  extin- 
guished and  an  indorsement  of  it 
subsequently  made  by  the  payee  is 
ineffectual.  Moran  v.  Abbey,  63 
Cal.  56;  Pearce  v.  Bryant  Coal  Co., 
121  III  590,  13  N.  E.  Rep.  561. 

5  Id. ;  Moran  v.  Abbey,  58  Cal.  167; 
Gordon  v.  Wansey,  21  id.  78;  Citi- 
zens' Bank  v.  Lay,  80  Va.  436;  Rolf 
V.  Wooster,  58  N.  H.  526. 

It  makes  no  difference  that  an  at- 
tempt to  transfer  was  made  at  the 
time  of  payment,  and  as  a  part  of 
that  transaction.  Wright  v.  Mix,  76 
Cal.  465, 18  Pac.  Rep.  645. 

If  a  note  is  deposited  in  a  bank  for 
collection  a  payment  made  by  a 
guarantor,  surety  or  the  maker  will 
discharge  it.  Citizens'  Bank  v.  Lay, 
80  Va.  436;  Lancey  v.  Clark,  64  N.  Y. 
209,  21  Am.  Rep.  604;  Eastman  v. 
Palmer,  32  N.  Y.  238;  Dooley  v. 
Virginia  F.  &  M.  Ins.  Co.,  3  Hughes, 
221. 


§    218.]  PAYMENT.  54; 

ment  actually  made  upon  a  debt,  whether  of  the  whole  or  a 
part,  is  a  total  or  partial  discharge,  and  cannot  afterwards  be 
changed  except  by  mutual  consent,  and  if  other  parties  are 
interested,  by  their  consent  also.'  Where  marriage  extin- 
guishes a  debt  due  from  the  wife  to  the  husband  it  also  dis- 
charges any  lien  by  which  the  debt  was  secured,  and  the  debt 
is  not  revived  by  a  divorce.^  As  will  more  fully  appear  in 
another  connection,^  the  payment  of  a  debt  due  after  suit 
brought  will  prevent  the  recovery  of  interest  as  damages,* 
though  it  would  be  otherwise  if  there  had  been  a  contract  to 
pay  interest.^ 

After  a  judgment  recovered  upon  a  paid  debt,  or  without 
deducting  payments,  the  sura  paid  cannot  be  recovered;  pay- 
ment in  a  strict  sense  is  a  defense,  and  if  not  used  as  such  is 
lost.^  The  payments  must  be  strictly  such  or  definitely  ap- 
propriated to  the  debt  to  have  that  efifect.''  Where  a  sum  of 
money  was  delivered  by  the  obligor  to  the  obligee  to  be  [353] 
credited  by  the  latter  upon  the  bond  as  part  payment,  and  the 
obligee  neglected  to  indorse  or  apply  it  and  obtained  judgment 
for  the  whole  amount  of  the  bond,  the  obligor  was  allowed  to 
recover  the  money  paid.^  There  was  a  special  trust  re-  [354] 
posed  in  the  defendant  to  credit  the  money  on  the  bond  and 
he  had  violated  it.  Where,  however,  there  is  a  direct  pay- 
ment on  a  debt  which  is  not  evidenced  by  note,  bond  or  writ- 
ing of  any  kind;  where  no  act  beyond  payment  and  receipt  of 
it  is  necessary  or  contemplated  to  give  effect  to  the  payment, 
and  the  money  is  passed  from  the  debtor  to  the  creditor  as 
payment  at  once,  and  not  simply  to  become  such  on  the  doing 
of  some  act  to  evidence  it,  it  is  strict  payment  and  cannot  be 

1  Mead  v.  York,  6  N.  Y.  449,  57  Am.  6  Loring  v.  Mansfield,  17  Mass.  394; 
Dec.  467;  Marvin  v.  Vedder,  5  Cow,  Maniot  v.  Hampton,  7  T.  R,  269;  De 
671;  Hawkins  V.  Stark,  19  Jolins.  305;  Sylva  v.  Henry,  3  Port.  182;  Eggles- 
Frost  V.  Martin,  26  N.  H.  423,  59  Am.  ton  v,  Knickerbacker,  6  Barb.  458; 
Dec.  353;  Miller  v.  Montgomery,  31  Adams  v.  Barnes,  17  Mass.  365; 
111.  350.  Job  V,  Collier.  11  Ohio,  422;  Seymour 

2  Farley  v.  Farley,  91  Ky.   497,  16  v.  Lewis,  19  Wend.  512. 

S.  W.  Rep.  129.  •^See  Hazen  v.  Reed,  30  Mich.  331; 

3  Ch.  8.  Judd  V.  Littlejohn,  11  Wis.  176. 

^  Davis   V.    Harrington,    160  Mass.        8  Woodward  v.  Hill,  6   Wis.    147; 

278,  35  N.  E.  Rep.  771.  Fowler  v.  Shearer,  7  Mass.  14.      See 

5  Andover  Savings  Bank  v.  Adams,  Wheeler  v.  Harrison,  28  Mich.  265. 
1  Allen,  28. 


-542     CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.    [§§  219,  220. 

recovered,  though  the  debt  is  afterwards  sued  upon  and  judg- 
ment rendered  for  it  without  deducting  the  sum  paid.^  If 
payment  has  been  made  for  a  consideration  which  is  subse- 
quently withdrawn  or  withheld,  the  money  maybe  recovered.^ 

"  It  is  undoubtedly  the  rule  that  one  partner  may  not  appro- 
priate the  property  or  money  of  the  firm  to  the  payment  of 
his  own  debt  without  the  consent  of  his  copartners,  and  that 
if  he  does  so  the  property  misapplied  may  be  followed  and  re- 
covered until  it  reaches  the  hands  of  a  honafide  purchaser  for 
value.  But  I  think  it  is  equally  well  settled  that  the  payment 
of  money  to  a  creditor,  who  receives  it  in  discharge  of  an  ex- 
isting debt  innocently  and  without  knowledge  or  means  of 
knowledge  that  the  debtor  paying  had  no  rightful  ownership 
of  the  fund,  is  good  and  effectual,  and  does  not  subject  the  re- 
cipient to  a  recovery  by  the  true  owner."* 

§219.  Payment  before  debt  due.  The  creditor  is  not  obliged 
to  receive  a  part  payment,*  but  if  he  does  it  has  the  effect  of 
partial  satisfaction.  Payment  before  the  money  is  due  is  a 
payment  at  maturity.^  If  a  creditor,  however,  receives  money 
before  it  is  due  on  a  demand  drawing  interest  such  payment, 
in  the  absence  of  an  agreement  to  the  contrary,  should  be  ap- 
plied to  the  extinguishment  of  the  principal.^  And  even  when 
received  upon  the  understanding  that  it  was  not  to  draw  interest 
until  the  balance  of  the  debt  should  be  paid  because  the  cred- 
itor used  the  money  as  his  own  it  was  held  that  it  should  be 
applied  at  the  date  of  payment.^  The  holder  of  a  note  enti- 
tled to  grace  cannot  be  compelled  to  accept  payment  until  the 
last  day,  to  which  interest  should  be  computed.* 

§  220.  Payment  by  devise  or  legacy.  A  devise  or  legacy 
will  operate  as  payment  when  it  is  intended  by  the  testator 
and  accepted  by  the  creditor  as  such.^    A  legacy  to  a  creditor 

iDriscoU  V.    Damp,   17  Wis.  419;  5  Patten  v.    Fullerton,   27  Me.  58; 

Bronson  v.  Rugg,  39  Vt.  241.  Holmes    v.     Broket,   Cro.    Jac.  434. 

-  Mechanics  &  Traders'  Ins.  Co.  v.  See  Roberts  v.  Wilkinson,  34  Mich. 

McLain,  48  La.  Ann.  1091,  20  So.  Rep.  129. 

278.  **  Starr  v.  Richmond  30  111.  276. 

3  Newhall  v.  Wyatt,  139  N.  Y.  452,  7  Toll  v.  Hiller,  11  Paige,  228. 

36   Am.  St.  712,  34  N.  E.  Rep.  1045;  8  Smith  v.  Merchants'  &  Farmers' 

Stepliens  v.  Board  of  Education,  79  Bank,  14  Ohio  Ct.  Ct.  199. 

N.  Y.  187,  35  Am.  Rep.  511.  9Scheerer  v.  Scheerer,   109  111.  11; 

*  Jennings  v.  Shriver,  5  Blackf.  37.  Rose  v.  Rose,  7  Barb.  174;  Clarke  v. 


%  220.] 


PAYMENT. 


543 


which  is  equal  to  or  greater  than  his  debt,  and  which  is  not 
contingent  or  uncertain,  is  presumed  to  be  a  satisfaction  of  the 
debt.^  Courts,  however,  have  given  effect  to  slight  circum- 
stances, appearing  on  the  face  of  the  will  or  otherwise,  by  way 
of  repelling  the  presumption  of  satisfaction.-  And  the  rule  is 
not  allowed  to  prevail  where  the  legacy  is  of  less  amount  [355] 
than  the  debt;  even  as  a  satisfaction  j!?;'o  tanto;  nor  where  there 
is  a  difference  in  the  time  of  payment  of  the  debt  and  the 
legacy;  nor  where  they  are  of  different  natures  as  to  subject- 
matter;  nor  where  there  is  an  express  direction  in  the  will  for 
the  payment  of  debts.^  When  a  legacy  is  made  by  a  creditor 
to  a  debtor  and  the  debt  is  less  in  amount  than  the  legacy, 
the  legatee  is  considered  as  having  so  much  of  the  assets  in  his 
hands  as  the  debt  amounts  to  and  consequently  to  be  satisfied 
pro  tanto;  and  Avhen  the  debt  exceeds  the  legacy,  the  execu- 
tors of  the  testator  are  entitled  to  retain  the  legacy  in  part 
discharge  of  the  debt.*  There  is  no  presumption  that  a  legacy 
given  a  creditor  is  in  satisfaction  of  the  debt  if  the  testator  is 


Bogardus,  13  Wend.  67;  Mulheran's 
Ex'r  V.  Gillespie,  id.  349;  Courtenay 
V.  Williams,  3  Hare,  539;  Voorhees 
V.  Voorhees,  18  N.  J.  Eq.  227;  Brokaw 
V.  Hudson.  27  id.  135;  Blair  v. 
White,  61  Vt.  110,  17  Atl.  Rep. 
49;  Brunn  v.  Schuett,  59  Wis.  260, 18 
N.  W.  Rep.  260. 

1  Wescoe's  Appeal,  52  Pa.  195; 
Eaton  V.  Benton,  2  Hill.  576;  Cloud 
V.  Clinkinbeard,  8  B.  Mon.  398,  48 
Am.  Dec.  397:  Strong  v.  Williams, 
12  Mass.  392,  7  Am.  Dec.  81 ;  Williams 
V.  Crary,  5  Cow.  368;  2  Story's  Eq., 
g  1100;  Fetrow  v.  Krause,  61  111. 
App.  238. 

2  Id.  See  Story's  Eq.,  ^§  1100, 
1101;  Strong  v.  Williams,  13  Mass. 
392;  Willis  v.  Dun,  Wright.  133; 
Byrne  v.  Byrne,  3  S.  &  R.  54,  8  Am. 
Dec.  641;  1  Pom.  Eq.,  ^  527.  "There 
is  no  doubt  the  rule  still  nominally 
exists;  but  the  tendency  of  the  more 
recent  decisions  is  to  consider  the 
bequest  a  bounty  and  not  the  dis- 
charge of  an  obligation.  And  the 
courts  now  lay  hold  of  any  circum- 


stances, however  trifling,  for  the 
purpose  of  repelling  the  presumption 
that  the  legacy  was  intended  as  a 
satisfaction  of  the  debt."  Crouch 
V.  Davis,  23  Gratt.  62,  93.  In  another 
case  it  was  observed:  Inasmuch  as 
the  presumption  is  arbitrary  and 
often  in  conflict  with  the  real  mo- 
tives and  wishes  of  the  testator,  and 
seemingly  harsh,  courts  have  been 
prompt  to  seize  upon  every  circum- 
stance to  counteract  and  overcome 
it.  Gilliam  v.  Brown,  43  Miss.  641. 
Both  these  cases  are  approved  in 
Patten  v.  Glover,  1  D.  C.  App.  Cas 
406,  480. 

^Fetrow  v.  Krause,  61  111.  App. 
238;  Van  Riper  v.  Van  Riper,  2  N. 
J.  Eq.  1;  Lisle  v.  Tribble.  92  Ky.  304, 
12  S.  W.  Rep.  742;  Gibbons  v.  Wood- 
ward, 3  Walker  (Pa.  Sup.  Ct.),  303: 
Cloud  V.  Clinkinbeard,  8  B.  Mon. 
398,48  Am.  Dec  397;  Fort  v.  Good- 
ing, 9  Barb.  371. 

♦Tinkham  v.  Smith,  56  Vt  187; 
Clarke  v.  Bogardus,  12  Wend.  67. 
See  Close  v.  Van  Husen,  19  Barb.  505. 


54:4  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.       [§  221 

a  joint  debtor,  or  if  the  legacy  is  contingent.^  Though  no 
general  rule  was  laid  down  a  legacy  has  been  declared  not  to 
be  a  satisfaction  of  a  debt  incurred  after  the  will  was  made.^ 
A  bequest  by  a  mother,  indebted  to  her  children  as  adminis- 
tratrix of  the  estate  of  their  father  and  as  their  guardian,  of  a 
portion  of  her  own  estate,  which  is  more  than  the  amount  of 
the  indebtedness,  is  not  to  be  regarded  as  a  satisfaction  of  her 
indebtedness  to  them.  But  this  rule  does  not  apply  to  an  ad- 
vancement made  by  a  father  or  other  person  in  loco  jparentis 
to  a  child  to  whom  he  is  indebted.* 

§  221.  Payment  by  gift  inter  vivos.  A  creditor  may  ex- 
tinguish a  debt  gratuitously  by  such  acts  as  are  equivalent  to 
a  gift  consummated.  Thus,  indorsements  made  in  consider- 
ation of  kindness,  by  direction  and  in  the  presence  of  a  mort- 
gagee, of  part  payments  upon  a  mortgage  against  his  grand- 
daughter and  her  husband,  with  whom  he  was  living  at  the 
time,  and  which  were  to  accord  with  his  deliberate  and  ex- 
pressed intention  to  make  a  gift  or  donation  of  his  property 
to  her,  have  been  sustained  as  an  extinguishment  or  forgiving 
of  the  mortgage  debt  to  that  extent.  It  was  objected  that, 
this  being  a  gift  inter  vivos,  delivery  and  acceptance  were  es- 
sential to  its  validity,  and  as  there  was  in  such  a  case  no  de- 
livery it  could  not  take  effect.  Christiancy,  J.,  said :  "  Doubt- 
less such  is  the  rule  where  the  gift  consists  of  tangible  per- 
sonal property  which  admits  of  actual  delivery;  and  the  same 
rale  would  probably  apply  where  the  note  or  bond  of  a  third 
person  is  the  subject  of  the  gift.  Whether  if  the  whole  of  the 
mortgage  debt  in  the  present  case  had  been  the  subject,  de- 
livery of  the  note  and  mortgage,  or  one  of  them,  would  not 
have  been  essential  we  need  not  inquire.  In  the  present  case 
it  was  but  a  part  of  the  sum  secured  by  the  note  and  mort- 
gage; and  the  attempted  donation  was  to  the  debtors  them- 
[356]  selves.  And  it  is  difficult  to  conceive  how  any  delivery 
could  have  been  made.  But  it  is  said  that  there  must  have 
been  a  delivery  of  the  papers  or  of  a  release  or  receipt  for  the 
portion  of  the  debt  intended  to  be  given;  because  without 

1  Gibbons  v.  Woodward,  supra.  ^  Patten   v.  Glover,   1  D.  C.   App. 

2 Sullivan  v.  Latimer,  38  S.  C.  158,     Gas.  4G6;  Plunkett  v.  Lewis,  3  Hare, 
17  S.  E.  Rep.  701.  316;  1  Pom.  Eq.,  §  540. 


§    '2-21.]  PAYMENT.  545 

something  of  this  kind  it  would  have  been  in  the  power  of  the 
donor  to  retract,  and  this  he  might  doubtless  have  done  if  this 
had  been  an  executory  agreement  or  undertaking  to  make  this 
gift.  But  here  the  purpose  and  intention  of  making  the  gift 
was  fully  executed,  and  by  one  of  the  donees  actually  accepted 
at  the  time;  and  the  acceptance  by  the  other  of  the  extino-uish- 
ment  of  a  part  of  the  debt  against  himself  may  be  very  safely 
presumed.  And  if  it  remained  in  the  power  of  the  donor  to 
retract,  it  would  have  been  equally  so,  if  purely  a  gift,  had  a 
receipt  been  given,  and  equally  so,  for  aught  we  can  discover, 
had  a  release  been  given,  there  being  no  consideration  and 
untler  our  statute  ^  which  makes  the  seal  no  more  than  prima 
facie  evidence  of  a  consideration.  The  want  of  consideration 
could,  therefore,  in  either  case,  have  been  shown.  As  the  debt 
which  was  the  subject  of  the  gift,  when  considered  with  ref- 
erence to  the  fact  that  the  donee  was  the  debtor,  and  that 
only  part  of  the  debt  was  attempted  to  be  given,  did  not  admit 
of  actual  delivery,  and  as  all  was  done  that  could  well  be  done 
under  the  circumstances  to  make  the  gift  effectual,  we  do  not 
think  the  act  and  intention  of  the  donor  should  be  defeated 
merely  because  the  subject  did  not  admit  of  an  actual  or  tech- 
nical delivery."  ^ 

A  delivery  is  so  essential  to  the  validity  of  a  gift  that  its 
place  cannot  be  supplied  by  a  formal  declaration  of  the  donor's 
executory  intention,  although  in  writing.^  The  intention  to 
discharge  b}''  gift  a  debt  in  the  form  of  a  note,  bond  or  the  like 
should  be  executed  by  an  actual  surrender  of  the  instrument  or 
by  a  release  delivered  to  the  donee.*  The  delivery  of  a  note 
bv  the  holder  to  the  maker,  with  the  intention  of  transferrintr 

iComp.  L.  of  Mich.  1871,  §  5947.  R.  312;  Whitehill  v.  Wilson,  3  P.  & 


2  Green  v.  Langdon,  28  Mich.  221 
'  Plumstead's  Appeal,  4  S.  &  R 
545;  Wheat  ley  v.  Abbott,  32  Miss. 
343;  Hunter  v.  Hunter,  19  Barb.  631 
Noble  V.  Smith,  2  Johns.  52,  3  Am, 
Dec.  399;  Cook  v.  Husted,  12  Johns. 
188;  Davis  v,  Boyd,  6  Jones,  249 
Brunn  v.  Schuett,  59  Wis.  260,  18  N. 
W.  Rep.  260. 
*  Kidder  v.    Kidder,   33    Pa.    268 


W.  405;  Duffield  v.  Elwes,  1  Bligh 
(N.  S.),  497;  Duffield  v.  Hicks,  1  Dow 
&  Clark,  11;  Licey  v.  Licey,  7  Pa.  251, 
47  Am.  Dec.  513;  1  Smith's  Lead.  Cas. 
1st  pt.  *469. 

In  Campbell's  Estate,  supra,  Gib- 
son, C.  J.,  said  that  "the  gift  of  a 
bond,  note  or  other  chattel  cannot  be 
made  by  words  in /u^wro  or  in  words 
in  presently  unaccompanied  by  such 


Campbell's  Estate,  7  id.  100,  47  Am.     delivery  of  the  possession  as  makes 
Dec.  503;  Wentz  v.  Dehaven,  1  S.  &    the  disposal  of  the  thing  irrevocabla" 
Vol.  1  —  35 


54G  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.       [§  222. 

to  him  the  title  thereto,  is  an  extinguishmentof  the  note  and  a 
discharge  of  the  obligation  to  pay  it.' 

[357]  §222.  Payment  by  retainer.  Payment  or  satisfaction 
of  a  debt  may  result  as  the  legal  effect  of  the  debtor  having 
conferred  on  him  in  some  character  the  duty  or  right  to  re- 
ceive payment.  This  conclusion  rests  upon  the  ground  that 
when  the  same  hand  is  to  pay  and  receive  the  money,  that 
which  the  law  requires  to  be  done  shall  be  deemed  to  be  done; 
and,  therefore,  that  such  debt,  when  due  from  an  administrator, 
for  instance,  shall  be  assets  de facto  to  be  accounted  for  in  the 
probate  account.^  But  the  principle  only  applies  where  it  is 
shown  that  the  personal  representative  had  sufficient  personal 
assets  for  the  payment  of  his  debt  which  he  could  have  applied 
for  that  purpose.^  When  a  testator  makes  his  debtor  executor 
it  is  a  release  at  law,  but  the  former  may  reserve  the  debt,  and 
payment  be  enforced  by  the  party  to  whom  it  is  bequeathed 
under  the  fiction  of  a  promise  to  him.*  Such  appointment 
does  not  extinguish  the  debt,  nor  a  mortgage  security  for  it,* 
but  it  becomes  assets  in  his  hands,^  especially  if  there  is  a  de- 
ficiency, to  pay  debts.''  An  executor  or  other  trustee  for  the 
distribution  of  moneys  to  pay  debts,  legacies,  etc.,  may  retain 
for  a  debt  owing  him  from  the  trust  funds,  and  may  also  re- 
tain for  the  benefit  of  the  trust  any  sum  due  from  a  benefi- 
ciary. A  personal  representative  may  retain  for  his  debt  by 
withholding  within  the  period  allowed  by  the  statute  of  lim- 

Brunn  v.  Schuett,  59  Wis.  260,  18  N.  Taylor  v.  Deblois,  4  Mason,  131;  Bry- 

W.  Rep.  260.  aut  v.  Smith,  10  Cush.  169;  Hunt  v. 

1  Slade  V.  Mutrie,  156  Mass.  19,  30  Nevers,  15  Pick.  500,  26  Am.  Dec.  616, 
N.  E.  Rep.  168;  Stewart  v.  Hidden,  15  Pick.  54,  1  Allen,  153.  See  Ilsley 
13  Minn.  43;  Ellsworth  v.  Fogg,  35  v.  Jewett.  2  Met.  168;  Wilson  v.  Wil- 
Vt.  355;  Vanderbeck  v.  Vanderbeck,  son,  17  Ohio  St.  150,  91  Am.  Dea  125. 
30  N,  J.  Eq.  265;  Jaffray  v.  Davis,  124  3  Jordan  v.  Hardie,  131  Ala.  72.  31 

.  N.  Y.  164,  170,  26  N.  E.  Rep.  351,  11  So.  Rep.  504;  Miller  v.  Irby,  63  Ala. 

L.  R.  A.  710;  Patten  v.  Glover,  1  D.  485. 

C.  App.  Gas.  466,  481.  ••  Fishel  v.  Fishel,  7  Watts,  44. 

2  Ipswich  Manuf.  Go.  v.  Story,  5  ^gacon  v.  Fairraan.  6  Gonn.  121; 
Met.  310;  Stevens  v.  Gaylord,  11  Gollard  v.  Donaldson,  17  Ohio,  264. 
Mass.  255;  Kinney  v.  Ensign,  18  See  Pratt  v,  Northam,  5  Mason,  95; 
Pick.  2;J2;  Winship  v.  Bass,  12  Mass.  Miller  v.  Irby,  G3  Ala.  477. 

199;  Wankford  v.  Wankford,  1  Salk.        «  Winship  v.  Bass,  12  Mass.  198. 
299;  Gheetham  v.  Ward,  1  B.  &  P.        ^ Marvin  v.  Stone,  2  Gow.  781. 
630;  Freakley  v.  Fox,  9  B.  &  G.  130; 


§   223.]  PAYMENT.  547 

itations  a  sufficient  amount  from  the  moneys  coming  to  his 
hamls,  and  is  entitled  to  due  credit  therefor  in  the  settlement 
of  his  accounts,^  on  such  proof  as  would  authorize  a  recovery 
upon  it.2  And  such  retainer  will  be  presumed  from  sufficient 
assets  coming  into  his  hands  which  were  susceptible  of  con- 
version into  money.''  His  debt,  however,  will  not  be  deemed 
extinguished  by  the  receipt  of  assets  sufficient  to  dis-  [358] 
charge  it,  but  which  he  fails  to  reduce  to  money  and  turn  over 
to  his  successor.*  The  right  of  retainer,  and  the  legal  inci- 
dents thereof,  applies  to  debts  due  the  personal  representative 
as  trustee,  or  as  executor  or  administrator  of  another  person." 
An  executor  de  son  tort  cannot  retain  for  his  own  debt.® 

Sureties  in  a  bond  who  pay  it  off  after  the  death  of  the 
principal  are  entitled  to  rank  as  his  specialty  creditors,  and  if 
they  be  administrators  of  his  estate  may  retain  whatever  they 
pay  on  account  of  such  suretyship  out  of  assets  that  come  to 
their  hands  as  administrators  against  other  specialty  creditors.'^ 
A  retainer  may  either  be  pleaded  or  given  in  evidence  under 
the  plea  oi  plene  administravit? 

§  223.  Payment  in  counterfeit  money,  bills  of  brolien 
banks  or  forged  notes.  It  accords  with  principles  governing 
in  like  cases,  and  certainly  with  the  decided  weight  of  author- 
ity, to  hold  that  the  party  paying  by  legal  implication  war- 
rants the  genuineness  of  what  he  pays  as  money,^  unless  the 
character  of  the  transaction  or  the  accompanying  circum- 
stances show  a  different  intention.^     This  rule  is  now  recoo-- 

O 

1  Batson  v.  Murrell,  10  Humph.  301,  &  Russ.  224;  Jones  v.  Davids,  4  Russ. 
51  Am.  Dec.  707;  Hamner  v.  Ham-    277. 

ner,  3  Head,  398;  Harrison  v.  Hen-  «  Evans  v.  Norris,  Hayw.  (by  Batt.) 
derson,  7  Heisk.  315.  473. 

2  Kirksey  v.  Kirksey,  41  Ala.  636.  9  Watson  v.  Cresap,  1  B.  Mon.  195, 

3  Glenn  v.  Glenn.  41  Ala.  571.  36  Am.  Dec.  572;  Edmunds  v.  Digges, 
*  Harrison  v.  Henderson,  7  Heisk.     1  Gratt.  359,  42  Am.  Dec.  561;  Har- 

315;  Ross  v.  Wharton,  10  Yerg.  190.  grave  v.   Dusenbury,  2  Hawks,  326; 

^Miller  V.  Irby.63  Ala.  477;Thomp-  Fogg  v.  Sawyer,  9  N.  H.  305;  Buck 

son  V.  Cooper,  1  Call,  861,  1  Am.  Dec.  v.  Doyle.  4  Gill.  478,  45  Am.  Dec.  176; 

509;  Thomas  v.  Thompson,  2  Johns.  Goodrich  v.  Tracy,  43  Vt.  314,  5  Am. 

471;  Hosack  v.  Rogers,  6  Paige,  415;  Rep.  281. 

Morrow  v.  Payton,  8  Leigh,  54.  i  See  Dakin  v.  Anderson,  18  Ind.  52. 

« Turner  v.  Child,  1  Dev.  331.  In  Orchard  v.  Hughes,  1    Wall.  73, 

''Powell's  Ex'r  v.  White,  11  Leigh,  it  was  held  to  be  no  defense  to  a  suit 

309.    See  Copis  v.  Middleton,  1  Turn,  for  ilebt  tliatthe  debt  arose  from  the 


54:8 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.       [§  223. 


nized  as  an  exception  to  that  of  caveat  emptor^  but  it  is  evident 
it  was  not  always  so.^  This  warranty  of  genuineness,  how- 
[359]  ever,  is  not  absolute;  but  the  general  current  of  author- 
ity is  that  the  payer  warrants  the  quality  to  such  an  extent 
that  he  is  bound  to  made  it  good,  if  found  bad,  and  is  returned 
within  a  proper  time.^  It  is  a  special  warranty,  requiring  the 
return  of  the  thing  warranted  and  involving  an  obligation  of 
the  debtor  to  pay  the  amount  again  in  good  money;  but  leav- 
ing the  creditor,  of  course,  the  option,  on  returning  the  spuri- 
ous money,  to  proceed  on  the  statu  q\io  as  upon  a  rescission. 
The  payment  in  either  case,  to  the  extent  of  the  counterfeit 
money,  is  treated  as  a  nullity  when  it  has  been  restored.' 
The  same  principle  applies  to  the  notes  of  individuals.     If 

receipt  of  the  bills  of  a  bank  char- 
tered illegally,  and  lor  fraudulent 
purposes,  and  that  the  bills  were  void 
in  law,  and  finally  proved  worthless 
in  fact;  they  themselves  having  been 
actually  current  at  the  time  the  de- 
fendant received  them,  and  not  hav- 
ing proved  worthless  in  his  hands, 
and  he  not  being  bound  to  take  them 
back  from  the  person  to  whom  he 
paid  them, 

1  In  Wade's  Case,  5  Coke,  114a,  it 
was  said:  "It  was  adjudged  between 
Vare  and  Studley  that  when  the  les- 
sor demanded  rent  of  the  lessee,  ac- 
cording to  the  condition  of  re-entry, 
and  the  lessee  payeth  the  rent  to  his 
lessor,  and  he  received  it  and  put  it 
in  his  purse,  and  afterwards  in  look- 
ing it  over  again  at  the  same  time 
he  found  amongst  the  money  that 
he  had  received  some  counterfeit 
pieces  and  thereupon  refused  to  carry 
away  the  money,  but  re-entered  for 
the  condition  broken,  it  was  ad- 
judged the  entry  was  not  lawful; 
for  when  the  lessor  had  accepted  the 
money  it  was  at  his  peril,  and  upon 
that  allowance  he  shall  not  take  ex- 
ception to  any  part  of  it."  And  it  is 
Baid  in  Shepherd's  Touchstone,  140, 
in  respect  to  mortgages:  "  If  the  pay- 
ment be  made,  part  of  it  with  coun- 
terfeit coin,  and  tlie  part}^  accept  and 


put  it  up,  this  is  a  good  payment,  anil 
consequently  a  good  performance  of 
the  condition." 

2  Atwood  v.  Cornwall,  28  Mich.  336, 
15  Am.  Rep.  219;  Wingate  v.  Neid- 
linger,  50  Ind.  520;  Samuels  v.  King, 
id.  527;  Stebbins  v.  Stebbins,  51  Ind. 
595.  See  Alexander  v.  Byers,  19  Ind. 
801. 

3  Id.;  Markle  v.  Hatfield,  2  Johns. 
453;  Gilman  v.  Peck,  14  Vt.  516; 
Thomas  v.  Todd,  6  Hill,  340;  Torrey 
V.  Baxter.  13  Vt.  452;  Pindall's  Ex'r 
v.  Northwestern  Bank,  7  Leigh,  617; 
Raymond  v.  Baar,  13  S.  &  R.  318,  15 
Am.  Dec.  603;  Bank  of  St.  Albans  v. 
Farmers'  &  M.  Bank,  10  Vt.  141,  33 
Am.  Dec.  188. 

In  Watson  v.  Cresap,  1  B.  Mon.  195, 
36  Am.  Dec.  572,  Judge  Ewing  said: 
*"It  must  be  presumed  that  he  who 
passes  a  bill  as  money  passes  it  as 
genuine,  and  the  law  implies  an  as- 
sumpsit or  warranty  that  it  is  so  (2 
Johns.  458,  15  Johns.  241);  and  if  the 
bill  should  be  counterfeit  and  worth- 
less, this  implied  promise  is  immedi- 
ately, upon  passing  the  bill,  broken, 
and  an  action  lies  for  its  breach;  nor 
does  it  matter  whether  he  who 
passes  it  knows  that  it  is  counter- 
feit or  not.  2  Johns.,  s?<pra.  The  ac- 
tion is  not  an  action  for  fraud,  but 
for   breach   of  promise  implied  by 


§  223.] 


PAYMENT. 


549 


they  are  forged,  in  whole  or  in  part,  or  are  void  because  of  the 
incapacity  of  their  makers,  the  paper  does  not  discharge  the 
debt  it  was  accepted  in  payment  of.'  A  contract  to  receive 
payment  in  certificates  of  indebtedness  issued  by  public  officers 
contemplates  that  the  instruments  shall  be  enforceable;  that 
they  shall  rest  upon  antecedent  proceedings  which  o-ave  the 
otficers  jurisdiction  to  issue  thera.^ 


law.  And  to  sustain  this  form  of 
declaring  it  would  certainly  be  un- 
necessary to  prove  that  the  note  was 
tendered  back,  as  it  goes  for  breach 
of  promise,  and  not  for  restitution 
of  the  consideration  upon  a  disaf- 
firmance of  the  contract  of  pay- 
ment. As  the  first  count  in  the 
case  under  consideration  is  a  count 
on  the  implied  promise,  the  proof 
justified  the  recovery  without  any 
evidence  that  the  bill  was  tendered 
back  to  the  defendants  before  suit 
brought.  We  are  also  satisfied  that 
if  money  or  other  bills  which  pass 
and  are  received  as  money  be  the 
consideration  given  for  a  counter- 
feit bill,  that  it  may  be  recovered 
back  on  an  indebitatus  count  for  so 
mucli  money  had  and  received.  Pay- 
ment for  such  a  bill  must  be  re- 
garded as  a  payment  by  mistake  for 
a  thing  of  no  value,  but  which  was, 
at  the  time  it  was  received,  believed 
to  be,  and  imported  on  its  face  to  be, 
of  intrinsic  worth.    2  Johns.  458. 

"But  this  form  of  declaring  pro- 
ceeds on  the  ground  of  a  disaffirm- 
ance of  the  contract  and  a  restitu- 
tion of  the  thing  given  in  exchange. 
It  is  an  equitable  remedy,  and  to  en- 
title the  plaintilf  to  recovery,  if 
anything  of  value  has  been  received, 
it  must  be  shown  that  it  was  ten- 
dered back  before  the  action  was 
brought.  A  counterfeit  bill  is  cer- 
tainly of  no  intrinsic  value;  it  would 
be  as  worthless  in  the  hands  of  the 
defendants  as  that  of  the  plaintiffs, 
and  according  to  the  rule  laid  down, 
it  would  seem  unnecessary  to  show 


that  it  was  tendered  back,  even  in 
this  form  of  declaring.  But  whether 
it  was  or  not  it  is  not  now  necessary 
to  determine,  as  the  recovery  was 
proper  on  the  first  count." 

This  case,  it  is  respectfully  sug- 
gested, would  not  now  be  regarded 
as  ctAp^tly  decided,  for  it  proceeds 
upon;fjigfound  fundamentally  erro- 
neous; namely,  that  a  counterfeit 
bill  "  would  be  as  worthless  in  the 
band  of  the  defendants  as  in  that 
of  the  plaintiffs."  An  absolute  war- 
ranty of  genuineness  is  assumed 
doubtless  on  that  theory.  The  con- 
sideration appears  to  have  been 
overlooked  that  where  a  counterfeit 
bill  has  been  innocently  paid  and 
received,  the  prompt  return  of  it 
will  enable  the  party  who  had  paid 
it  to  restore  it  to  the  person  from 
whom  he  received  it,  and  thus  ob- 
tain its  nominal  amount  in  good 
money.  The  implied  warranty  re- 
quires such  restitution. 

1  Godfrey  v.  Crisler,  121  Ind.  203, 
22  N.  E.  Rep.  999;  First  Nat.  Bank  v. 
Buchanan,  87  Tenn.  32,  2  S.  W.  Rep. 
202,  10  Am.  St.  617;  School  Town  of 
Monticello  v.  Grant,  104  Ind.  168,  1 
N.  E.  Rep.  302;  Gerwig  v.  Sitterlj%56 
N.  Y.  214;  Stratton  v.  McMakin,  84 
Ky.  641,  4  Am.  St.  215;  Ritter  v. 
Singmaster,  73  Pa.  400;  Graham's 
Estate,  14  Phila.  280;  Emeric  v. 
O'Brien,  36  Ohio  St.  491;  Guichard 
V.  Brande,  57  Wis.  534,  15  N.  W.  Rep. 
764;  Sandy  River  Nat.  Bank  v.  Mil- 
ler, 8-2  Me.  137,  19  Atl.  Rep.  109. 

2Catliu  v.  Munn,  37  Hun,  23. 


550  CONVENTIONAL   LIQUIDATIONS    AND    DISCHARGES.       [§  224.. 

[3G0]  The  tendency  of  modern  decisions  is  to  require  reason- 
able vigilance  in  the  receipt  and  prompt  diligence  in  the  re- 
turn of  counterfeits,  or  in  giving  notice  to  the  payer  that  he 
may  protect  himself  against  prior  parties.  What  is  diligence 
is  determined  with  reference  to  the  facts  of  each  case,  but 
upon  analogies  drawn  from  the  law  of  commercial  paper.  A 
delay  of  months  or  even  a  few  days  may  be  fatal  to  the  right 
of  recourse  to  the  payee.^  Any  unnecessary  delay  beyond 
such  reasonable  time  as  would  enable  the  taker  to  inform  him- 
self as  to  its  genuineness  operates  as  a  fraud  on  the  payer,  and 
prevents  a  recovery.^ 

[301]  §  224.  Same  subject.  When  payment  is  made  in  the 
bills  of  insolvent  banks  or  in  other  depreciated  conventional 
currency,  the  question  of  who  should  bear  the  loss  may  arise 
[362]  under  various  circumstances.  If  both  parties  deal  in 
thecurrency  in  question  as  uncurrent  money  it  is  like  dealing 
in  a  commodity.  And  if  a  debtor  pays  as  money  bank  notes^ 
[363]  knowing  the  bank  to  be  insolvent,  and  conceals  it  from 
the  creditor  or  payee,  it  will  be  deemed  a  fraud.'  But  there 
are  various  aspects  in  which  an  innocent  payment  of  depre- 
ciated or  worthless  currency  may  be  viewed;  that  is,  though 
both  the  payer  and  receiver  take  for  granted  it  is  good,  and 
may  be  equally  ignorant  of  any  fact  tending  to  lessen  its  value: 
first,  the  bank  may  be  in  fact  insolvent,  but  had  not  stopped 
payment;  second,  it  may  have  stopped  payment,  but  a  knowl- 
edge of  it  not  have  reached  the  neighborhood  where  the  pay- 
ment was  made,  and  the  bills  may  have  continued  there  actually 
current;  third,  the  currency  used  may  be  wholly  worthless  or 

1  Raymond  V.  Baar,  13  S.  &  R.  318:  Bank  v.  Gloucester  Bank,  17  id.  1, 
Samuels  v.  King,  50  Ind.  527;  Thomas  28,  9  Am.  Dec.  111. 
V.  Todd,  6  Hill.  340;  Lawrenceburgh  2  Atwood  v.  Cornwall,  28  Mich. 
Nat.  Bank  v.  Stevenson,  51  Ind.  594;  3-36,  15  Am.  Rep.  219.  This  case  is 
Corn  Exchange  Nat.  Bank  v.  Na-  Valuable  because  of  the  ability  and 
tional  Bank,  78  Pa.  233;  Kenny  v.  learning  with  which  Judge  Camp- 
First  Nat.  Bank,  50  Barb.  112;  Cam-  bell  discusses  the  legal  relations 
idge  V.  AUenby,  6  B.  &  C.  373;  Bank  between  the  payer  and  receiver  of 
of  St.  Albans  V.  Farmers' &  M.  Bank,  counterfeit  money.  See  First  Nat. 
10  Vt.  141;  Pindall's  Ext  v.  North-  Bank  v.  Ricker.  71  111.  439,  22  Am. 
western  Bank,  7  Leigh,  617;  Union  Rep.  104;  Simms  v,  Clark,  11  111.  137; 
Bank  v.  Baldenwick,  45  111.  375;  United  States  Bank  v.  Bank  of 
Pumphrey  v.  Eyre,  Tappan,  283.  See  Georgia,  10  Wheat.  333. 
Young  V.  Adams,  6  Masa  187;  Salem  »  Story  on  Prom.  Notes,  §  118. 


§  224.] 


PAYMENT. 


551 


only  depreciated.  Mr.  Chitty  says:  "It  should  seem  that  if 
in  discounting  a  note  or  bill  the  promissory  note  of  country 
bankers  be  delivered,  after  they  have  stopped  payment,  but 
unknown  to  the  parties,  the  person  taking,  unless  guilty  of 
laches,  might  recover  the  amount  of  the  discounter  because  it 
must  be  implied  that  at  the  time  of  the  transfer  the  notes  were 
capable  of  being  received  if  duly  presented  for  payment."  ^ 
And  Mr.  Story  says  of  a  payment  in  bills  of  an  insolvent  bank, 
where  both  parties  are  equally  innocent,  and  alike  ignorant 
that  the  bank  had  become  insolvent,  that  the  weight  of  reason- 
ing and  of  authority  seems  to  be  in  favor  of  the  payer  bearing 
the  loss.  The  decisions  in  New  York,^  Wisconsin,*  Vermont,* 
New  Hampshire,^  Illinois,"  Maine,^  South  Carolina,® and  Ohio' 
are  in  accord  with  that  doctrine.  But  in  Pennsylvania,'  Ten- 
nessee,^ and  Alabama,^  it  has  been  held  that  such  loss  should 
be  borne  by  the  receiver.* 

The  failure  of  a  bank  has  the  effect  of  depriving  its  bills  of 
the  distinctive  character  of  money;  it  becomes  insolvent  when 


1  Chitty  on  Bills,  247. 

2  Lightbody  v.  Ontario  Bank,  11 
Wend.  9,  affirmed,  13  id.  101;  Hough- 
ton V.  Adams,  18  Barb.  545. 

3Townsends  v.  Bank  of  Racine,  7 
Wis.  185. 

*  Gilman  v.  Peck,  11  Vt.  516, 34  Am. 
Dec.  703;  Wainwright  v.  Webster,  11 
Vt.  576,  34  Am.  Dec.  707. 

*  Fogg  V.  Sawyer,  9  N.  H.  365,  25 
Am.  Dec.  462. 

6  Magee  v,  Carmack,  13  111.  289. 

7  Frontier  Bank  v.  Morse,  22  Me. 
88,  38  Am.  Dec.  284. 

SHarleyv.   Thornton,  2  Hill,  509. 

sWestfall  V.  Braley,  10  Ohio  St. 
188,  75  Am.  Dec.  509.  But  see  Im- 
bush  V.  Mechanics'  Bank,  1  West.  L. 
J.  49. 

1  Bayard  v.  Shunk,  1  W.  &  S.  94, 
37  Am.  Dec.  441. 

2  Scruggs  V.  Gass.  8  Yerg.  175,  29 
Am.  Dec.  114.  But  see  Ware  v. 
Street,  2  Head,  609,  75  Am.  Dec.  755. 

3  Lowrey  v.  Murrell,  2  Port.  282,  27 
Am.  Dec.  651. 


*  See  Young  v.  Adams,  6  Mass.  182; 
Edmunds  v.  Digges,  1  Gratt.  329; 
Phillips  V.  Blake.  1  Met.  156;  Cam- 
idge  V.  Allen  by,  6  B.  &  C.  373;  Owen- 
son  V.  Morse,  7  T.  R.  64;  Ex  parte 
Blackburne,  10  Ves.  204;  Emly  v.  Lye, 
15  East,  7. 

In  Corbit  v.  Bank  of  Smyrna,  2  Harr. 
235,  30  Am.  Dec.  635,  it  was  held  that 
the  receipt  by  a  bank  for  deposit  as 
money  of  the  bills  of  a  bank  that  had 
just  suspended,  but  before  either  the 
bank  or  the  depositor  was  informed 
of  the  failure,  was  at  the  risk  of  the 
bank  receiving  them.  And  a  distinc- 
tion was  taken  between  the  receipt 
of  bank  bills  for  a  contemporaneous 
debt  or  consideration  and  receiving 
them  for  a  precedent  debt.  In  the 
former  case  the  bills  are  supposed  to 
be  the  thing  bargained  for,  and  there- 
fore at  the  risk  of  the  receiver;  but 
when  received  for  a  precedent  debt 
it  is  not  discharged  unless  the  bills 
are  of  solvent  banks  when  received. 


552  CONVENTIONAL    LIQUIDATIONS    AND    DISCnAEGES.       [§  224. 

it  ceases  to  redeem  them  with  legal  tender  money .^  Bank  notes 
are  the  representative  of  money,  and  circulate  as  such  by  gen- 
eral consent  and  usage.  But  this  consent  and  usage  are  based 
upon  the  convertibility  of  such  notes  into  coin  at  the  pleasure 
of  the  holder,  upon  their  presentation  to  the  bank  for  redemp- 
tion. This  fact  is  the  vital  principle  which  sustains  their  char- 
acter as  money.  So  long  as  they  are  in  fact  what  they  purport 
to  be,  payable  on  demand,  common  consent  gives  them  the  at- 
tributes of  money.  But  upon  the  failure  of  the  bank  by  which 
they  were  issued,  when  its  doors  are  closed  and  the  inability  to 
redeem  its  bills  is  openly  averred,  they  instantly  lose  that  char- 
[365]  acter,  their  circulation  as  currency  ceases  with  the  usage 
and  consent  upon  which  it  rested,  and  the  notes  become  the  mere 
dishonored  and  depreciated  evidences  of  debt.  When  this  change 
in  their  character  takes  place  the  loss  must  necessarily  fall  upon 
him  who  is  the  owner  of  them  at  the  time;  and  this,  too, 
whether  he  is  aware  or  unaware  of  the  fact.  His  ignorance 
can  give  him  no  right  to  throw  the  loss  he  has  already  incurred 
upon  an  innocent  third  party.^  Therefore,  if  such  bills,  after 
failure  of  the  bank,  are  paid  out  and  received  as  money  by  per- 
sons ignorant  of  the  fact,  the  receiver  is  entitled  to  return  them 
and  require  their  amount  in  good  money  on  the  ground  of  mis- 
take.'' The  very  time  when  a  bank  announces  its  failure,  by 
closing  its  doors  and  ceasing  to  redeem,  is  that  at  which  its 
failure  is  deemed  to  occur,  without  reference  to  its  antecedent 
real  condition,  between  parties  having  no  cause  to  anticipate 
that  event.*  The  doctrine  that  the  loss  falls  upon  him  in  whose 

1  Townsends  v.  Bank  of  Racine,  7  pension  was  resolved  upon  that  same 
Wis.  185;  Lightbody  v.  Ontario  Bank,  evening,  but  was  not  announced  un- 
11  Wend.  9,  13  id.  101.  til  tlie  next  day.     The  court  say: 

2  Westfail  v.  Braley,  10  Ohio  St.  188,  "  The  loss  must  fall  upon  one  of  two 
75  Ana.  Dec.  509.  innocent  men,  and  the  law  must  con- 
oid.;  Frontier  Bank  v.   Morse,  22  trol  it.     At  the  time  the  payment 

Me.  88,  38  Am.  Dec.  284;  Roberts  v.  was  made  the  notes  were  circulating 

Fisher,  43  N.  Y.  159,  3  Am.  Rep.  680;  as  currency  and  considered  good  by 

Leger  v.  Bonnaffe,  2  Barb.  475;  Bald-  the  community.     But  they  were  in 

will  v.  Van  Deusen,  37  N.  Y.  487.  fact  of  no  value  at  the  hour  they 

*  Ware  v.  Street,  2  Head,  609,  75  were  paid  out,  although  a  few  hours 

Am.   Dec.   755.     In  this  case  a  pay-  before   they  were  convertible    into 

raent  in  bank  bills  was  made  on  the  specie.    .    .    .     The  supposed   com- 

12th  of  July,  1858,  late  in  the  evening  mercial  interest  of  our  country  and 

and  was  held  good,  although  the  sus-  the    general     convenience    of     the 


ii 


§  22i.] 


PAYMENT. 


iJJo 


hands  the  bills  are  at  the  time  of  the  failure  necessarily  [3(50] 
involves  an  implied  guaranty  in  every  payment  of  bank  bills 
that  at  that  time  the  bank  has  not  suspended  or  failed,  unless 
^  contrary  intention  is  manifested. 

On  the  contrary,  in  Pennsylvania  and  some  other  states,  as 
bofore  stated,  where  a  payment  in  bank  bills  is  made  in  good 
faith  their  acceptance  is  not  deemed  to  be  upon  the  faith  of 
any  such  guaranty,  but  is  governed  by  the  rule  of  caveat 
emptor,  and  the  maxim  of  melior  est  conditio  defendentis} 


people  have  produced  a  course  of 
legislation  by  which  bank  paper  has 
become  the  circulating  medium  and 
the  standard  of  value  instead  of 
specie.  True,  it  has  not  been  made 
a  lawful  tender  and  cannot  be  with- 
out a  change  of  the  constitution. 
But  by  almost  universal  consent  it  has 
become  the  medium  of  exchange  and 
the  representative  of  property.  It 
lias  taken  the  place  of  the  precious 
metals  and  is  regarded  as  money. 
This,  however,  is  by  consent  and  not 
bylaw.  No  man  is  hound  to  receive 
it  in  payment  of  debts  or  for  property. 
But  if  it  gets  into  his  hands  by  con- 
sent, and  a  loss  comes  by  failure  of 
the  bank,  the  misfortune  must  and 
should  be  his  in  whose  hands  it  hap- 
pens to  be  at  the  time.  The  risk 
must  follow  the  paper  and  not  the 
i"ormer  owners.  It  passes  from  hand 
to  hand  without  recourse  except  in 
cases  of  fraud  or  concealment."' 

1  In  Bayard  v.  Shunk,  1  W.  &  S.  92, 
37  Am.  Dec.  441,  Gibson,  C.  J.,  ex- 
pounds and  enforces  this  view  with 
great  vigor  of  language  and  logic. 
He  says:  "Cases  in  which  the  bills 
and  notes  of  a  third  party  were 
transferred  for  a  debt  are  not  to  the 
])urpose;  and  most  of  those  which 
have  been  cited  are  of  that  stamp. 
Where  the  parties  to  such  a  trans- 
action are  silent  in  respect  to  the 
terms  of  it,  the  rules  of  interpreta- 
tion are  few  and  simple.  If  the  se- 
curities are  transferred  for  a  debt 


contracted  at  the  time,  the  presump- 
tion is  that  they  were  received  in 
satisfaction  of  it;  but  if  lor  a  prece- 
dent debt,  it  is  that  they  are  received 
as  collateral  security  for  it;  and  in 
either  case  it  may  be  rebutted  by 
direct  or  circumstantial  evidence. 
But  by  the  conventional  rules  of 
business,  a  transfer  of  bank  notes, 
though  the}'  are  of  the  same  mould 
and  obligation  betwixt  the  original 
parties,  is  regulated  by  i)eculiar 
principles,  and  stands  on  a  different 
footing.  They  are  lent  bj'  the  banks 
as  cash;  they  are  paid  away  as  cash; 
and  the  language  of  Lord  Mansfield 
in  Miller  v.  Race,  1  Burr.  452,  was 
not  too  strong  when  he  said,  'they 
are  treated  as  money,  as  cash,  in  the 
ordinary  course  and  transaction  of 
business  by  the  general  consent  of 
mankind,  which  gives  them  the 
credit  an d  currency  of  money  to  al  1  in- 
tents and  purposes:  they  are  as  much 
money  as  guineas  themselves  are,  or 
any  other  coin  that  is  used  in  com- 
mon payments  is  money  or  cash.'  If 
such  were  their  legal  character  in 
England,  where  there  was  but  one 
bank,  how  emphatically  must  it  be 
so  here  where  they  have  sui)planted 
coin  for  every  purpose  but  that  of 
small  change,  and  where  they  have 
excluded  it  from  circulation  almost 
entirelj-.  It  is  true,  as  was  remarked 
in  Young  v.  Adams,  6  Mass.  182,  that 
our  bank  notes  are  private  contracts 
witiiout  a  public  sanction  like  that 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  22J:. 


[367]  Where  recourse  is  allowed  to  the  party  who  paid  out 
the  bills  it  does  not  depend  on  their  being  worthless.  Parker, 
C.  J.,  said:  "The  case  of  a  payment  in  bills  of  a  broken  bank 
cannot  be  distinguished  in  principle  from  a  payment  in  coun- 


which  gives  operation  to  the  lawful 
money  of  the  country;  but  it  is  also 
true  that  they  pass  for  cash,  both 
here  and  in  England,  not  by  force 
of  any  such  sanction,  but  by  the 
legislation  of  general  consent,  in- 
duced by  their  great  convenience,  if 
not  the  absolute  necessities  of  man- 
kind. Miller  v.  Race  is  a  leading 
case  which  has  never  been  doubted 
in  England,  or,  except  in  a  case  pres- 
ently to  be  noticed,  in  America;  and 
it  goes  very  far  to  rule  the  point  be- 
fore us;  for  if  the  wheel  of  commerce 
is  to  be  stopped  or  turned  backwards 
in  order  to  repair  accidents  to  it 
from  impurities  in  the  medium 
which  keeps  it  in  motion,  except 
those  which,  few  and  far  between, 
are  occasioned  by  forgery,  bank 
notes  must  cease  to  be  a  part  of  the 
currency,  or  the  business  of  the 
world  must  stand  still.  The  weight 
of  authority  bearing  directly  on  the 
point  is  (1841)  decisively  in  favor  of 
the  position  that  bo7in  fide  payment 
in  the  notes  of  a  broken  bank  dis- 
charges the  debt.  .  .  .  Camidge 
V.  Allen  by,  6  B.  &  C.  373;  Scruggs  v. 
Gass,  8  Yerg.  175,  29  Am.  Dec.  114; 
Young  V.  Adams,  6  Mass.  182;  against 
Lightbody  v.  Ontario  Bank,  11  Wend. 
9,  affirmed,  13  id.  101.     .     .    . 

"To  assume  that  the  solvency  of 
the  bank  at  the  time  of  the  transfer 
is  an  inherent  condition  of  it  is  to 
assume  the  whole  ground  of  the  ar- 
gument. The  conclusion  concurred 
in  by  all,  however,  was  that  the  me- 
dium must  turn  out  to  have  been 
what  the  debtor  offered  it  for  at  the 
time  of  ])ayment.  How  does  that 
consist  with  the  equitable  principle 
that  there  must  be,  in  every  case,  a 
motive  for  the   interference  of  the 


law,  but  that  it  must  be  stronger 
than  any  to  be  found  on  the  other 
side;  else  the  equity  being  equal,  and 
the  balance  inclining  to  neither  side, 
things  must  be  left  to  stand  as  they 
are  (Fonb.  B.  1,  ch.  V,  §  3;  id.  oh.  IV, 
§  25);  in  other  words,  that  the  law 
interferes  not  to  shift  a  loss  from  one 
innocent  man  to  another  equally 
innocent,  and  a  stranger  to  the  cause 
of  it.  The  self-evident  justice  of  this 
would  be  proof,  were  it  necessary, 
that  it  is  a  principle  of  the  common 
law.  But  we  need  go  no  further  in 
search  of  authority  for  it  than  Miller 
V.  Race,  in  which  one  who  had  re- 
ceived a  stolen  bank  note  for  full 
consideration  in  the  course  of  his 
business  was  not  compelled  to  restore 
it.  It  was  intimated  in  the  Ontario 
Bank  v.  Lightbody  that  there  was  a 
preponderance  of  equity  in  that  case, 
not  on  the  side  of  him  who  had  lost 
the  note,  but  of  him  who  had  last 
given  value  for  it.  Why  last?  The 
maxim,  prior  in  tempore  potior  in 
jure,  prevails  between  prior  and  sub- 
sequent purchasers  indifferently  of  a 
legal  or  an  equitable  title.  It  is  for 
that  reason  the  owner  of  a  stolen 
horse  can  reclaim  him  of  a  purchaser 
from  the  thief;  and  were  not  the  field 
of  commerce  market  overt  for  every- 
thing which  performs  the  office  of 
money  in  it,  the  owner  of  a  stolen 
note  might  follow  it  into  the  hands 
of  a  bona  fide  holder  of  it.  But  gen- 
eral convenience  requires  that  he 
should  not;  and  it  was  that  principle, 
not  any  consideration  of  the  equities 
betwixt  the  parties,  which  ruled  the 
case  of  Sliller  v.  Race.  But  a  more 
forcible  illustration  of  the  principle, 
were  the  case  indisputably  law,  might 
be  had  in  Levy  v.  Bank  of  the  United. 


§  224.] 


PAYMENT. 


i)0o 


terfeit  money.  From  the  time  of  the  failure  of  the  bank  they 
cease  to  be  the  proper  representatives  of  money,  whether 
they  are  at  the  time  near  to  or  at  a  distance  from  the  [3G8] 
bank.     They  may  have  a  greater  value  tlmn  counterfeit  bills, 


States,  4  Ball.  234, 1  Bin.  27,  in  which 
the  placing  even  a  forged  check  to 
the  credit  of  a  depositor  as  cash  —  a 
transaction  really  not  within  any 
principle  of  conventional  law  -  was 
lield  to  conclude  the  bank;  and  to 
this  may  be  added  tiie  entire  range 
of  cases  in  which  the  purchaser  of 
an  article  from  a  dealer  has  been 
bound  to  bear  a  loss  from  a  defect  in 
the  quality  of  it.  And  for  the  same 
reason  that  the  law  refuses  to  inter- 
fere between  parties  mutually  inno- 
cent, it  refuses  to  interfere  between 
those  who  are  mutually  culpable;  as 
in  the  case  of  an  action  for  negli- 
gence. What  is  there,  then,  in  the 
case  before  us  to  take  it  out  of  this 
great  principle  of  the  common  law? 
The  position  taken  by  the  courts  of 
New  York  isthat  every  one  who  parts 
with  his  property  is  entitled  to  ex- 
pect the  value  of  it  in  coin.  Doubt- 
less he  is.  He  may  exact  payment 
in  precious  stones,  if  such  is  the  bar- 
gain. But  where  he  has  accepted 
without  reserve  what  the  conven- 
tional laws  of  the  country  declare  to 
be  cash,  his  claim  to  anything  else  is 
it  an  end.  Bills  of  exchange  and 
promissory  notes  enter  not  into  the 
transactions  of  commerce  as  money: 
but  it  impresses  even  tliese  with 
qualities  which  do  not  belong  to 
ordinary  securities.  The  holder  of 
one  of  them,  who  has  taken  it  in 
the  ordinar}'  course,  can  recover  on 
it,  whether  there  was  a  considera- 
tion between  the  original  parties  or 
not.    .    .     . 

"The  assertion  that  it  is  always  an 
original  and  subsisting  part  of  the 
agreement  that  a  bank  note  shall 
turn  out  to  have  been  good  when  it 
was  paid  away  can  be  conceded  no 


farther  than  regards  its  genuineness. 
That  genuine  notes  are  supposed  to 
be  equal  to  coin  is  disproved  by  daily 
experience,  which  shows  that  they 
circulate  by  the  consent  of  whole 
communities  at  their  nominal  value 
when  notoriously  below  it.  But  why 
hold  the  payer  responsible  for  the 
failure  of  the  bank  only  when  it 
has  been  ascertained  at  the  time  of 
the  payment,  and  not  for  insolvency 
ending  in  an  ascertained  failure 
afterwards?  As  the  bank  may  have 
been  actually  insolvent  before  it 
closed  to  let  the  world  know  it,  we 
must  carry  his  responsibility  back 
beyond  the  time  when  it  ceased  to 
redeem  its  notes,  if  we  carry  it  back 
at  all.  Were  it  not  for  the  conven- 
tional principle  that  the  purchaser 
of  a  chattel  takes  it  with  its  defects, 
the  purchaser  of  a  horse  with  the 
seeds  of  mortal  disease  in  him  might 
refuse  to  pay  for  him  though  his 
vigor  and  usefulness  were  yet  unim- 
paired; and  if  we  strip  a  payment 
in  bank  notes  of  the  analogous  cash 
principle,  why  not  treat  it  as  a  nul- 
lity, by  showing  that  the  bank  was 
actually,  though  not  ostensibly,  in- 
solvent at  the  time  of  the  transac- 
tion. It  is  no  answer  that  the  note 
of  an  unbroken  bank  may  be  in- 
stantly converted  into  coin  by  pre- 
senting it  at  the  counter.  To  do 
that  may  require  a  journey  from 
Boston  to  New  Orleans,  or  between 
places  still  further  apart,  and  the 
bank  may  have  stopped  in  the  mean- 
time, or  it  may  stop  at  the  instant  of 
presentation  when  situated  where 
the  holder  resides.  And  it  may  do 
so  when  it  is  not  insolvent  at  alU 
but  perfectly  able  eventually  to  pay 
the   last  shilling.     This  distinction 


556 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  224. 


but  in  neither  case  has  the  party  received  what  in  the  con- 
templation of  both  parties  he  was  entitled  to  receive,  if  the 
contract  was  to  pay  a  certain  sum.  In  neither  case  has  he 
received  money  or  its  representative.  The  sum  contracted  to 
[360]  be  paid  has  not  been  paid  in  money  or  anything  which 
by  usage  passes  as  money,  or  which  was  entitled  at  the  time 
to  represent  it;    and    the  party  has   therefore  failed  to  pay 


between  previous  and  subsequent 
failure  evinced  by  stopping  before 
the  time  of  the  transaction  or  after 
it  is  an  arbitrary  and  impracticable 
one.  To  such  a  payment  we  must 
apply  the  cash  principle  entire,  or 
we  must  treat  It  as  a  transfer  of  ne- 
gotiable pai)er,  imposing  on  the 
transferee  no  more  than  the  ordi- 
naiy  inercantile  responsibility  in  re- 
gard to  presentation  and  notice  of 
dishonor.  There  is  no  middle  ground. 
.  .  .  The  case  of  a  counterfeit 
bank  note  is  entirely  different.  Tlie 
laws  of  trade  extend  to  it  only  to 
prohibit  the  circulation  of  it.  They 
leave  it  in  all  beside  to  what  is  the 
rule  both  of  the  common  and  the 
civil  law,  which  requires  a  thing 
parted  with  for  a  price  to  have  an 
actual  or  at  least  a  potential  exist- 
ence (2  Kent,  468),  and  a  forged 
note,  destitute  as  it  is  of  the  quality 
of  legitimate  being,  is  a  nonentity. 
It  is  no  more  a  bank  note  than  a 
dead  horse  is  a  living  one;  and  it  is 
an  elementary  principle,  that  what 
has  no  existence  cannot  be  the  sub- 
ject of  a  contract.  But  it  cannot  be 
said  that  the  genuine  note  of  an  in- 
solvent bank  has  not  an  actual  and 
a  legitimate  existence,  though  it  be 
little  worth;  or  that  the  receiver  of 
it  has  not  got  the  thing  he  expected. 
It  ceases  not  to  be  genuine  by  the 
bank's  insolvency:  its  legal  obliga- 
tion as  a  contract  is  undissolved,  and 
it  remains  a  promise  to  pay,  though 
the  promisor's  ability  to  perform  it 
be  impaired  or  destroyed.  .  .  . 
The  difference  between  forgery  and 


insolvency  in  relation  to  a  bank 
note  is  as  distinctly  marked  as  the 
difference  between  title  and  quality 
in  relation  to  the  sale  of  a  chattel. 

"  What  then  becomes  of  the 
boasted  principle  that  a  man  shall 
not  have  parted  with  his  property 
until  he  shall  have  had  value,  or 
rather  .what  he  expected  for  it  ?  Like 
many  others  of  the  same  school,  it 
would  be  too  refined  for  our  times, 
even  did  a  semblance  of  justice  lie 
at  the  root  of  it.  But  nothing  de- 
vised by  human  sagacity  can  do 
equal  and  exact  justice  in  the  appre- 
hension of  all  men.  The  best  that 
can  be  done,  in  any  case,  is  no  more 
than  an  approximation  to  it;  and 
when  the  incidental  risks  of  a  busi- 
ness are  so  disposed  of  as  to  consist 
with  the  general  convenience,  no  in- 
justice will  in  the  end  be  done  to 
those  by  whom  they  are  borne. 
Commerce  is  a  system  of  dealing  in 
which  risk,  as  well  as  labor  and  cap- 
ital, is  to  be  compensated.  But 
nothing  can  be  more  exactly  bal- 
anced than  the  equities  of  parties  to 
a  payment  in  regard  to  the  risk  of 
the  medium  when  its  worthlessness 
was  unsuspected  by  either  of  them. 
The  difference  between  them  is  not 
the  tithe  of  a  hair  or  any  other  in- 
finitesimal quantity  that  can  be  im- 
agined; and  in  such  a  case  the  com- 
mon law  allows  a  loss  from  mutual 
mistake  to  rest  where  it  has  fallen, 
rather  than  to  remove  it  from  the 
shoulders  of  one  innocent  man  to 
the  shoulders  of  another  equally  so." 


d 


§  225.]  PAYMENT.  557 

what  be  contracted  to  pay.  Counterfeit  coin  may  contain  a 
portion  of  good  metal  and  thus  have  some  value,  but  this 
would  not  make  it  a  good  medium  of  payment.  Entire  worth- 
lessness,  or  not,  is  not,  therefore,  the  criterion."  ^  A  [370] 
return  of  such  paper  by  the  receiver  is  required  as  a  condi- 
tion of  the  right  to  recover  from  the  payer;  and  the  necessity 
of  returning  it  arises  from  the  same  considerations  in  the  case 
of  counterfeit  money,  to  enable  the  party  paying  to  secure 
himself  with  prior  parties.  But  whether  the  rule  requiring 
return  within  a  reasonable  time  is  confined  to  cases  in  which 
the  payer  has  recourse  does  not  appear  to  be  decided.  If  the 
failure  occurred  while  he  was  the  owner  of  the  bills  he  has 
no  recourse;  and  if  they  are  not  returned  why  may  not  the 
party  receiving  and  retaining  them  be  charged  with  their 
value  and  the  recovery  be  limited  to  the  depreciation?^ 

§  225.  Payment  by  note,  bill  or  check.  A  creditor  maj'^ 
receive  anything  of  value  as  payment.'^  A  debtor,  by  agree- 
ment with  his  creditor,  may  pay  his  contemporaneous  or  ante- 
cedent debt  in  a  note  or  bill  against  a  third  person;  but  there 
must  be  a  mutual  agreement  that  it  shall  be  transferred  and 
received  as  final  satisfaction  without  recourse  or  condition  of 
being  productive.*  Where  goods  are  sold  for  a  particular  [371] 

iFogg    V,   Sawyer,   9  N.  H.    365;  for  the  jury  to  be  determined  from 

Frontier  Bank   v.  Morse,  22  Me.  88,  all  the  circumstances." 
38  Am.  Dec.  284;  Magee  v.  Carmack,        3  Louden  v.  Birt,  4  Ind.  566:  Reed 

13  IlL  289.  V.  Bartlett,  19  Pick.  273;  Tilford  v. 

^Townsends  v.  Bank  of  Racine,  7  Roberts,  8  Ind.  254. 
Wis.   185;   Ontario  Bank   v.   Light-        *  st.   John   v.  Purdy,  1    Sandf.  9; 

body,  13  Wend.  104.  New  York  State  Bank  v.  Fletclier,  5 

In  Magee  v.  Carmack.  13  111.  289,  Wend.  85;  Conkling  v.  King,  ION.  Y. 

the  court  remark  as  to  the  question  440,  affirming  10  Barb.  372;  Roberts 

of  what  is  a  reasonable  time:  "When  v.   Fisher,   53   Barb.   69;   Wright  v. 

from  the  nature  of  the  subject  a  First   Crockery    Ware   Co.,  1   N.  H. 

general   rule  can  be  applied  to  all  281,  8  Am.   Dec.  68;  JafTrey  v.  Cor- 

cases,  then  what  constitutes  reason-  nish,  10  N.  H.  505;  Elliot  v.  Sleeper, 

able  notice  may  be  a  question  of  law  2  id.  527;  Randlet  v.  Herren,  20  id. 

for  the  court,  as  notice  to  the  indorser  102;  Brewer  v.  Branch  Bank,  24  Ala, 

of  a  bill  or  note.    But  when,  as  in  this  440;  Hutchins  v.  Olcutt,  4  Vt.  549, 

case,  the  question  of  what   would  24  Am.  Dec.  634;  Hart  v.  Boiler,  15 

constitute  a  reasonable  time  must  S.  &  R.  162,  16  Am.  Dec.  536;  Citi- 

depend  upon    the    peculiar  circum-  zens'   Bank   v.    Carson,  32  Mo.  191: 

stances    of    each    case,  and  cannot  Smith  v.  Owens,  21  Cal.  11;  Graves 

reasonably  be  subjected  to  any  gen-  v.  Friend,  5  Sandf.  568. 
eral  rule,  then  it  is  a  question  of  fact 


i)Ob 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  225. 


note  it  is  an  exchange  or  barter,  and  the  note  has  the  effecc 
of  payment.'  In  some  states  the  rule  is  that  the  note  of  the 
vendee  is  presumed  to  have  been  taken  by  the  vendor  in  pay- 
ment of  a  contemporaneous  debt  unless  the  contrary  be  shown 
or  the  note  be  void  or  there  has  been  fraud  or  misrepresenta- 
tion respecting  it;^  but  it  is  otherwise  as  to  an  antecedent 
debt.'  And  when  the  note  of  a  third  person  is  taken  without 
recourse,  by  indorsement  or  otherwise,  for  goods  sold  at  the 
time,  the  presumption  is  it  is  taken  in  payment.*  There  is  no 
dissent  from  the  proposition  that  an  agent  who  has  no  author- 
ity to  sell  property  and  receive  payment  for  his  principal  is 
not  presumed  to  be  empowered  to  take  anything  but  money 
in  payment  therefor;^  and  this  is  true  of  an  agent  who  is  ap- 
pointed to  receive  and  collect  demands  due  his  principal.'*  This 


1  Ferdon  v.  Jones,  2  E.  D.  Smith, 
106;  Whitbeck  v.  Van  Ness,  11  Johns. 
409,  6  Am.  Dec.  383;  Breed  v.  Cook, 
15  Johns.  241;  Rew  v.  Barber,  3  Cow. 
272. 

A  creditor  who  accepts  from  his 
debtor  notes  of  third  persons  which 
were  to  be  received  as  payment  if 
the  former  approves  them  is  bound 
to  determine  whether  they  are  to  be 
so  received  or  not  within  a  reason- 
able time  and  to  give  his  debtor  no- 
tice of  his  decision.  If  he  delays 
for  forty  days  it  is  for  the  jury  to 
find  whether  he  has  accepted  them 
as  payment.  Acme  Harvester  Co. 
V.  Axtell,  5  N.  D.  315,  65  N.  W,  Rep. 
680. 

2  Ford  V.  Mitchell,  15  Wis.  308; 
Challoner  v.  Boyington,  83  Wis.  399, 
58  N.  W.  Rep.  694. 

3  Willow  River  Lumber  Co.  v. 
Luger  Furniture  Co.,  102  Wis.  636, 
78  N.  W.  Rep.  762. 

4  Challoner  v.  Boyington,  supra; 
Hall  v.  Stevens,  116  N.  Y.  201,  22  N. 
E.  Rep.  374,  5  L.  R.  A.  802,  reversing 
40  Hun,  578;  Gibson  v.  Tobey,  46  N. 
Y.  637,  7  Am.  Rep.  397;  Cor  bit  v. 
Bank  of  Smyrna,  2  Harr.  235,  239, 
50  Am.  Dec.  635;  Torry  v.  Hadley,  27 
Barb.  192;  Whitbeck  v.  Van  Ness,  11 


Johns.  409,  6  Am.  Dec.  383;  Noel  v. 
Murray,  13  N.  Y.  167;  Rew  v.  Barber, 
3  Cow.  272;  Breed  v.  Cook,  15  Johns. 
241;  Bank  of  England  v.  Newman,  1 
Ld.  Raym.  442;  Bayard  v.  Shunk,  1 
W.  &  S.  92,  37  Am'  Dec.  441 ;  Fydell 
V.  Clark,  1  Esp.  447;  Clark  v.  Mun- 
dall,  1  Salk.  124.  But  see  Darnall  v. 
Morehouse,  36  How.  Pr.  511;  Turner 
V.  Bank  of  Fox  Lake,  3  Keyes,  425; 
Youngs  V.  Stahelin,  34  N.  Y.  258; 
Owenson  v.  Morse.  7  T.  R.  64;  Bur- 
rows V.  Bangs,  34  Mich.  304;  Gardner 
V.  Gorham,  1  Doug.  (Mich.)  507;  Van 
Cleef  V.  Therasson,  3  Pick.  12;  Car- 
roll V.  Holmes,  24  111.  App.  453,  and  a 
dictum  in  Morrison  v.  Smith,  81  111. 
221. 

5Runyon  v.  Snell,  116  Ind.  164,  18 
N.  E.  Rep,  522,  9  Am.  St.  839;  Stew- 
art V.  Woodward,  50  Vt.  78,  28  Am. 
Rep.  488;  Victor  Sewing  Machine 
Co.  V.  Heller,  44  Wis.  265;  Quinn  v. 
Sewell,  50  Ark.  380,  8  S.  W.  Rep.  132. 

If  the  principal  ships  goods  sold 
by  the  agent  for  other  than  a  cash 
consideration  the  contract  of  sale  is 
ratified.  Billings  v.  Mason,  80  Me. 
496,  15  Atl.  Rep.  59. 

«  Scott  V,  Gilkey,  153  111.  168,  39  N. 
E.  Rep.  265;  Cooney  v.  United  States 
Wringer  Co.,  101  III.  App.  468;  Mor- 


1  ^1^0.J 


PAYMENT. 


view  is  qualified  in  Kentucky  as  to  banks  which  are  intrusted 
with  collections  if  their  usaf^e  is  to  accept  checks  in  payment 
of  claims,  whether  the  customer  has  knowledge  of  the  usage 
or  not,  if  he  has  not  given  directions  as  to  the  mode  of  pay- 
ment.^ But  this  view  is  denied  in  ^Missouri.-  A  irovernment 
revenue  collector  has  no  authority  to  receive  in  payment  for 
stamps  anything  but  money.^ 

Whether  the  receipt  by  the  creditor  of  the  debtor's  note,  or 
the  note  of  one  of  several  debtors,  with  the  agreement  that  it 
is  received  at  the  risk  of  the  creditor  and  as  full  satisfaction, 
will  have  the  effect  to  extinguish  the  debt,  is  not  universally 
agreed.  In  New  York  it  has  been  several  times  held,  and  per- 
haps the  doctrine  there  may  be  deemed  settled,  that  a  debtor's 
note,  although  expressly  received  as  satisfaction,  cannot  ex- 
tinguish his  precedent  debt> 


ris  V.  Eufaula  Nat.  Bank,  106  Ala. 
383,  18  So.  Rep.  11;  McCormick  Har- 
vesting Machine  Co.  v.  Breen,  61  111. 
App.  528;  National  Bank  v.  Grimm, 
109  N.  C.  93,  13  S.  E.  Rep.  867:  Bank 
of  Commerce  v.  Hart,  37  Neb.  197, 
40  Am.  St.  479,  20  L.  R.  A.  780,  55  N.  ■ 
W.  Rep.  631;  Sandy  River  Bank  v. 
Merchants  &  Mechanics'  Bank,  1 
Biss.  146;  Western  Brass  Manuf.  Co. 
V.  Maverick,  4  Tex.  Civ.  App.  535,  23 
S.  W.  Rep.  728:  Everts  v.  Lavvther, 
165  111.  487,  46  N.  E.  Rep.  233;  Law- 
ther  v.  Everts,  63  111.  App.  432; 
Scully  V.  Dodge,  40  Kan.  395,  19  Pac. 
Rep.  807;  McCormick  v.  Peters,  24 
Neb.  70.  37  N.  W.  Rep.  927;  Nichol- 
son v.  Pease,  61  Vt.  534, 17  Atl.  Rep. 
720;  Lochenmeyer  v.  Fogart3',  112 
111.  572;  Wilcox  &  W.  Organ  Co.  v. 
Lasley,  40  Kan.  521,  20  Pac.  Rep.  228; 
Deatherage  v.  Henderson,  43  Kan. 
684,  23  Pac.  Rep.  1052;  Mitchell  v. 
Printup,  68  Ga.  675. 

If  the  agent  of  a  mortgagee  ac- 
cepts a  certificate  of  deposit  in  pay- 
ment of  a  mortgage  and  deposits  it 
in  the  bank  which  issued  it  to  the 
credit  of  his  own  account,  the  pay- 
ment is  of  cash.  Harrison  v.  Legore, 
109  Iowa,  618,  80  N.  W.  Rep.  670; 


Hare  v.  Bailey,  73  Minn.  409,  76  N. 
W.  Rep.  213. 

It  seems  that  an  attorney,  acting 
in  good  faith,  has  broader  powers 
than  other  agents.  It  has  been  ruled 
where  an  attorney,  under  his  em- 
ployment, obtained  judgment  and 
presented  a  certified  transcript  of  it 
to  the  defendant,  demanding  pay- 
ment, which  was  made  in  confeder- 
ate funds  in  1862,  that  such  payment 
was  binding,  and  that  payment  in 
such  funds,  they  being  current,  to 
clerks,  sheriflfs  and  other  officers 
authorized  to  collect  money,  was 
binding  on  the  creditor,  while  it  was 
otherwise  as  to  payments  so  made  to 
private  agents.  East  Tennessee,  etc. 
R.  Co.  V.  Williams,  8  Tenn.  Cas.  8. 
See  §  211. 

1  Farmers'  Bank  &  Trust  Co.  v. 
Newland,  97  Ky.  464.31  S.  W.  Rep. 
38;  Morse  on  Banks  &  Banking,  sec. 
221. 

2  National  Bank  of  Commerce  v. 
American  Exchange  Bank,  151  Mo. 
320,  52  S.  W.  Rep.  26.5,  74  Am.  St.  527. 

S.American  Brewing  Co.  v.  United 
States,  33  Ct  of  Cls.  349;  Miltenber- 
ger  V.  Cooke,  18  Wall.  421. 

4  Cole  V.  Sackett,  1   Hill,  5ia    In 


560 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  225, 


[372]  III  England,  and  generally  in  this  country,  it  is  be- 
lieved that  the  debtor's  negotiable  note  or  bill  of  a  third  per- 
son, when  received  by  mutual  agreement  of  the  parties  as 
satisfaction,  has  that  effect;  and  the  rule  applies  equally 
whether  the  debt  be  antecedent  or  contemporaneous.^     Where 


this  case  Cowen,  J.,  said:  "It  may 
be  considered  at  present  as  entirely 
settled  that  to  operate  as  a  satisfac- 
tion the  promise  must  be  of  some 
tiiird  person;  in  other  words,  some- 
thing over  and  above  the  original 
debt.  A  promise  by  note  is  a  secu- 
rity of  no  higlier  degree  than  an  im- 
plied promise;  and  tlie  logic  of  these 
pleas  is  no  more  than  saying:  'Your 
precedent  debt  is  discharged  because 
I  promised  to  pay  it  in  another  form, 
and  you  accepted  tlie  latter  promise 
as  a  satisfaction.'  What  considera- 
tion is  tliere  for  such  an  acceptance  ? 
The  new  promise  to  do  a  thing  which 
the  debtor  was  bound  to  do  before  — 
a  thing  which  he  now  refuses  to  do, 
because  he  had  promised  again  and 
again  to  do  it!  In  these  promising 
times,  there  are,  I  apprehend,  few 
debts  which  on  such  a  theory  are 
not  in  danger  of  being  barred  much 
short  of  the  statutes  of  limitations; 
for  creditors,  however  unwilling, 
are  many  times  obliged  to  accept 
promises  as  the  only  satisfaction 
they  can  obtain  for  the  present.  It 
is  entirely  settled  that  a  promissory 
note  in  no  way  affects  or  impairs  the 
original  debt  unless  it  be  paid." 

Notwithstanding  the  argument, 
from  want  of  consideration,  in  the 
foregoing  opinion.  Judge  Cowen 
conceded  to  negotiable  notes  taken 
for  an  account  some  additional  value 
to  the  creditor  in  Myers  v.  Welles,  5 
Hill,  463:  "Being  negotiable,  they 
might  be  used  more  beneficially  than 
the  account.  Besides,  they  operate 
to  liquidate  the  plaintiff's  claim. 
These  advantages  constituted  suffl,- 
dent  consideration  for  the  suspen- 
sion."    See    Frisbie    v.    Larned,   21 


Wend.  450;  Putnam  v.  Lewis,  8 
Johns.  389;  Hawley  v.  Foote,  19 
Wend.  516. 

On  principle,  it  might  well  be 
claimed  that  where  the  new  note  is 
supported  by  sufficient  consideration 
for  forbearance,  that  consideration 
is  sufficient  for  a  discharge  of  the 
original  debt. 

1  Kirkpatrick  v.  Puryear,  93  Tenn. 
409,  24  S.  W.  Rep.  1130,  22  L.  R.  A. 
785;  Thum  v.  Wolstenholme,  21 
Utah,  446,  61  Pac.  Rep.  537;  Holmes 
V.  Laraway,  64  Vt.  175,  23  Atl.  Rep. 
763;  Mulligan  v.  Hollingsworth,  99 
Fed.  Rep.  216;  Kell  v.  Larkin,72  Ala. 
493;Dryden  v.  Stephens,  19  W.  Va.  1: 
Mayer  v.  Mordecai,  1  S.  C.  398;  Smith 
V.  Hobleman,  12  Neb.  502,  11  N.  W. 
Rep.  753;  Sard  v.  Rhodes,  1  M.  &  W. 
153;  Sibree  v.  Tripp,  15  id.  23;  2  Am. 
Lead.  Cas.  (5th  ed.)  273;  1  Smith 
Lead.  Cas.  pt.  1  (7th  Am.  ed.)  *456; 
Yates  V.  Valentine,  71  Hi.  643;  Chitty 
on  Bills,  289  et  seq.  and  p.  119;  Story 
on  Prom.  Notes,  §  389,  note  3,  g  405; 
Seltzer  v.  Coleman,  32  Pa.  493; 
Smith's  Merc.  L.  542;  Cornwall  v. 
Gould,  4  Pick.  444;  Huse  v.  Alexan- 
der, 2  Met.  157;  Sheehy  v.  Mandeville, 
6  Cranch,  253;  Mailiard  v.  Duke  of 
Argyle,  6  M.  &  G,  40;  Hart  v.  Boiler, 
15  S.  &  R.  162, 16  Am.  Dec.  536;  Jones 
V.  Shawan,  4  W.  &  S.  257;  Sutton  v. 
The  Albatross,  2  Wall.  C.  C.  327; 
Keough  V.  McNitt,  6  Minn.  513.  See 
Goenen  v.  Schroeder,  18  id.  66;  Bank 
V.  Bobo,  11  Rich.  597;  Haven  v.  Foley, 
19  Mo.  636;  Dougal  v.  Cowles,  5  Day, 
511:  Bonnell  v.  Chaniberlin,  26  Conn. 
487;  McMurray  V.  Taylor,  30  Mo.  263, 
77  Am.  Dec.  611;  Foster  v.  Hill,  36 
N.  H.  526;  Moody  v.  Leavitt,  2  N.  H. 
171;  Costelo  v.  Cave,   2  Hill  (S.  C), 


§  225.] 


PAYMENT. 


561 


any  person  is  obligated  to  pay  money,  a  payment  made  in  any 
mode,  eitlier  property,  his  negotiable  paper,  or  other  securi- 
ties, if  such  payment  is  received  as  a  full  satisfaction  of  the 
demand,  it  is  equivalent  for  the  purpose  of  payment  to  cash.' 
Though  the  general  rule  is  otherwise,  in  Massachusetts,-  Maine,^ 


528,  27  Am.  Dec.  404;  Drake  v.  Mitch- 
ell, 3  East.  251;  Foster  v.  Allanson,  3 
D.  &  E.  479;  Moravia  v.  Levy,  id.  483, 
n.:  Watsou  v.  Owens,  1  Rich.  Ill; 
The  Kimball,  3  Wall.  37;  Brown  v. 
Olmsted,  50  Cal.  162;  Alley  v.  Rogers, 
19  Gratt.  366;  Burrows  v.  Bangs,  34 
Mich.  304. 

1  O'Bryan  v.  Jones,  38  Mo.  App.  90; 
Rice  V.  Dudley,  34  id.  383;  Dryden  v. 
Stephens.  19  W.  Va.  1;  Ralston  v. 
Wood,  15  111.  159,  58  Am.  Dec.  604; 
Gillilan  v.  Nixon,  26  111.  52;  Cox  v. 
Reed,  27  id.  434;  Wilkinson  v.  Stew- 
art, 30  id.  48;  Leake  v.  Brown.  43  id. 
376;  Tinsley  V.  Ryon,9Tex.  405;  Rob- 
son  V.  Watts.  11  Tex.  764;  Van  Mid- 
dlesworth  v.  Van  Middlesworth,  32 
Mich.  183;  Wright  v.  Lawton,  37 
Conn.  107:  Gage  v.  Lewis.  68  111.  004; 
Doolittle  V.  Dwight.  2  Met.  561 ;  With- 
erby  v.  Mann,  11  Johns.  518;  McLel- 
lan  V.  Crofton,  6  Me.  304;  Randall  v. 
Rich,  11  Mass.  494;  Pearson  v.  Par- 
ker, 3  N.  H.  366;  Atkinson  v.  Stew- 
art, 2  B.  Mon.  348;  Howe  v.  BufTalo, 
etc.  R.  Co.,  37  N.  Y.  297;  Keller  v. 
Boatman.  49  Ind.  104. 

In  Pitzer  v.  Harmon,  8  Blackf.  112, 
44  Am.  Dec.  738,  a  negotiable  note 
was  given  by  the  surety  and  was 
taken  in  discharge  and  satisfaction; 
held  not  such  a  payment  as  would 
warrant  a  recovery  against  the  prin- 
cipal for  money  paid.  See  Bennett 
V.  Buchanan,  3  Ind.  47. 

If  a  check  given  for  a  pre-existing 
debt  is  ultimately  paid  there  is  no 
"debt  owing  or  accruing"  to  the 
creditor  between  the  times  of  the 
delivery  of  the  check  and  its  pay- 
ment so  as  to  make  the  debtor  who 
drew  it  subject  to  garnishment.  El- 
Vou  1  —  36 


well  v.  Jackson.  1  Cab.  &  Ellis,  302; 
Thompson  v.  Peck,  115  Ind.  512,  18 
N.  E.  Rep.  16.  1  L.  R.  A.  201:  Hunter 
V.  Wetsell,  84  N.  Y.  549.  38  Am.  Rei). 
544. 

As  to  the  payment  of  costs  by 
check  in  order  to  be  entitled  to  ap- 
peal, see  Burns  v.  Smith,  180  Pa.  006. 
37  Atl.  Rep.  105. 

-Melledge  v.  Boston  Iron  Co.,  5 
Cush.  158,  51  Am.  Dec.  59;  Thatcher 
V.  Dinsmore.  5  Mass.  299,  4  Am.  Dec. 
61;  Goodenow  v.  Tyler,  7  Mass.  30,  5 
Am.  Dec.  22;  Maneely  v.  McGee,  6 
Mass.  143,  4  Am.  Dec.  105;  Chapman 
V.  Durant,  10  Mass.  47;  .lohnson  v. 
Johnson,  11  id.  361;  Whitcomb  v. 
Williams,  4  Pick.  288;  Fowler  v. 
Bush.  21  id.  230;  Wood  v.  Bodwell, 
12  id.  268;  Scott  v.  Ray,  18  id.  268; 
French  v.  Price,  24  id.  13;  Brewer 
Lumber  Co.  v.  Boston  &  A.  R.  Co., 
179  Mass.  228.  60  N.  E.  Rep.  548. 

3  Dole  V.  Hayden,  1  Me.  152;  Wise 
v.  Hilton,  4  id.  435;  Homes  v.  Smith, 
16  id.  181:  Gilmore  v.  Bussey,  12  id. 
418;  Trustees,  etc.  v.  Kendrick,  id. 
381;  Comstock  v.  Smith,  23  id.  20,'; 
Bunker  v.  Barron,  79  id.  62,  1  Am. 
St.  282.  8  Atl.  Rep.  253;.Varner  v. 
Nobleborough,  2  Me.  121,  11  Am. 
Dec.  48. 

In  Dole  v.  Hayden,  supra,  upon  a 
settlement  of  mutual  accounts  a 
promissory  note  was  given  for  the 
balance  supposed  to  be  due,  but  by 
a  mistake  in  computation  the  note 
was  made  for  $20  more  than  in 
truth  was  due;  it  was  held  that  the 
debtor  might  recover  this  sum  from 
the  creditor  although  the  note  still 
remained  unpaid.  The  court  treated 
the    mistake    as    substantially    an 


562 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  225. 


Indiana,^  Louisiana^  and  Vermont,'  it  is  thoroughly  settled  that 
when  a  creditor  receives  a  negotiable  note  of  the  debtor,  either 
for  an  antecedent  or  a  contemporaneous  simple  contract  debt,  it 
[373]  is  presumed  to  be  received  as  absolute  and  not  conditional 
pa3''raent.  This  is  a  presumption  of  fact  onl}^  liable  to  be 
controlled  by  evidence  that  such  was  not  the  intention  of  the 
parties/  In  Wisconsin  the  taking  of  a  bill  of  exchange  on  a 
previous  indebtedness  of  the  drawer  to  the  payee  is  prima 
facie  payment  of  the  debt;^ 

This  presumption  rests  upon  the  theory  that  when  a  note  is 
given  for  goods  it  is  equally  convenient  for  the  creditor,  and 
generally  more  so,  to  sue  on  it  than  on  the  original  promise; 
and  so  there  is  no  reason  for  considering  the  original  simple 
contract  as  still  subsisting  and  in  force;  therefore,  it  is  pre- 


omission  to  allow  $20  of  the  plaint- 
iff's account,  and  the  action  as 
brought  for  it. 

1  "  It  is  settled  by  the  decisions  of 
this  court  that  the  giving  of  a  prom- 
issory note,  governed  by  the  law 
merchant,  for  a  pre-existing  indebt- 
edness of  the  maker  to  the  payee 
will  discharge  such  debt  unless  it  is 
shown  that  the  parties  did  not  intend 
it  to  have  that  effect.  And  the  giv- 
ing of  a  promissory  note  not  gov- 
erned by  the  law  merchant  does  not 
operate  as  a  payment  thereof  unless 
it  is  so  agreed  between  the  parties.  " 
Sutton  v.  Baldwin,  146  Ind.  361,  45 
N.  E.  Rep.  518. 

Where  a  debtor  gave  his  creditor 
notes  payable  to  his  wife  the  court 
refused  to  hold  that  they  were  given 
and  accepted  as  payment,  although 
they  were  payable  in  bank,  because 
the  creditor  could  not  use  them  as 
commercial  paper  unless  the  wife 
indorsed  them.  Bradway  v.  Groen- 
endyke,  153  Ind.  508,  55  N.  E.  Rep. 
434. 

The  presumption  of  payment  aris- 
ing from  the  acceptance  of  bills  of 
exchange  is  not  difficult  to  overcome, 
and  parol  evidence  may  be  received 


for  that  purpose.  Keck  v.  State,  12 
Ind.  App.  119,  39  N.  E.  Rep.  899. 

^Hunt  V.  Boyd,  2  La.  109. 

3  Hodges  V.  Fox,  3G  Vt  74;  Street 
V.  Hall,  29  id.  165. 

But  if  the  creditor  takes  a  note 
under  a  misapprehension  as  to  the 
facts,  he  supposing  that  parties  are 
bound  by  it  who  are  not,  the  pre- 
sumed intention  to  treat  the  note  as 
payment  is  rebutted,  and  there  may 
be  a  recovery  upon  the  original  debt. 
Wait  V.  Brewster,  31  Vt.  516,  527. 

« Butman  v.  Howell,  144  Mass.  66, 
10  N.  E.  Rep.  504;  Green  v.  Russell, 
132  Mass.  536;  Fowler  v.  Ludwig.  34 
Me.  460;  Dodge  v.  Emerson,  131  Mass. 
467;  Melledge  v.  Boston  Iron  Co.,  5 
Gush.  158,  51  Am.  Dec.  59;  Maneely 
V.  McGee,  6  Mass.  143,  4  Am.  Dec. 
105;  Watkins  v.  Hill.  8  Pick.  522; 
Howland  v.  Coffin,  9  id.  54;  Reed  v. 
Upton,  10  id.  525;  Butts  v.  Dean,  2 
Met.  76,  35  Am.  Dec.  389;  Brewer 
Lumber  Co.  v.  Boston  &  A.  R.  Co., 179 
Mass.  228.  60  N.  E.  Rep.  548,  and 
cases  cited  in  notes  to  the  next  par- 
agraph. 

SMehlbergv.  Tisher,  24  Wis.  607; 
Schierl  v.  Baumel,  75  id.  69,  43  N.  W. 
Rep.  724. 


■§  225.] 


PAYMENT. 


suraed  that  it  was  intended  by  the  parties  that  the  note 
should  be  deemed  a  satisfaction.'  The  presumption,  however, 
is  founded  on  the  negotiable  character  of  the  note,  and  does 
not  apply  to  other  instruments.'-  The  same  presumption 
arises  in  Massachusetts  when  payment  is  made  by  the  note  of 
a  thinl  person,  unless  there  is  an  agreement  to  the  contrary, 
or  equivalent  circumstances;'  but  it  is  otherwise  in  Indiana,* 
unless  the  creditor  surrenders  the  debtor's  notes  and  sues  upon 
the  note  of  the  third  person.*  The  presumption  that  a  note  is 
taken  as  satisfaction  is  affected  by  circumstances.  Thus,  where 
the  note  given  is  not  the  obligation  of  all  the  parties  who  are 
liable  for  the  simple  contract  debt,  and,  a  fortiori^  when  [37-4] 
the  note  given  is  that  of  a  third  person,  and  if  held  to  be  in 
satisfaction  would  wholly  discharge  the  liability  of  other  par- 
ties previously  liable,  the  presumption,  if  it  exists  at  all,  is  of 
much  less  weight.^  The  fact  that  such  presumption  would  de- 
prive the  party  who  takes  the  note  of  a  substantial  benefit  has 
a  strong  tendency  to  show  that  it  was  not  so  intended;  as 
where  it  would  imply  the  discharge  of  a  mortgage,^  or  the 


1  Curtis  V.  Hubbard,  9  Met.  328. 
See  Brewer  Lumber  Co.  v.  Boston  & 
A.  R.  Co.,  179  Mass.  228,  234,  60  N.  E. 
Rep.  548,  for  other  reasons. 

2Alford  V.  Baker,  53  Ind.  279; 
Trustees  v.  Kendrick,  13  Me.  381; 
Chapman  v.  Coffin,  14  Gray,  454; 
Greenwood  v.  Curtis,  6  Mass.  358,  4 
Am.  Dec.  145;  Wade  v.  Curtis,  96 
Me.  309,  52  Atl.  Rep.  762. 

3  Wiseman  v.  Lyman,  7  Mass.  286. 

Taking  the  negotiable  note  of  a 
third  person  and  entering  it  on  the 
books  as  payment  is  not  conclusive 
that  it  is  such.  Brighara  v.  Lally, 
130  Mass.  485. 

*  Godfrey  v.  Crisler,  121  Ind.  203.  23 
N.  E.  Rep.  999;  Bristol  Manuf.  Co.  v. 
Probasco,  64  Ind.  406. 

5  Dick  V.  Flanagan,  123  Ind.  277,  23 
N.  E.  Rep.  765.  See  Hooker  v.  Hub- 
bard, 97  Mass.  175;  Dewey  v.  Bell,  5 
Allen,  165. 

« Paine  v.  Dwinel,  53  Me.  52,  87 
Am.  Dec.  533;  Kidder  v.  Knox,  48 
Me.  555;  Strang  v.  Hir.st,  61  id.  15; 


Melledge  v.  Boston  Iron  Co.,  5  Cush. 
158,  51  Am.  Dec.  59;  Maneely  v.  Mc- 
Gee,  6  Mass.  143,  4  Am.  Dec.  105; 
Emerson  v.  Providence  Hat  Manuf. 
Co.,  12  Mass.  237,  7  Am.  Dec.  60; 
French  v.  Price,  24  Pick.  13;  Bar- 
nard V.  Graves,  16  id.  41;  Curtis  v. 
Hubbard,  9  Met.  328. 

'Taft  V.  Boyd,  13  Allen,  86;  Bun- 
ker V.  Barron,  79  ]\Ie.  62,  1  Am.  St 
282,  8  Atl.  Rep.  253;  Watkins  v.  Hill. 
8  Pick.  522;  Pornroy  v.  Rice,  16  id. 
22;  Zerrano  v.  Wilson,  8  Cush.  424. 
See  Fowler  v.  Bush,  21  Pick.  230. 

In  Weddigen  v.  Boston,  etc.  Co., 
100  Mas&  422,  a  buyer  sent  the  seller 
a  third  person's  check  to  pay  for  a 
bill  of  goods;  the  seller  sent  a  re- 
ceipt for  the  amount  as  received  in 
settlement  of  the  bill.  At  the  time 
of  sending  the  check  the  buyer  sup- 
posed it  to  be  good,  but  it  was  sea- 
sonably presented  and  dishonored; 
held  not  a  payment  or  accord  and 
satisfaction. 

Where  a  debtor  gave  his  negoti- 


564  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.       [§  226. 

lien  of  a  vendor,  including  the  right  of  stoppage  in  transitu} 
The  taking  of  a  note  is  to  be  regarded  as  payment  only  when 
the  security  of  the  creditor  is  not  thereby  impaired.^  In  some 
states,  and  upon  very  good  reasons,  a  distinction  is  made  as  to 
the  eilect  to  be  given  to  security  executed  by  the  debtor.  If 
it  is  not  of  higher  rank  than  the  evidence  of  indebtedness  held 
by  tiie  creditor  it  is  not  presumed  to  be  accepted  in  payment, 
but  if  he  takes  a  higher  security  or  a  better  assurance  of  pay- 
ment than  he  was  before  possessed  of  the  presumption  is  to 
the  contrary.'  Where  the  debtor  executes  a  note  in  which  he 
waives  his  right  to  claim  exemptions  and  gives  it  to  his  cred- 
itor, it  is  presumed  to  be  taken  by  him  in  payment  of  a  book 
account.*  The  general  distinction  was  made  by  Judge  Story; 
he  thought,  however,  that  it  ought  not  to  be  extended  to  se- 
curity given  by  a  third  person.-^  Whether  a  note  is  to  have 
the  effect  of  payment  or  to  be  considered  as  collateral  only  is 
to  be  determined  by  the  law  of  the  state  in  which  it  was  made 
and  is  payable,  though  the  creditor  resides  in  another  state 
and  the  indebtedness  which  was  the  consideration  for  the  note 
was  incurred  there.® 

§  226.  Same  subject.     The  rule  in  the  states  above  named 
is  exceptional.     It  is  held  generally  in  this  country,  as  well  as 

able  note  for  the  amount  of  his  debt,  ceived  in  full  for  the  goods.     Van- 

and  included  more  than  lawful  in-  cleef  v.  Therasson,  '6  Pick.  12. 

terest  in  consideration  of  further  de-  i  Brewer  Lumber  Co.  v.  Boston  & 

lay  of  payment,  the  note  being  void  A.  R.  Co.,  179  Mass.  228,  60  N.  E.  Rep. 

for  usury,  held  the  original  debt  was  548. 

not  discharged  and   might  still  be  ^Paine  v.  Dwinel,  53  Me.  52,  87 

recovered,    though    a    receipt    was  Am.  Dec.  533;    Lovell   v.  Williams, 

given  at  the  time  the  note  was  taken.  125  Mass.  442;  Walker  v.  Mayo,  143 

Johnson   v.  Johnson,    11   Mass.  359;  id.  42,  8  N.  E.  Rep.   873;  Vallier  v. 

Stebbins  V.  Smith,  4  Pick.  97:  Rams-  Ditson,  74  Me.  553;    Hercules   Iron 

dell  V.  Soule,  12  Pick.  126;  Meshke  v.  Works  v.  Hummer,  4  111.  App.  598. 

Van  Doren,  16  Wis.  319;  Lee  v.  Peck-  3  Chalmers  v.  Turnipseed,  21  S.  C. 

ham,  17  id.  383.  See  Webster  v.  Stad-  126;  Pelzer  v.  Steadman,  22  id.  279; 

den,  14  id.  277.  Gardner  v.  Hust,  2  Rich.  608. 

A  negotiable  note  given  in  New  ^Lee  v.  Green,  83  Ala.  491,  3  So. 

York  for  goods  sold  there  by  a  citi-  Rep.  785. 

zen  of  that  state  is  no  satisfaction  of  *  United  States  v.  Lyman,  1  Mason, 

the  original  debt,  so  as  to  bar  an  ac-  482,  505. 

tion  in  Massachusetts  for  the  same,  ^Gilman  v.  Stevens,  63  N.  H.  342; 

although  the  note  was  lost  and  the  Thomson-Houston    Electric    Co.    v. 

vendor  had  given  the  vendee  a  re-  Palmer,  52  Minn.  174,  53  N.  W.  Rep. 

ceipt  stating  that  the  note  was  re-  1137,  38  Am.  St.  536. 


§  220.] 


PAYMENT. 


565 


in  England,  that  a  note,  bill  or  check  of  the  debtor  or  of  a 
third  person,  given  and  received  on  account  of  a  previous  debt 
or  one  contemporaneously  contracted,^  is  not  absolute,  but  con- 
ditional, payment,  unless  it  is  accepted  as  such,  or  unless  it  pro- 
duces payment.'-     The  principle  is  applicable  to  a  check  which 


1  Wisconsin  is  apparently  another 
exception  so  far  as  contemporaneous 
debts  are  concerned.  Challoner  v. 
Boyington,  83  Wis.  399,  53  N.  W. 
Rep.  G9i;  but  not  as  to  antecedent 
debts.  Willow  River  Lumber  Co.  v. 
Luger  Furniture  Co.,  102  Wis.  636, 78 
N.  W.  Rep.  763. 

-The  cases  which  expressly  hold 
the  doctrine  stated  in  the  text  are 
very  numerous:  a  few  only  are  cited 
here;  those  which  will  be  cited  in 
the  subsequent  discussion  of  the  va- 
rious branches  of  the  subject  under 
consideration  are  in  harmony  with 
those  here  collected,  except  the  de- 
cisions in  Massachusetts,  Maine, 
Indiana,  Louisiana  and  Vermont, 
and  in  Wisconsin  as  to  bills  of  ex- 
change and  some  cases  there  and 
elsewhere  which  make  a  distinction 
between  the  obligations  of  the 
debtor  and  third  persons  where 
they  are  given  for  a  contempora- 
neous debt.  See  first  paragraph  of 
last  section.  Hunter  v.  Moul,  98  Pa. 
13,  42  Am.  Rep.  610;  White  v.  Boone, 
71  Tex.  712, 12  S.  W.  Rep.  51 ;  Caldwell 
V.  Hall,  49  Ark.  508.  1  S.  W.  Rep.  62; 
Comptoir  D'Escompte  v.  Dresbach, 
78  Cal.  15,  20  Pac.  Rep.  28:  Thomas 
V.  Westchester  County,  115  N.  Y.  47, 
4  L.  R.  A.  477.  21  N.  E.  Rep.  634;  Fry 
V.  Patterson,  49  N.  J.  L.  612,  10  Atl. 
Rep.  390;  Brabazon  v.  Seymour,  42 
Conn.  554;  Bank  of  Monroe  v.  Gif- 
ford,  79  Iowa,  300.  44  N.  W.  Rep.  558; 
Bradley  v.  Harwi,  43  Kan.  314,  23 
Pac.  Rep.  566;  Levan  v.  Wilten,  135 
Pa.  61,  19  Atl.  Rep.  145;  Whitcherv. 
Dexter,  61  N.  H.  91;  Holmes  v. 
Briggs,  131  Pa.  233,  18  Atl.  Rep.  928 
(these    last    two    cases  qualify  the 


proposition  by  the  condition  that  the 
creditor  must  not  so  improperly  con- 
duct himself  with  respect  to  the  note 
as  to  injure  the  debtor);  Selby  v. 
McCuI  lough,  26  Mo.  A  pp.  66;  Knox 
V.  Gerhauser,  3  Mont.  267;  Salomon 
V.  Pioneer  Co-operative  Co.,  21  Fla. 
374,  58  Am.  Rep.  667;  Fleig  v.  Sleet, 
43  Ohio  St.  53,  54  Am.  Rep.  800,  1  N. 
E.  Rep.  24;  First  Nat.  Bank  v.  Case, 
63  Wis.  504.  22  N.  W.  Rep.  833  (the 
rule  is  otherwise  where  a  bill  of  ex- 
change is  accepted;  see  last  para- 
graph); Wood  burn  v.  Woodburn, 
115  111.  427.  5  N.  E.  Rep.  82:  Heath 
v.  White,  3  Utah,  474,  24  Pac.  Rep. 
762;  Wiles  v.  Robinson,  80  Mo.  47; 
Hunt  V.  Higman,  70  Iowa,  406,  30  N. 
W.  Rep.  769;  Hess  v,  Dille,  23  W.  Va. 
90:  Keel  v.  Larkin,  72  Ala,  493; 
Ciieltenham  Stone  &  G.  Co.  v.  Gates 
Iron  Works,  23  111.  App.  635,  134  111. 
623,  16  N.  E.  Rep.  923;  Walsh  v. 
Lennon,  98  III.  27,  38  Am.  Rep.  75; 
Wilhelm  v.  Schmidt,  84  111.  183; 
Pritchard  v.  Smith,  77  Ga.  463;  Cos- 
telo  V.  Cave,  2  Hill  (S.  C),  207;  Slo- 
comb  V.  Lurty,  Hempst.  C.  C.  431; 
People  V.  Howell,  4  Johns.  296;  Bates 
V.  Rosekrans,  37  N.  Y.  409;  Webster 
V.  Stadden,  14  Wi.s.  277;  Burrows  v. 
Bangs,  34  Mich.  304;  Peter  v.  Beverly, 

10  Pet.  532;  Owensou  v.  Morse,  7  T. 
R,  64;  Chastain  v.  Johnson,  3  Bailey, 
574:  Alley  v.  Rogers,  19  Gratt.  368; 
The  Kimball,  3  Wall.  37;  Newell  v. 
Nixon,  4  id.  573;  Lee  v.  Tinges,  7 
Md.  215;  Harris  v.  Jolmston,  9 
Cranch,  311;  Good  v.  Cheesman,  2  B. 
&  Ad.  328;  Winslow  v.  Hardin's 
Ex'r,  3  Dana,  543;  Adger  v.  Pringle, 

11  S.  C.  527;  Johnson  V.  Clarke,  laid. 
72;  Scott  V.  Gilkey,  153  111.  168,  39  N. 


5G6 


CONVENTIONAL    LIQUIDATIONS    AND    DISCUAKGES.       [§  22G.. 


is  certified  before  its  delivery  to  the  creditor.  Tlie  only  effect 
of  the  certificate  is  to  increase  the  currency  of  the  check  by 
addin<j  to  the  liability  of  the  drawer  that  of  the  bank.  The 
creditor  does  not  assume  the  risk  of  the  solvency  of  the  lat- 
[376]  ter.'  Renewal  of  a  note  is  not  always  considered  to  be 
a  payment/  and  will  not  discharge  a  mortgage  security.'     But 


E.  Rep.  265;  Dellapiazza  v.  Foley, 
112  Cal.  380,  44  Pac.  Rep.  727;  Angus 
V.  Chicago  Trust  &  Savings  Bank, 
170  111.  398,  48  N.  E.  Rep.  946;  Her- 
cules Iron  Worlis  v.  Hummer,  49  111. 
App.  598;  Schumacher  v.  Edward  P. 
Allis  Co.,  70  id.  556;  Bradford  v.  Neil 
&  Mahnke  Construction  Co.,  76  III. 
App.  488;  Stone  v.  Evangelical  Luth- 
eran St.  Paul's  Church,  92  111.  App. 
77;  Topeka  Capital  Co.  v.  Merriam, 
60  Kan.  397,  56  Pac.  Rep.  757;  Kirk- 
patrick  v.  Bessalo,  116  Mich.  657,  74 
N.  W,  Rep.  1042;  London  &  San 
Francisco  Bank  v.  Parrott,  125  Cal. 
472,  58  Pac.  Rep.  164.  73  Am.  St.  64; 
Woodward  v.  Holmes,  67  N.  H.  494, 
41  AtL  Rep.  72;  Acme  Harvester  Co. 
V.  Axtell,  5  N.  D.  315,  65  N.  W.  Rep. 
680;  Carroll  v.  Sweet,  128  N.  Y.  19, 
13  L.  R  A.  43,  27  N.  E.  Rep.  763; 
Willow  River  Lumber  Co.  v.  Luger 
Furniture  Co.  102  Wis.  636,  78  N. 
W.  Rep.  762  (previous  debt);  Sutton 
V.  Baldwin.  146  Ind.  361,  45  N.  E. 
Rep.  518;  Blair  v.  Wilson,  28  Gratt. 
165;  Holland  v.  Rongey,  168  Mo.  16, 


76  S.  W.  Rep.  568;  Nason  v.  Fowler, 
70  N.  H.  291.  47  Atl.  Rep.  203. 

1  Born  V.  First  Nat.  Bank,  123  Ind. 
78,  7  L.  R,  A.  442,  18  Am.  St.  312,  24 
N.  E.  Rep.  173;  Bickford  v.  Same,  42 
111.  238;  Larsen  v.  Breene,  12  Colo. 
480,  21  Pac.  Rep.  498;  Andrews  v. 
German  Nat.  Bank,  9  Heisk.  211,  24 
Am.  Rep.  300;  Mutual  Nat.  Bank  v. 
Rotge,  28  La.  Ann.  933,  25  Am.  Rep. 
126. 

2  Adams  v.  Squires,  61  111.  App. 
513;  Chisholm  v.  Williams,  128  111. 
115,  21  N.  E.  Rep.  215;  Tyler  v.  Hyde, 
80  III.  App.  123;  Kemmerer's  Appeal, 
102  Pa.  558:  Graham's  Estate.  14 
Piiila.  280;  National  Bank  v.  Bigler, 
83  N.  Y.  51;  Kibbey  v.  Jones,  7  Bush, 
243;  Jagger  Iron  Co.  v.  Walker,  76 
N.  Y.  521. 

"The  question  whether  renewal 
notes  extinguish  the  debt  is  a  vexed 
one,  and  is  usually  one  of  fact,  and 
the  courts  have  differed  somewhat 
upon  the  presumptions  which  arise 
from  the  bare  fact  of  renewal  by 
note  bearing  the  signature  of  other 


SReeder  v.  Nay,  95  Ind.  164;  Will- 
iams V.  Starr,  5  Wi.s.  534;  Eastman 
v.  Porter,  14  Wis.  39;  Flower  v.  El- 
wood,  66  111.  438;  Coles  v.  Withers, 
33  Gratt.  180;  Fowler  v.  Bush,  21 
Pick.  230. 

In  the  last  case  a  mortgage  was 
given  as  security  for  a  debt  pay- 
able in  instalments;  after  the 
first  instalment  became  due  the 
mortgagee  called  on  the  mortgagor 
for  payment,  saying  he  could  sell 
the  note  and  mortgage  if  such  in- 
Ktalment  were  paid.     The  mortgagor 


thereupon  gave  a  negotiable  note 
for  such  instalment,  payable  in  four 
month.s.  upon  which  the  mortgagee 
proposed  to  raise  the  money  at  a 
bank;  and  the  following  indorse- 
ment was  made  on  the  original 
note:  "Received  the  fii'st  instalment 
on  the  within.  $402.78."  The  mort- 
gagee subsequently  sold  the  note 
and  mortgage.  It  was  held  that 
this  was  a  payment  of  such  instal- 
ment and  not  a  mere  change  of  se- 
curity for  the  same  debt;  that  the 
mortgage  was  discharged  pro  tanio. 


22G.] 


PAYMENT, 


50 ; 


it  seems  where  renewal  is  a  discount  of  the  new  note,  and 
there  is  a  payment  of  the  old  note  out  of  the  avails,  it  is  a  dis- 
charge of  the  old  debt.^  Courts  are  in  the  habit  of  saying  that 
when  such  paper  is  given  for  a  debt  it  is  not  to  be  deemed  a 
satisfaction  unless  there  is  an  express  agreement  to  that  efToct.'^ 
It  is  probably  not  necessar}^  that  the  proof  should  be  just  in 
that  form;  but  it  is  doubtless  essential  that  there  be  an  express 
agreement  or  circumstances  of  approximately  equal  force  to 
show  that  intention.^     There  is  such  a  lack  of  harmony  [377] 


parties.  Tlie  subject  was  discussed 
in  the  case  of  Nif?htinj2;ale  v.  Chafee, 
11  R.  L  609.  23  Am.  Rep.  531,  where 
it  was  held  that  aa  agreement  to  dis- 
charge a  retiring  partner  will  not  be 
inferre  1  from  the  acceptance  of  the 
note  of  the  continuing  partners. 
Whatever  may  be  the  rule  in  other 
cases,  we  concur  with  Prof.  Parsons 
in  the  opinion  that,  unless  there  is 
evidence  of  a  contrary  intention,  re- 
newals at  bank  ought  always  to  be 
regarded  as  payment  because  the 
banks  themselves  so  regard  them. 
See  2  Pars.  Notes  &  B.  (2d  ed.),  p.  203. 
In  commenting  on  the  opinion,  the 
court  in  the  Rhode  Island  case  says: 
'He  does  not  tell  us  how  he  knows 
they  so  I'egard  them.'  This  opinion 
of  Prof.  Parsons  is  not  to  be  brushed 
away  by  a  question.  The  practices 
of  banks  are  well  known,  and  from 
them  their  understanding  may  be 
inferred.  Certainly,  since  the  pas- 
sage of  the  federal  banking  law,  tbe 
whole  course  of  national  banks  has 
been  at  variance  with  the  idea  that 
the  original  debt  continued,  and  that 
successive  renewals  were  additional 
and  collateral  security  to  the  first 
obligation.  The  policy  of  the  law  is 
to  require  the  banks  to  confine  their 
loans  to  short-time  paper,  generally 
secured  by  indorsers,  who  may  vary 
from  time  to  time  as  the  notes  are 
renewed.  We  think  it  would  be  a 
surprise  to  those  who  indorse  paper 
to  be  told  that  their  obligation  re- 


mains after  the  note  has  been  taken 
up  and  canceled  by  .several  renewals, 
and  each  in  its  turn  taken  up  and 
canceled."  Childs  v.  Pellett,  102  Jlich. 
558,  506,  61  N.  W.  Rep.  54. 

•Fislier  V.  Marvin,  47  Barb.  159; 
Castleman  v.  Holmes,  4  J.  J.  Marsh. 
1.  Contra,  Jagger  Iron  Co.  v. 
Walker,  76  N.  Y.  521. 

2  The  Kimball,  3  Wall.  37;  Segrist 
v.  Crabtree.  131  U.  S.  287,  9  Sup.  Ct. 
Rep.  687;  Pritchard  v.  Smith,  77  Ga. 
463;  Comptoir  D'Escompte  v.  Dres- 
bach,  78  Cal.  15,  20  Pac  Rep.  28; 
Willow  River  Lumber  Co.  v.  Luger 
Furniture  Co.,  102  Wis.  636.  78  N. 
W.  Rep.  762.  See  Case  Manuf.  Co. 
V.  Sox  man,  138  U.  S.  431,  11  Sup.  Ct. 
Rep.  360. 

3Randlet  v.  Herren,  20  N.  H.  102; 
Johnson  v.  Cleaves,  15  id.  332;  Slo- 
comb  V.  Lurty,  Hemp.  C.  C.  431; 
Youngs  v.  Stahelin,  34  N.  Y.  258; 
Yates  v.  Valentine,  71  111.  643. 

In  Eastman  v.  Porter,  14  Wis.  39, 
it  is  said  that  where,  in  connection 
with  the  fact  that  negotiable  paper 
is  taken  on  account  of  a  debt,  it  is 
alleged  or  acknowledged  to  have 
been  received  "  as  payment,"  or  "  in 
full,"  or  "  in  full  of  all  demands," 
these  expressions  must  be  considered 
with  that  fact,  and  interpreted  as 
meaning  conditional  payment. 

In  La  Fayette  County  Monument 
Corp.  v.  Magoon,  73  Wis.  627,  42  N. 
W.  Rep.  17,  3  L.  R.  A.  761,  the  com- 
munications   between    the    parties 


56S 


CONVENTIONAL   LIQUIDATIONS    AND    DISCHARGES.       [§  226. 


in  the  adjudications  that  it  is  unsafe  to  attempt  to  formulate  a 
rule  from  thera.  There  is  a  marked  tendency  in  the  later  cases 
to  lessen  the  old  rule  which  required  an  express  agreement  in 


were  to  the  effect  that  M.  hereby 
subscribes  and  hands  to  the  treas- 
urer of  said  corporation  $1,000  in 
money  to  be  used,  etc.  In  acknowl- 
edging the  receipt  of  this  and  the 
accompanying  check  it  was  said,  "  re- 
ceived from  iL  the  sum  of  $1,000  ac- 
cording to  the  foregoing  letter." 
Held,  that  the  check  was  received 
as  money.  Glenn  v.  Smith,  2  Gill  & 
J.  493.  20  Am.  Dec.  542;  Johnson  v. 
Weed,  9  Johns.  310.  6  Am.  Dec.  279; 
Tobey  v.  Barber.o  Johns.6S,4  Am.Dec. 
326;  Putnam  v.  Lewis,  8  Johns.  389; 
Bateman  v.  Bailey.  5  T.  R.  512;  Puck- 
ford  V.  Maxwell,  6  id.  52;  Bradford 
V.  Fox,  38  N.  Y.  289;  Comptoir  D'Es- 
compte  V.  Dresbach,  78  Cal.  15,  20 
Pac.  Rep.  28. 

In  Connecticut,  as  evidence  that 
a  new  note  is  received  in  payment 
of  an  account,  peculiar  importance 
is  attached  to  a  receipt  which  ex- 
presses that  the  note  is  given  in  full 
payment.  It  is  there  held  that  such 
a  receipt  is  a  discharge  unless  it  is 
executed  under  circumstances  of 
mistake,  accident  or  surprise,  or  is 
founded  in  fraud.  Bonnell  v.  Cham- 
berlin,  26  Conn.  487:  Fuller  v.  Crit- 
tenden, 9  id.  401,  23  Am.  Dec.  364; 
Tucker  v.  Baldwin.  13  Conn.  136,  33 
Am.  Dec.  384;  Hurd  v.  Blackman,  19 
Conn.  177.  See  Bishop  v.  Perkins, 
id.  300;  Beam  v.  Barnum,  21  id.  202. 

An  effort  to  collect  acceptances 
given  by  a  debtor,  when  they  were 
not  received  in  payment,  is  not  such 
an  appropriation  of  them  as  satisfies 
the  debt.  Olyphant  v.  St.  Louis  Ore 
&  S.  Co.,  28  Fed.  Rep.  729. 

Entering  the  amount  of  the  nego- 
tiable note  of  a  third  person  upon 
the  creditor's  books  to  the  debtor's 
credit  without  making  any  other  ap- 
propriation of  it  does  not  conclusively 


show  that  it  was  taken  in  payment. 
Brighton  v.  Lally,  130  Mass.  485.  Nor 
does  the  subsequent  rendering  of 
monthly  statements  showing  such 
credit.  Cheltenham  Stone  &  G.  Co. 
V.  Gates  Iron  Works,  23  111.  App.  35, 
124  III.  623,  16  N.  E.  Rep.  123. 

If  the  check  of  a  third  person  is 
taken  the  creditor's  neglect  to  give 
the  debtor  prompt  notice  of  its  dis- 
honor, his  retention  of  it  and  collect- 
ing a  dividend  out  of  the  drawer's 
estate  do  not  raise  a  presumption 
that  it  was  taken  as  absolute  pay- 
ment; these  facts  are  exclusively  for 
the  jury.  Holmes  v.  Briggs,  131  Pa. 
233,  18  Atl.  Rep.  92S. 

The  English  law  is  thus  stated: 
"The  debt  may  be  considered  as  act- 
ually paid  if  the  creditor  at  the  time 
of  receiving  the  note  has  agreed  to 
take  it  in  payment  of  the  debt,  and 
to  take  upon  himself  the  risk  of  the 
note  being  paid,  or  if,  from  the  con- 
duct of  the  creditor  or  the  special  cir- 
cumstances of  the  case,  such  an 
agreement  is  legally  to  be  implied. 
But  in  the  absence  of  any  special 
circumstances  throwing  the  risk  of 
the  note  upon  the  creditor,  his  re- 
ceiving the  note  in  lieu  of  the  present 
payment  of  the  debt  is  no  more  than 
giving  an  extended  credit,  or  giving 
time  for  paj^ment  on  a  future  day, 
in  consideration  of  receiving  this 
species  of  security.  Whilst  the  time 
runs  payment  cannot  legally  be  en- 
forced, but  the  debt  continues  till 
payment  is  actually  made:  and  if 
payment  be  not  made  when  the  time 
has  run  out,  payment  of  the  debt 
may  be  enforced  as  if  the  note  had 
not  been  given."  Per  Langdale.  M. 
R.,  in  Sayer  v.  Wagstaff,  5  Beav.  415, 
423.  If  the  creditor  is  olfered  cash 
but  voluntarily  takes  a  bill  he  is  paid 


i  226.] 


PAYMENT. 


5G9 


order  that  payment  should  follow  the  taking  of  security,'  and 
to  regard  the  surrender  or  retention  of  the  original  security  as 
•decisive  of  the  intention  of  the  parties,-  because  if  the  cred- 
itor intends  to  resort  to  security  he  already  holds  he  will  not 


and  cannot  resort  to  his  debtor  if  the 
bill  is  dishonored.  Marsh  v.  Pedder, 
4  Camp.  257;  Strong  v.  Hart,  6  B.  & 
•C.  160;  Smith  v.  Ferrand,  7  id.  19: 
Anderson  v.  Hillies.  13  C.  B.  499.  But 
unless  the  creditor  had  an  oppor- 
tunity to  receive  money  a  bill  if 
taken  will  be  presumed  to  have  been 
accepted  as  conditional  payment. 
Robinson  v.  Read,  9  B.  &  C.  449. 
Under  a  contract  for  the  sale  of  goods 
to  be  paid  for  by  tiie  bu3"er's  accept- 
ances or  other  like  forms  of  credit, 
the  payment  is  conditional  only,  and 
upon  dishonor  of  the  bills  the  seller 
may  sue  upon  the  original  conti'act 
for  the  price  of  the  goods;  upon  a  re- 
fusal to  give  the  bills  the  remedy  of 
the  seller  is  for  that  breach  of  con- 
tract, and  he  cannot  sue  for  tlie  con- 
tract price  until  the  expiration  of  the 
stipulated  credit.  Leake's  Contracts, 
894;  Paul  v.  Dod,  2  C.  B.  800;  Helfs  v. 
Winterbottom,  2  B.  &  Ad.  431 ;  Gunn 
v.  Bolckovv,  L.  R.  10  Ch.  500. 

1  An  express  agreement  to  receive 
payment  in  sometliing  else  than 
money  need  not  be  proved;  it  may 
be  implied  from  the  facts  and  cir- 
cumstances. Griffin  v.  Petty,  101 
N.  C.  380,  7  S.  K  Rep  729;  Adams  v. 
Squires,  61  111.  App.  513;  Chisholm  v. 
Williams,  128  111.  115,  21  N.  E.  Rep. 
215. 

A  debtor  proposed  by  letter  to 
■remit  a  draft  '•  in  payment  of  bill  in 
full;"  the  creditor  acknowledged  the 
receipt  of  the  di-aft  in  full  payment. 
There  was  no  cause  of  action  against 
the  debtor  on  the  account;  his  liabil- 
ity rested  upon  his  indorsement.  Day 
v.  Thompson,  65  Ala.  269. 

Au  express  agreement  is  not  nec- 
essary to  make  the  check,  note  or 
bill  payment.    Riverside  Iron  Works 


V.  Hall,  64  Mich.  165,  31  N.  W.  Rep. 
152;  Brown  v.  Dunckel,  46  Midi.  32, 
18  N.  W.  Rep.  537;  Keel  v.  Larkin, 
72  Ala.  493;  Morris  v.  Harveys,  75 
Va.  726;  Hall  v.  Stevens,  116  N.  Y. 
201,  22  N.  E.  Rep.  374.  5  L.  IL  A.  S02 
(contemporaneous  debt). 

The  intention  to  receive  a  note  and 
collaterals  in  payment  is  inferable 
from  an  entry  in  the  creditor's  books 
to  the  effect  that  they  were  received 
in  settlement  of  balance,  and  a  re- 
ceipt expressing  that  they  were  in 
settlement  of  the  above  account- 
Williams,  Ex  parte,  17  S.  C.  396. 

In  Griffin  v.  Anderson,  3  S.  C.  105, 
the  words  "settled  in  full"  in  tlie 
bond  of  a  commissioner  were  con- 
sidered sufficient  to  indicate  that  a 
note  was  taken  in  payment  of  a 
balance  due  from  him.  See  In  re 
Hurst,  1  Flip.  462. 

If  notes  secured  by  a  mortgage 
nearly  equal  in  amount  to  the  debt 
are  given  and  tlie  balance  is  paid  in 
cash,  and  part  of  the  notes  are  used 
by  the  creditor,  the  debt  is  extin- 
guished. Quidnuck  Co.  v.  Chafee,  13 
R.  I.  438. 

2  Riverside  Iron  Works  v.  Hall,  64 
Mich.  165,  31  N.  W.  Rep.  152;  Brown 
V.  Dunckel,  46  IMich.  32, 18  N.  W.  Rep. 
537;  Morris  v.  Harveys,  75  Va.  726; 
Fidelity  Ins.,  etc.  Ca  v.  Shenandoah 
Valley  R.  Co.,  86  id.  1, 19  Am.  St.  858, 
9  S.  K  Rep.  759;  Burchard  v.  Frazer, 
23  Mich.  224;  Kirkpatrick  v.  Pur- 
year,  93  Tenn.  409,  24  S.  W.  Rep.  11 30, 
22  L.  R.  A.  785. 

A  creditor  cannot  insist  that  a  note 
taken  by  him  does  not  discharge  his 
claim  unless  he  offers  to  surrender 
it.  Davis  &  Ranking  Buikling  &: 
Manuf.  Co.  v.  Montro.se  Butter  & 
Cheese  Co.,  59  III.  App.  573. 


570 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  220. 


surrender  it.  In  the  absence  of  an  agreement  or  acts  of  the 
parties  indicative  of  a  contract,  a  negotiable  note  or  bill  of  ex- 
change taken  as  conditional  payment  will  have  the  effect  to 
suspend  the  right  of  action  until  it  matures.^  And  then  it  will 
[378]  not  be  presumed  in  favor  of  the  creditor  that  it  remains 
unpaid;  he  must  account  for  it;  and  so  if  he  receives  a  check. 
Such  paper,  unless  it  has  been  lost,  must  be  produced  at  the 
trial  of  an  action  on  the  original  consideration  that  it  may  be 
surrendered  or  canceled.^ 


Where  the  new  note  is  made  by  a 
third  person  the  surrender  of  the  old 
will  be,  prima  facie,  a  discharge  of 
it  and  a  release  of  its  maker  from 
personal  liability;  but  not  if  the 
holder  of  the  old  note  had  a  specific 
lien  on  land  as  security  for  the  debt 
and  the  result  of  giving  the  new  note 
is  to  make  the  person  liable  on  it  the 
owner  of  the  land,  part  of  the  con- 
sideration being  the  new  nota  Hess 
V.  Dille.  23  W.  Va.  90;  Merchants' 
Nat.  Bank  v.  Good,  21  id.  455. 

Walker,  C.  J.,  in  Strong  v.  King,  35 
111.  9, 19,  said:  "The  bare  reception  of 
a  check  from  the  drawer  for  the 
amountof  the  bill  will  not.  ordinarily, 
be  considered  as  payment,  but  only 
as  a  means  of  payment;  and  this  is 
the  rule  whether  the  bill  is  surren- 
dered to  the  drawer  at  the  time  of 
receiving  the  check  or  is  retained  by 
the  holder  until  the  payment  is  con- 
summated. It  may  be  imprudent  to 
surrender  the  bill  before  actual  pay- 
ment is  made,  but  such  improvi- 
dence does  not  change  the  rule." 

In  Flower  v.  Elwood,  66  111.  438, 
444,  the  same  judge  said:  "And  al- 
though the  surrender  of  the  notes 
by  the  mortgagee  to  the  maker  is 
prima  facie  evidence  of  their  pay- 
ment, still  such  presumption  may  be 
rebutted." 

In  Yates  v.  Valentine,  71  111.  643, 
his  associate,  apparently  delivering 
the  unanimous  opinion  of  the  court, 
said:  "We  can  conceive  of  no  act 
showing  more  decisively  that  it  was 


intended  by  the  parties  that  the  note 
was  satisfied  and  should  be  canceled. 
It  was  intended  that  the  defendant 
should  thereafter  be  bound  by  the 
terms  of  the  notes  then  given,  and 
the  old  note  was  given  him  that  it 
might  cease  to  exist  as  an  evidence 
of  indebtedness  against  him."  Chas- 
tain  v.  Johnson,  2  Bailey,  574;  East- 
man V.  Porter,  14  Wis.  39;  Smith  v. 
Miller,  43  N.  Y.  171,  3  Am.  Rep.  690. 

Ordinarily  the  surrender  by  a  cred- 
itor to  the  debtor  of  the  promissory 
note  of  the  latter  on  the  acceptance 
of  the  note  of  a  third  person  for  that 
amount  is  pm«a/acie  evidence  that 
it  is  taken  in  satisfaction  of  the  note 
so  surrendered.  Youngs  v.  Lee,  12 
N.  Y.  551;  Pratt  v.  Coman,  37  id.  440; 
Phoenix  Ins.  Co.  v.  Church,  81  id.  218, 
225,  37  Am.  Rep.  494.  But  whether 
the  original  debt  is  in  fact  discharged 
depends  upon  the  parties'  intention. 
Noel  V.  Murray,  13  N.  Y.  167. 

A  note  given  by  executors  does 
not  discharge  an  indebtedness  due 
from  the  estate  of  their  testator 
whose  note  was  surrendered  to  them 
unless  such  was  the  understanding 
of  the  parties.  Glenn  v.  Burrows,  37 
Hun,  602. 

iThe  Kimball,  3  Wall.  37;  Phoenix 
Ins.  Co.  V.  Allen,  11  Mich.  501,  83 
Am.  Dec.  756;  Griffith  v.  Grogan,  12 
Cal.  317;  Putnam  v.  Lewis,  8  Johns. 
389;  Brewster  v.  Bours,  8  Cal.  501; 
Lee  V.  Tinges,  7  Md.  215;  Smith  v. 
Owens,  21  Cal.  11. 

•■i  Stevens   v.  Bradley,   22   111.    224;, 


§  227.] 


PAYMENT. 


571 


§  227.  Same  subject.  By  accepting  the  note,  bill  or  check, 
either  of  the  debtor  or  of  a  third  person,  as  conditional  pay- 
ment the  creditor  assumes  the  duty  of  doinir  anything  in  re- 
spect to  it  which  is  necessary  not  only  to  obtain  payment  by 
due  presentment,  but  also  by  protest  and  notice  to  fix  the  lia- 
bility of  the  parties.  And  the  onus  is  upon  him  to  show  that 
he  has  performed  that  duty.'  If  there  are  other  parties  to 
such  paper  to  which  the  holder  could  resort  in  case  of  its  dis- 
honor any  want  of  diligence  on  the  part  of  the  creditor  re- 
ceiving it,  by  which  such  parties  are  discharged,  will  preclude 
such  creditor  from  returning  it  and  suing  upon  the  original 
debt.2 

There  is  not  the  same  arbitrary  strictness  in  the  rule  of  dili- 
gence and  in  respect  to  consequences  of  neglect  where  a  check 
is  received  as  a  means  of  payment,  or  even  as  payment,  that 
prevails  in  regard  to  notes  and  bills.  The  drawer  is  in  no 
case  discharged  from  his  responsibility  to  pay  the  check  unless 
he  has  suffered  some  loss  or  injury  by  the  omission  or  neglect 
to  make  presentment,  and  then  only  p7'o  tanto? 


Heartt  v.  Rhodes,  66  id.  851;  Carroll 
V.  Holmes,  24  111.  App.  453;  O'Bryan 
V.  Jones,  38  Mo.  App.  90;  McMurray 
V.  Taylor,  30  Mo.  263,  77  Am.  Dec.  611; 
Salomon  v.  Pioneer  Co-operative  Co., 
21  Fla.  374,  58  Am.  Rep.  667;  MoCon- 
nell  V.  Stettinius,  7  111.  707;  Danger- 
field  V.  Wilby,  4  Esp.  159;  Hadwen 
V.  Mendizabel,  10  Moore,  477;  Jaffrey 
V.  Cornish,  10  N.  H.  505;  Mehlberg  v. 
Tisher.  24  Wis.  607;  Dayton  v.  Trull, 
23  Wend.  345;  Burdick  v.  Green,  15 
Johns.  247;  Smith  v.  Rogers,  17  id. 
340:  Huglies  v.  Wheeler,  8  Cow.  78; 
Eastman  v.  Porter,  14  Wis.  39;  Plant's 
Manuf.  Co.  v.  Falvey,  20  Wis.  200; 
Cromwell  v.  Lovett,  1  Hall,  56;  Tay- 
lor V.  Allen,  36  Barb.  294. 

1  Kil Patrick  v.  Home  Building  & 
L.  Ass'n,  119  Pa.  30,  12  Atl.  Rep.  754; 
Phoenix  Ins.  Co.  v.  Allen.  11  Mich. 
501,  83  Am.  Dec.  756;  Dayton  v.  Trull, 
23  Wend.  345;  Cooper  v,  Powell,  An- 
thon,  49:  Little  v.  Phenix  Bank,  2 
Hill,  425, 7  id.  359;  Jeunison  v.  Parker, 


7  Mich.  355;  Heartt  v.  Rhodes,  66 
111.  351;  Bradford  v.  Fox.  39  Barb. 
203,  16  Abb.  Pr.  51,  38  N.  Y.  2«9: 
Story  on  Prom.  Notes,  §  498;  Roberts 
V.  Thompson,  14  Ohio  St.  1,  82  Am. 
Dec.  465;  Schierl  v.  Baumel,  75  Wis. 
69,  43  N.  W.  Rep.  724;  Corbett  v. 
Clark,  45  Wis.  406;  Allan  v.  Eldred. 
50  id.  135,  6  N.  W.  Rep.  565;  Chicago, 
etc.  R.  Co.  V.  Wisconsin,  etc.  R  Co., 
76  Iowa,  615,  41  N.  W.  Rep.  375. 

The  drawer  does  not  waive  any- 
thing by  a  subsequent  promise  to  pay 
unless  he  made  it  with  knowledge  of 
the  fad!?,  which  the  holder  has  the 
burden  of  proving.  Schierl  v.  Bau- 
mel, supra. 

2  Id.;  Sandy  River  Nat.  Bank  v. 
Miller,  82  Me.  137,  19  Atl.  Rep.  109. 

3  McWilliams  v.  Phillips,  71  Ala. 
80;  Hunter  v.  Moul,  98  Pa.  13,  42  Am. 
Rep.  010;  Gibbs  v.  Cannon,  9  S.  &  R. 
201;  Overton  v.  Tracey,  14  id.  311; 
Holmes  v.  Briggs.  131  Pa.  233,  IS  Atl. 
Rep.    928;    Story  on    Prom.    Notes, 


572 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  227. 


"Where  the  debtor  is  an  indorserof  the  check  he  delivers  to 
his  creditor  the  latter  must  present  it  for  payment  within  the 
time  limited  for  so  doing  by  the  law  merchant,  otherwise,  if 
the  bank  upon  which  the  check  is  drawn  fails  and  there  was 
money  to  the  credit  of  the  drawer  to  meet  the  check  if  it  had 
been  presented  without  undue  delay,  the  debtor's  liability  for 
the  original  indebtedness  will  be  extinguished.  The  creditor 
has  the  onus  of  showing  that  the  indorser  was  not  injured  by 
the  delay,  the  latter  having  proved  that  the  check  was  not 
duly  presented,  and  this  rule  prevails  whether  the  suit  is  on 
the  check  or  on  the  indebtedness  to  pay  which  the  check  was 
indorsed  and  transferred.'  In  an  earlier  case  in  the  same  state 
a  debtor  indorsed  to  his  creditor  a  draft  on  a  third  party  due 
in  thirty  days,  the  proceeds  of  which  were  to  be  credited  to 
the  debtor's  account.  The  draft  was  not  presented  at  maturity, 
and  soon  thereafter  the  drawee  became  insolvent.  The  cred- 
itor had  no  redress  either  upon  the  draft  or  the  original  in- 


^  497;  Kent's  Com.,  Lee.  44;  Cruger 
V.  Armstrong,  3  Johns,  Cas.  5;  Con- 
roy  V.  Warren,  id.  259;  Murray  v. 
Judab,  6  Cow.  484:  Commercial  Bank 
V.  Hughes,  17  Wend.  94;  Harbeck  v. 
Craft.  4  Duer,  122;  Mohawk  Bank  v. 
Broderick,  10  Wend.  304;  Little 
V.  Phenix  Bank,  2  Hill,  425;  Serle  v. 
Norton,  2  Mood.  &  Rob.  401;  Hill 
V.  Beebe,  13  N.  Y.  556. 

In  Bradford  v.  Fox,  38  N.  Y.  289, 
the  defendant  averred  payment,  and 
it  was  held  that,  though  made  by  a 
check,  tlie  onus  of  proving  that  the 
check  resulted  in  payment  was  on 
him.  Grover,  J.,  said;  "To  effect 
this,  proof  of  the  deli  very  and  receipt 
of  the  check  by  the  plaintiff  not  being 
sufficient,  tlie  defendant  was  bound 
to  go  further  and  show  that  by  the 
laches  of  the  plaintiff  a  loss  had 
been  incurred,  to  be  borne  by  some 
one;  and  when  this  appeared,  the 
law  would  cast  the  loss  upon  the 
plaintiff,  and  would  work  out  such 
result  by  making  the  check  operate 
as  payment  of  the  debt." 

It  is  believed,  however,  that  after 


delivery  of  a  check  to  a  creditor  as  a 
means  of  payment,  the  weight  of 
authority  puts  the  burden  of  proof 
on  him  to  show  that  the  check  was 
unproductive;  and  if  there  has  been 
a  want  of  diligence,  that  no  loss  or 
injury  has  resulted  to  the  debtor. 
Murray  v.  Judah,  6  Cow.  484;  Syra- 
cuse, etc.  R.  Co.  V.  Collins,  3  Lans.  29. 

The  drawer  of  a  check  has  his 
remedy  against  the  agent  who  ac- 
cepted it  for  collection  if  harm  re- 
sulted from  his  negligence.  Morris 
V.  Eufaula  Nat.  Bank,  106  Ala.  383, 
389,  18  So.  Rep.  11;  Smith  v.  Miller, 
43  N.  Y.  171,  3  Am.  Rep.  690,  52  N.  Y. 
546;  Chouteau  v.  Rowse,  56  Mo.  65; 
Clarke  v.  Gates,  67  Mo.  139. 

As  to  the  measure  of  diligence  re- 
quired in  the  case  of  a  bank  which 
has  received  a  local  check  for  collec- 
tion, see  Morris  v.  Eufaula  Nat. 
Bank,  122  Ala.  580,  25  So.  Rep.  499, 
overruling  s.  c,  106  Ala.  383,  18  So. 
Rep.  11. 

1  Kirkpatrick  v.  Puryear,  93  Tenn. 
409,  22  L.  R  A.  785, 24  S.  W.  Rep.  1130. 


§  227.]  PAYMENT.  573 

debtedness.^  "If  the  creditor  had  received  of  his  debtor  a 
check  and  failed  to  present  it,  the  principle  would  have  been 
the  same  precisely.  If  he  had  received  part  or  all  the  money 
on  the  draft  and  failed  to  credit  it^  beyond  question  such  re- 
ceipt would  have  been  a  good  defense  jyro  tardo  or  in  whole  to 
the  collection  of  the  debt  due  by  the  account;  so  we  think,  on 
sound  principle,  a  failure  to  receive  when  he  ought  to  have  re- 
ceived, such  failure  being  the  result  of  his  own  negligence  or 
the  party  to  whom  he  had  indorsed  it,  should  equally  work  the 
same  result.  He  fails  to  account  in  either  case  for  the  col- 
lateral. He  has  had  the  benefit  of  it  as  a  security  for  his  debt 
and  took  it  as  a  means  of  payment,  thus  depriving  the  original 
holder  of  the  right  to  control  and  putting  himself  in  his  place. 
He  cannot  impose  upon  him  the  entire  loss  when  it  results 
from  his  own  neglect,  while  controlling  or  having  the  right  to 
control  the  paper."  A  chose  in  action  in  any  form  re-  [379J 
ceived  as  conditional  payment  or  as  collateral  security,  to  the 
extent  collected  or  paid,  or  of  the  loss  by  the  creditor's  negli- 
gence, or  when  transferred  by  him  to  a  third  person,  unless 
taken  back,  is  payment  on  account  of  the  debt  for  which  it 
was  received.^  So  if  the  creditor  take  from  his  debtor  an 
order  or  note  payable  to  a  third  person.^ 

1  Betterton  v.  Roope,  3  Lea,  215,  iJl  place  where  the  bank  on  wliich  it 
Am.  Rep.  683.  was   drawn   was  located,   to  apply 

In  Carroll  V.  Sweet,  138  N.  Y.  19,13  upon  the  indebtedness  in  suit.     \V. 

L.  R.  A.  43,  27  N.  E.  Rep.  763,  the  de-  requested  the  plaintiff  to    hold  the 

fense  to  an  action  to  recover  a  claim  check  for  a  few  days,  stating  that  if 

was  payment.     The  facts  as  stated  the  plaintiff    would  let  him   know 

by  the  reporter  were  that  W.  gave  when  he  wished  to  use  the  check  he 

his  check  to  the  defendant  for  the  would  then  provide  for  it.     W.  testi- 

amount  of  a  loan.     The  defendant,  lied  on  the  trial  that  he  had   then 

the  same  day,  indorsed  and  delivered  money  enough  to  pay  the  check  and 

the   check  to  the    plaintiff,  at  the  would   have   paid  it  had   payment 

2  Life  Ins.  Clearing  Co.  v.  Altschu-  &C.  19;  Harris  v.  Johnston,  3  Cranch, 
ler,  5")  Neb.  341,  75  N.  W.  Rep.  862;  311;  John  v.  John,  Wright,  584;  Mc- 
Massachusetts  Benefit  L.  Ass'n  v.  Cluny  v.  Jackson,  6  Gratt.  96;  Parker 
Robinson,  104  Ga.  256,  30  S.  E.  Rep.  v.  United  States.  1  Pet.  C.  C.  262; 
918,  42  L.  R.  A.  261;  Looney  v.  Dis-  Lawrence  v.  Schuylkill  Navigation 
trict  of  Columbia,  113  U.  S.  258,  5  Co.,  4  Wash.  C.  C.  562;  Bill  v.  Porter, 
Sup.  Ct.  Rep.  463;  Brown  v.  Same,  17  9  Conn.  23.  See  Case  Manuf.  Co.  v. 
Ct.  of  Cls.  402;  Donnelly  v.  Same,  Soxman,  138  U.  S.  431,  438,  11  Sup. 
119  U.  S.  339,  7  Sup.   Ct.  Rep.   276;  Ct.  Rep.  360. 

Loth  V.  Mothner.  53  Ark.  116,  13  S.        3  Shaw  v.  Gookin,  7  N.  a  16. 
W.  Rep.  594;  Smith  v.  Ferrand,  7  B. 


574 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  22S. 


§  228.  Collaterals  collected  or  lost  by  negligence  of  cred- 
itor are  payments.  When  security  is  given  for  a  debt  and 
money  is  realized  therefrom,  it  is,  as  has  just  been  said,  a  pay- 
ment j9w  tanto}  The  money  thus  received  is  deemed  so  appro- 
priated by  mutual  agreement.'-  It  is  payment,  not  merely  a 
set-off;'  but  if  the  debtor  pays  his  debt  after  such  collections 
on  collaterals  he  may  recover  them  from  the  creditor.* 
[380]  There  is  an  implied  obligation  on  the  creditor  to  ac- 
count for  the  proceeds  of  collaterals.  His  failure  or  refusal  to 
give  an  account  of  the  application  thereof  will  operate  as  a 
bar  to  the  recovery  of  the  debt  itself.'     But  where  the  collat- 


been  insisted  upon.  The  plaintiff 
kept  the  check  for  nine  daj's  before 
he  presented  it  for  payment.  W.  in 
the  meantime  had  become  insolvent. 
The  cashier  of  the  bank  on  which 
the  check  was  drawn  testified  that 
there  were  no  funds  to  meet  it,  and 
that  it  would  not  have  been  paid  if 
it  had  been  presented  any  time  after 
the  day  of  its  date.  There  was  no 
agreement  that  the  check  should  be 
taken  in  satisfaction  of  the  debt. 
Held,  that  it  was  error  to  direct  a 
verdict  for  the  plaintiff;  that  the  de- 
lay in  presenting  the  clieck  dis- 
charged the  defendant  from  liability 
as  indorser;  that  the  delay  was  not 
excused  by  the  fact  that  the  drawer 
had  no  funds,  or  was  insolvent,  or 
because  presentment  would  have 
been  unavailing  as  a  means  of  pro- 
curing payment;  that  while  the  in- 
dorsement and  transfer  of  the  check 
operated  as  a  provisional  payment 
only,  if  the  delay  caused  a  loss  to  the 
defendant,  to  the  extent  of  the  loss 
the  delay  was  tantamount  to  actual 
payment:  that  as  there  was  evidence 
tendmg  to  show  that  the  delay  pre- 
vented a  collection  of  the  check  in 
whole  or  in  part,  and  that  so  much 
was  lost  to  the  defendant,  the  ease 
was  for  the  jury. 

1  Montgomery  v.  Schenck,  83  Hun, 
24,  31  N.  Y.  Supp.  42;  Pauly  v.  Wil- 
son,  57  Fed.  Rep.  548 ;  §  227.     See  New 


London  Bank  v.  Lee,  11  Conn.  112,  73 
Am.  Dec.  713. 

A  mortgage  or  other  security  to 
indemnify  an  accommodation  in- 
dorser is  not  available  as  security  for 
the  debt,  either  to  relieve  the  in- 
dorser or  surety  from  paying  it  (Post 
V.  Tradesmen's  Bank,  28  Conn.  420; 
Horner  v.  Savings  Bank,  7  id.  478),  or 
as  a  means  of  payment  at  the  in- 
stance of  the  creditor.  Ohio  Life 
Ins.  &  T.  Co.  V.  Reeder,  18  Ohio,  35, 
46.  See  Russell  v.  La  Roque,  13  Ala. 
149. 

If  collaterals  have  been  exchanged 
for  other  securities  which  prove  to 
be  worthless  the  debtor,  whose  paper 
was  accepted  conditionally,  is  not 
released  except  so  far  as  he  is  in- 
jured. Hunter  v.  Moul,  98  Pa.  13.  42 
Am.  Rep.  610;  Girard  F.  &  M.  Ins. 
Co.  V.  Marr.  46  Pa.  504. 

2  Pope  V.  Doilson,  58  IlL  360;  Kem- 
mil  V.  Wilson,  4  Wash.  C.  C.  308; 
Midgeley  v.  Sloconib,  2  Abb.  Pr. 
(N.  S.)  275;  Lincoln  v.  Bassett,  23 
Pick.  154;  Kenniston  v.  Avery,  16 
N.  H.  117;  Dismukes  v.  Wright,  3 
Dev.  &  Bat.  78. 

3  King  V.  Hutchins,  28  N.  H.  561: 
In  re  Ouimette,  1  Sawyer,  47. 

^Overstreet  v.  Nunn,  36  Ala.  666; 
Dorrill  v.  Eaton,  35  Mich.  302. 

^Simes  v.  Zane,  1  Phila.  500;  Dussol 
v.  Bruguire,  50  Cal.  456. 


g  22S.]  PAYMENT. 


O  tO 


erals  are  placed  in  the  hands  of  a  third  person  by  the  debtor, 
and  were  never  in  the  hands  or  under  the  control  of  the  cred- 
itor, he  is  entitled  to  recover  against  the  debtor  without  ac- 
counting for  them.'  If  bank  bills  have  been  received  it  lies 
on  the  creditor,  in  a  suit  against  a  surety,  to  show  what  has 
been  done  with  them,^  Taking  a  collateral  does  not  suspend 
the  right  to  bring  suit  on  the  debt  secured.'  Nor  can  the 
debtor  obtain  credit  thereon  for  such  collateral  unless  it  has 
been  collected  or  appropriated  by  the  creditor,  or  lost  by  his 
negligence  or  fault.^ 

Where  negotiable  paper  is  received  as  a  means  of  payment 
it  is  prima  facie  payment,  and  the  creditor  must  show  what 
has  become  of  it;  show  diligence  to  obtain  payment,  or  excuse 
non-presentment,  and  produce  it  at  the  trial.^  A  note  de- 
livered as  collateral  continues  a  valid  security  until  the  debt 
is  paid,  notwithstanding  it  is  changed  in  form,  as  into  a  judg- 
ment.^ And  a  creditor  who  holds  security,  without  special 
instructions  for  its  application,  for  various  notes  due  from  his 
debtor,  some  of  which  bear  the  names  of  sureties,  may,  in 
case  of  the  insolvency  of  the  principal  debtor  and  of  some  of 
the  sureties,  apply  the  same  towards  the  payment  of  such  of 
the  notes  as  may  be  necessary  for  his  own  protection;  and 

1  Bank  of  United  States  v.  Peabody,  out  the  consent  of  the  pledgor  or  his 

20  Pa.  454.  assignee,   return   the   note  received 

^Spaulding    v.    Bank    of    Susque-  and  take  back  the  original  note,  so 

hanna  County,  9  Pa.  28.  as  to  reinstate  the  liability  of  the 

3Wilhelni  v.  Schmidt.  84  111.183;  pledgor  or  deprive  his  assignee  of 

Flanagan  v.  Hambleton,  54  Md.  222;  the   right  to  the   surplus.     Post  v. 

Williams  V.  National  Bank,  72  id.  441,  Union   Nat.    Bank,   159    111.   421,   43 

450,    20    Atl.    Rep.    191;    Dugan  v.  N.  E.  Rep.  976. 

Sprague,  2  Ind.  600;  Foster  V.  Purdy,        5  Dayton  v.  Trull.  23  Wend.  345; 

5  Met.   442;   Lincoln  v.    Bassett,  23  Cooper  v.  Powell,  Anth.  49;  Roberts 

Pick.  154.  V.     Gallagher.    1    Wash.    C.    C.   156; 

*  Id. ;  Fiske  v.  Stevens,  21  Ma  457;  Brown  v.  Cronise,  21  Cal.  386;  Plants 

Hawks  V.  Hinchcliff,  17  Barb.  492;  Manuf,  Co.   v.  Falvey.    20  Wis.  L'OO; 

Cooke  V.  Chaney,  14  Ala.  65;  Slevin  Bullard  v.  Hascall,  25  Mich.  132. 
V.  Morrow,  4  Ind.  425;  Hall  v.  Green,        «  Fisher  v.    Fisher,   98    Mass.  303; 

14  Ohio,  499;  Prettyman  v.  Barnard,  Smith  v.  Strout,  63  Me.  205;  Chapman 

37  111.  105;  Marschuetz  v.  Wright,  50  v.  Lee,  64  Ala.  483;  Sonoma  Valley 

Wis.  175,  6  N.  W.  Rep.  511;  Hunter  Bank  v.  Hill.  59  Cal.  107;  Duncombe 

■V.  Moul,  98  Pa.  13,  42  Am.  Rep.  610.  v.  New  York.  etc.  R.  Co.,  84  N.  Y.  193, 

The  holder  of  a  note  as  collateral  88  id.  1;  Waldron  v.  Zacharie,  54  Tex. 

cannot  receive  another  note  in  pay-  503. 
•ment  of  it,  and  subsequently,  with- 


5TG 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHAEGES.       [§  22S. 


insolvent  parties  upon  others  cannot  avail  themselves  thereof 
[381]  in  any  way,  in  equity,  without  paying  or  offering  to  pay 
the  whole  of  the  notes  for  which  the  security  was  given.^  A 
creditor  is  only  obliged  to  apply  the  net  proceeds  of  collat- 
erals. Expenses  necessarily  incurred  in  rendering  them  avail- 
able are  to  be  deducted,  and  the  balance  only  is  a  payment 
upon  the  debt  secured,^  But  the  equitable  interest  of  the  as- 
signee of  a  non-negotiable  promissory  note  assigned  as  collat- 
eral security  extends  only  to  the  amount  of  the  debt  for  the 
security  of  which  it  was  assigned,  and  not  to  the  costs  which 
have  accrued  in  a  suit  subsequently  brought  thereon.  And 
a  release  from  the  payee,  executed  subsequent  to  the  assign- 
ment, will  be  available  for  all  of  such  collateral  in  excess  of 
such  debt.*     A  chose  in  action  which  is  transferred  as  coUat- 


1  Wilcox  V.  Fairhaven  Bank,  7 
Allen,  270.  F.  and  H.  made  and  deliv- 
ered to  S.  their  joint  and  several 
note  for  §4,500:  before  its  maturity 
S.  gave  his  note  for  §1,000  to  C,  and 
indorsed  and  delivered  as  collateral 
the  note  of  F.  and  H.  C.  subse- 
quently assigned  S.'s  note  to  F.  and 
delivered  the  note  of  F.  and  H.  as 
collateral  security.  After  this  S. 
sold  and  assigned  the  note  of  F.  and 
H.,  then  in  the  hands  of  F.,  to  D., 
who  thereafter  demanded  the  $4,500 
of  F.,  offering  to  credit  the  same 
vpith  the  amount  of  the  $1,000  note, 
which  was  refused.  Held,  that  D. 
was  entitled  to  recover  on  the  note 
agamst  F.  and  H.  less  the  amount  of 
the  $1,000  note. 

A  principal  note  is  paid  as  against 
a  surety  thereon,  when  the  holder 
receives  payment  of  a  larger  note 
pledged  as  collateral  security  there- 
for, though  a  third  note  be  taken  in 
lieu  of  such  collateral  note.  Post  v. 
Union  Nat.  Bank,  159  111.  421, 42  N.  E. 
Rep.  976. 

^Starrett  v.  Barber,  20  Me.  457; 
Herrington  v.  Pouley,  26111.94;  Van 
Blarcom  v.  Broadway  Bank,  37  N.  Y. 
540. 


3  Blake  v.  Buchanan,  22  Vt.  548. 
The  defendant  and  one  A.  of  Massa- 
chusetts exchanged  notes  of  equal 
amounts  and  having  equal  time  to 
run,  in  August,  1854.  Later  in  the 
same  month  A.  deposited  defend- 
ant's notes  and  others  as  collateral, 
and  procured  a  discount  of  his  own 
note  for  $8,000  by  plaintiff.  The 
note  had  ten  days  to  run;  A.  failed 
to  pay  it,  and  was  driven  into  insolv- 
ency. Separate  suits  were  brought 
against  the  defendant  on  his  notes 
when  they  became  due.  At  the  time 
of  bringing  these  suits  between 
$:iOOO  and  $4,000  of  the  collaterals 
had  been  paid.  When  the  actions 
(together)  were  tried,  the  collaterals 
had  been  paid  in  to  an  amount  suf- 
ficient to  pay  the  plaintiff's  claim, 
except  about  $200.  Held,  that  the 
plaintiff  should  have  judgment  for 
the  full  amount  of  the  notes,  interest 
and  costs,  but  the  rights  of  the  de- 
fendant should  be  provided  for  by 
an  order  in  the  judgment  permitting 
him  to  be  discharged  by  paying  the 
balance  due  the  plaintiff  with  costs; 
the  residue  to  be  paid  into  court  to 
be  subject  to  its  further  order  on  the 
application  of  A.'s  assignees,  or  of  A. 


§  229.] 


PA.TMENT. 


577 


eral  security  is  put  under  the  control  of  the  creditor  to  [382] 
make  his  claim  out  of  it,  and  it  is  not  in  the  nature  or  subject 
to  the  incidents  of  a  pawn  or  pledge.  It  should  be  collected, 
not  sold,^ 

§  329.  Same  subject.  A  creditor  receiving  collateral  se- 
curities is  required  to  use  ordinary  diligence,  and  to  observe 
good  faith  in  respect  to  the  same;  if  they  are  lost  or  impaired 
tlirough  his  act  or  neglect  he  is  liable  to  the  debtor  to  the  ex- 
tent of  the  injury;  and  such  damages,  or  so  much  as  is  neces- 
sary therefor,  will  inure  as  a  payment  of  the  debt  for  which 
the  collaterals  were  received  as  security.-  If  they  be  ne<^otiable 
paper  to  mature  at  a  future  day,  due  diligence  imposes  on  the 
creditor  the  necessity  of  doing  those  acts  which  will  preserve 


on  notice.  Nantucket  Bank  v.  Steb- 
bins,  6  Duer,  341. 

In  Russell  v.  La  Eoque.  13  Ala.  149, 
it  was  held  that  where  a  surety  re- 
ceived from  his  principal  a  note  as 
indemnity,  and  passed  the  same 
over  to  the  creditor  as  collateral  se- 
curity for  the  principal,  the  creditor 
could  not  recover  upon  such  note 
after  the  principal  debt  was  barred 
by  the  statute  of  limitations;  but  it 
would  have  been  otherwise  if  the 
note  had  been  delivered  to  the  cred- 
itor in  discharge  of  the  surety's  lia- 
bility. 

1  Chambersburg  Ins.  Co.  v.  Smith, 
11  Pa.  120;  Nelson  v.  Wellington, 
5  Bosw.  178;  Brookman  v.  Metcalf, 
id.  4-39. 

■^  Roberts  v.  Gallagher,  1  Wash.  C. 
C.  156;  Gallagherv.  Roberts,  2  id.  191; 
Hanna  v.  Holton,  78  Pa.  334,  21  Am. 
Rep.  20;  Girard  F.  &  M.  Ins.  Co.  v. 
Marr.  46  Pa.  504;  Miller  v.  Gettys- 
burg Bank,  8  Watts,  192;  Dyott's  Es- 
tate, 2  W.  &  S.  463;  Lisliy  v.  O'Brien, 
4  Watts,  141;  Bank  of  United  States 
V.  Peabody,  20  Pa.  454;  Chambers- 
burg Ins.  Co.  V.  Smith,  11  id.  120; 
Sellers  v.  Jones,  22  id.  423;  Muirhead 
V.  Kirkpatrick,  21  id.  237;  Foote  v. 
Brown,  2  McLean,  369;  Brown  v. 
Cronise,  21  Cal.  386;  Whitten  v. 
You  1  —  37 


Wright,  34  Mich.  92;  Exeter  Bank  v. 
Gordon,  8  N.  H.  66;  Finnell  v.  Meaur, 
8  Bush.  449;  Kenniston  v.  Avery,  1ft 
N.  H.  117;  In  re  Brown,  2  Story,  502; 
Chamberlyn  v.  Delarive,  2  Wilson, 
353;  Bonta  v.  Curry,  3  Bush,  678; 
Russell  V.  Hester,  10  Ala.  535;  Pow- 
ell V.  Henry,  27  Ala.  612;  Lee  v. 
Baldwin,  10  Ga.  208;  Cardin  v.  Jones, 
23  Ga.  175;  Kiser  v.  Ruddick,  8 
Blackf.  382:  Noland  v.  Clark,  10  B. 
Mon.  239;  Hoffman  v.  Johnson,  1 
Bland  Ch.  10b;  Steger  v.  Bush.Sm.  & 
M.  Ch.  172;  Barrow  v.  Rhinelander,  3 
Johns.  Ch.  619;  Jennison  v.  Parker,  7 
Mich.  355;  Goodhall  v.  Richardson, 

14  N.  H.  567;  White  v.  Howard,  1 
Sandf.  81;  Nexsen  v.  Lyell,  5  Hill, 
466:  Montague  v.  Stelts,  37  S.  C.  200, 

15  So.  Rep.  968,  34  Am.  St.  736. 

If  the  creditor  is  negligent  the 
debtor  need  not  claim  his  damages 
by  separate  action  or  counter-claim, 
but  may  interpose  tlie  negligence  as 
a  defense  to  his  creditor's  action  and 
require  an  accounting  for  the  collat- 
erals. Montague  v.  Stelts,  supin. 
The  loss  of  the  collateral  by  theft, 
without  negligence,  before  the  ma- 
turity of  the  principal  note,  is  not  a 
defense  to  an  action  on  the  latter. 
Winthrop  Savings  Bank  v.  Jackson, 
67  Me.  570:  24  Am.  Rep.  56. 


578  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES,       [§  229. 

the  liabilit}'^  of  indorsers  or  other  secondary  parties.^  In  case 
of  neglect  the  creditor  is  liable  for  the  actual  loss,  but  no  more ;  ^ 
and  the  onus  is  on  the  debtor  to  show  the  extent  of  the  injury.' 
[383]  So  if  the  creditor  receives  a  check  in  payment  of  a  debt, 
and  unreasonably  delays  presenting  it,  he  is  only  liable  for  the 
actual  injury  to  the  drawer.* 

A  transfer  of  the  collateral  by  the  creditor  is  an  appropria- 
tion of  it,  and  he  will  be  held  to  have  elected  to  take  it  for 
what  appears  by  its  face  to  be  due  thereon  in  satisfaction  to 
that  extent.'*  If  he  transfers  the  collateral  for  less  than  its  face  it 
is  his  loss.^  He  must  settle  with  the  debtor  for  the  whole  nominal 
value  of  the  collateral,  though  he  settled  with  the  maker  for 
less,  or  took  a  note  in  part  satisfaction.^  A  creditor  may  re- 
Imquish  a  collateral  security  to  his  debtor  without  the  consent 
of  other  creditors,  and  not  thereby  lose  his  resort  to  the  debt- 
or's property.^  But  a  surety  would  be  discharged  by  such  re- 
linquishment; for  the  creditor  is  bound  to  hold  security  for  the 
benefit  of  the  surety  as  well  as  for  himself;  and  if  he  parts 
with  it,  without  the  knowledge  or  against  the  will  of  the  surety, 
he  will  lose  his  claim  against  him  to  the  value  of  what  is 
so  surrendered.^  One  who  receives  from  his  debtor  as  collat- 
eral negotiable  paper  of  a  third  person,  indorsed  b}''  the  debtor, 
makes  it  his  own  and  releases  the  debtor's  indorsement  if  he 
neglects  to  protest  it  for  non-payment.^''     A  creditor  having  a 

1  Jennison  v.  Parker,  7  Mich.  355;  Ct.  Rep.  276;  Williams,  Ex  parte,  17 

Russell  V.  Hester,  10  Ala.  535;  Ken-  S.  C.  396;  Adger  v.  Pringle,  11  id.  535; 

niston  v.  Avery,  16  N.  H.  117;  Foote  Tovvnsends  v.  Stevenson,  4  Rich.  62. 

V.  Brown,  2  McLean,  369;  Brown  v.  ""Id. 

Cronise,  21  Cal.  386;  Phoenix  Ins.  Co.  ''Depuy  v.  Clark,  12  Ind.  427.     See 

V.  Allen,  11  Mich.  501,  83  Am.  Dec.  Garlick  v.  James,  12  Johns.  146;  Phil- 

756.  lips  V.  Thompson,  2  Johns.  Ch.  418,  7 

2Aldrich    v.  Goodell,  75  111.   452;  Am.  Dec.  535. 

Coonley   v.   Coonley,  Hill  &  Denio,  8  Dyotfs  Estate,  2  W.  &  S.  463. 

312.  9  Stewart  v.  Davis.  18  Ind.  74.    See 

3 Id.;  Fiske  v.  Stevens,  21  Me.  457.  ch.  17. 

*  McWilliams   v.  Phillips,  71   Ala,  '» Whitten  v,  Wright,  34  Mich.  92. 

80;  Hunter  v.  Moul,  98  Pa.  13,  42  Am.  In  this  case,  upon  the  trial  the  plaintr 

Rep,  610;  Bell  v.  Alexander,  21  Gratt.  iff  oflFei'ed  to  sliow  that  at  the  time 

1.     See  §  227.  the  note  was  given  the  maker  was 

5  Hawks  v.  Hinchcliff,  17  Barb.  492;  insolvent,  that  he  was  so  at  the  time 
Looney  v.  District  of  Columbia,  113  of  its  maturity,  and  continued  so  up 
U.  S.  258,  5  Sup.  CL  Rep,  463;  Don-  to  the  time  of  the  trial,  for  the  pur- 
nelly  v.  Same,  119  U.  S.  339,7  Sup.  pose  of  showing  that  though  the  note 


\ 


§  23U.] 


PAYMENT. 


579 


note  for  the  purchase-money  of  a  slave,  on  the  death  of  [384' 
the  purchaser  took  possession  of  the  skve;  he  was  held  liable 
for  the  injury  done  to  the  estate  as  executor  <h  son  tort,  and  the 
amount  of  such  liability  payment  so  far  upon  the  note.^  A 
creditor  who  included  in  a  mortgage  a  premium  for  a  policy 
of  insurance  on  the  life  of  the  debtor  as  additional  security  for 
the  debt  and  neglected  to  effect  the  insurance  was  held  liable 
as  upon  an  express  agreement  to  insure  for  the  amount  of  the 
sum  for  which  he  should  have  procured  insurance. - 

§  230.  Who  may  malie  payments.  The  general  rule  as  to 
payment  or  satisfaction  by  a  third  person,  not  himself  liable 
as  a  co-contractor  or  otherwise,  seems  to  be  that  it  is  not  suf- 
ficient to  discharge  the  debtor  unless  it  is  made  as  anient  for 
him  and  on  his  account,  and  with  his  prior  authority  or  sub- 
sequent ratification;  but  the  debtor  may  ratify  the  payment 
by  pleading  it   unless  he  has  previously  disavowed  it.'     The 


was  not  properly  protested  the  de- 
fendant lost  nothing  by  it.  That  evi- 
dence was  held  properly  excluded. 
Marston,  J.,  delivering  the  opinion 
of  the  court,  said:  "It  is  of  the  ut- 
most importance  that  no  uncertainty 
should  exist  as  to  the  rights  and  lia- 
bilities of  parties  to  negotiable  paper. 
Should  the  introduction  of  evidence 
upon  the  trial  be  sanctioned  to  show 
that  an  indorser  had  not  suffered 
any  injury  from  a  want  of  protest 
and  notice,  an  element  of  uncer- 
tainty would  then  exist,  and  the 
way  would  be  opened  for  a  new  class 
of  questions  and  much  needless  liti- 
gation. The  value  of  a  note  cannot 
always  be  determined  from  the  solv- 
ency or  insolvency  alone  of  the 
maker.  As  was  said  in  Rose  v. 
Lewis,  10  Mich.  48.),  'the  value  of 
negotiable  paper  is  well  understood 
not  to  be  absolutely  dependent  on 
the  amount  of  property  liable  to  exe- 
cution which  may  be  possessed  by 
the  maker.  A  very  large  portion  of 
current  securities  of  undoubted 
goodness  would,  under  such  a  test, 
be  worthless.     And  in  cases  where 


the  holder  of  such  paper  is  indebted 
to  the  maker,  it  may  be  as  valuable 
to  him,  by  way  of  set-off,  as  if  the 
maker  were  wealthy  and  in  sound 
credit.  The  value  of  commercial 
paper  must  always  depend  very 
much  upon  tlie  integrity  and  busi- 
ness habits  of  those  who  issue  it. 
And  we  cannot  perceive  the  justice 
or  good  sense  of  any  rule  which 
should  disregard  the  results  of  com- 
mon experience.'  If  the  note  in  this 
case  had  been  properly  protested 
and  notice  given  to  the  defendant, 
he  might  have  been  able  to  collect 
it  or  secure  its  payment.  We  think 
the  evidence  was  properly  excluded." 

1  Finnell  v.  Meaux,  '6  Bush,  449. 

2Soule  V.  Union  Bank,  45  Barb.  Ill, 
30  How.  Pr.  105. 

^  Gray  v.  Herman.  75  Wis.  453,  44 
N.  W.  Rep.  248,  6  L.  R.  A.  691;  Wal- 
ter V.  James,  L.  R.  6  Ex.  124;  Simp- 
son V.  Eggmgton,  10  Ex.  845:  James 
V.  Isaacs,  13  C.  B.  791;  Belshaw  v. 
Bush,  11  id.  191;  Jones  v.  Broad- 
hurst,  9  id.  193;  Clow  v.  Borst,  6 
Johns.  37;  Stark  v.  Thompson,  3  T. 
B.  Mon.  296:  Woolfolk  v.  McDowell, 


5S0 


CONVENTIONAL    LIQUIDATIONS    AND   DISCHARGES.       [§  230, 


payment  by  a  principal  of  a  claim  for  goods  delivered  to  his 
agent  is  not  the  satisfaction  of  it  by  a  mere  stranger,  and  it 
extinguishes  the  demand  of  the  creditors.^  And  so  of  the  pay- 
ment of  a  claim   made  by  the  principal  stockholder  in  a  cor- 


9  Dana,  268;  Lucas  v.  Wilkinson,  1 
Hurl.  &  N.  420;  Atlantic  Dock  Co.  v. 
Mayor,  53  N.  Y.  64;  Bleakley  v. 
WJiite,  4  Paige,  654. 

In  a  note  to  Simpson  v.  Eggington, 
supra,  it  is  said  that  "  the  rule  which 
requires  the  consideration  to  move 
between  the  parties  has  been  modi- 
fied in  many  important  particulars 
by  the  introduction  of  the  action  for 
money  had  and  received,  and  it 
would  seem  only  reasonable  to  per- 
mit a  debt  to  be  extinguished  by  a 
payment  made  to  a  creditor  when- 
ever the  circumstances  are  such  that 
the  amount  paid  might  have  been 
recovered  by  the  debtor  had  no 
debt  existed." 

The  early  cases  on  the  subject  are 
considered  by  Creswell.  J.,  in  Jones 
V.  Broadhurst,  supra,  and  also  in  the 
arguments  of  counsel  in  Walter  v. 
James,  supra.  See  Hooper's  Case,  3 
Leon.  110;  Grimes  v.  Blofield,  Cro. 
Eliz.  541;  Edgecombe  v.  Rodd,  5  East. 
294. 

In  Belshaw  v.  Bush,  11  C.  B.  191 
(1851),  Maule,  J.,  said:  "If  a  bill 
given  by  the  defendant  himself  on 
account  of  the  debt  operate  as  a  con- 
ditional payment,  and  so  be  of  the 
same  force  as  an  absolute  payment 
by  the  defendant,  if  the  condition  by 
which  it  is  to  be  defeated  has  not 
arisen,  there  seems  no  reason  why  a 
bill  given  by  a  stranger  for  and  on 
account  of  the  debt  should  nob  oper- 
ate as  a  conditional  payment  by  the 
stranger;  and  if  it  have  that  opera- 
tion, the  plea  in  the  present  case  will 
have  the  same  effect  as  if  it  had  al- 
leged that  the  money  was  paid  by 
William  Bush  (the  stranger)  for  and 
on    account  of  the   debt.      But,    if 


a  stranger  give  money  in  payment, 
absolute  or  conditional,  of  the  debt 
of  another,  and  the  causes  of  action 
in  respect  to  it,  it  must  be  payment 
on  behalf  of  the  other,  against  whom 
alone  the  causes  of  action  exist,  and 
if  adopted  by  him,  will  operate  as 
payment  by  himself."  Coke,  Litt. 
206&,  m  H.  6. 

James  v.  Isaacs,  12  C.  B.  791  (1852). 
In  assumpsit  for  work  and  labor  the 
defendant  pleaded  that  the  money 
mentioned  in  the  declaration  ac- 
crued due  to  the  plaintiff  under  an 
agreement  for  the  building  of  a 
church;  that  the  plaintiff  having  sus- 
pended the  work  another  agreement 
was  entered  into  between  him  and 
one  A.  under  which  the  plaintiff,  in 
consideration  of  certain  stipulated 
payments, undertook  to  complete  the 
work  and  to  rely  for  the  residue  of 
the  contract  price  upon  certain  sub- 
scriptions which  were  to  be  raised; 
and  that  A.  duly  made  and  the 
plaintiff  received  the  payments  stip- 
ulated for  by  the  second  agreement 
in  satisfaction  and  discharge  of  the 
original  agreement  between  the 
plaintiiT  and  the  defendants,  and  of 
the  performance  thereof  by  the 
latter.  Held,  that  the  plea  was  bad 
in  substance  inasmuch  as  it  did  not 
show  that  the  agreement  made  by 
A.  and  the  payments  under  it  were 
intended  to  be  made  for  the  benefit 
of  the  defendants,  and  that  they 
adopted  A.'s  acts.  See  2  Am.  Lead. 
Cas.  (4th  ed.)  270;  Wellington  v, 
Kelly,  84  N.  C.  543;  Wolff  v,  Walter, 
56  Mo.  292. 

1  Case  V.  Phillips,  182  III  187,  55 
N.  E.  Rep.  66. 


§    230.]  PAYMENT.  581 

poration  to  one  for  services  rendered  it  as  general  manao-er.^ 
A  payment  made  to  the  holder  of  a  note  by  an  indorscr,  not 
as  agent  for  the  maker,  but  simply  in  discharge  of  his  own 
obligation,  the  note  having  been  executed  by  the  maker  for 
value,  does  not  inure  to  the  benefit  of  the  latter,  and  in  an 
action  upon  the  note  he  is  liable  for  the  whole  amount  for 
which  it  was  given.  So  far  as  the  indorser's  payment  is  con- 
cerned it  was  an  equitable  purchase  of  the  note  by  him.-'  In 
a  Wisconsin  case  the  defendant  became  a  debtor  for  the  ben- 
efit of  a  third  person,  who  made  payment  of  his  own  volition 
and  on  his  own  behalf.  The  trial  court  ruled  that  it  was  not 
competent  for  the  party  sued  to  plead  payment  by  another 
party  who  was  not  sued,  and  who  could  not  be  affected  by  the 
judgment.  Cole,  C.  J.,  considered  this  ruling  by  asking: 
"  Why  not,  if  it  is  shown  that  the  creditor  accepts  the  pay- 
ment in  satisfaction  of  the  debt  ?  Can  it  be  said  that  the  ob- 
ligation is  still  in  force?  What  sense  or  reason  is  there  in 
any  such  technical  rule  as  that,  if  it  exists?  If  a  debt  is  fully 
paid  it  would  seem,  according  to  plain  common  sense,  that  the 
obligation  was  extinguished  and  is  no  longer  in  force  as  a 
contract.  What  concern  is  it  to  the  creditor  who  pays  his 
debt,  especially  where  he  accepts  the  payment  made  in  satis- 
faction of  his  debt ?"^  The  demand  of  a  creditor  which  is 
paid  with  the  money  of  a  third  person,  without  an  agreement 
that  the  security  shall  be  assigned  or  kept  alive  for  the  bene- 
fit of  such  third  person,  is  extinguished.*    Payment  made  by 

1  Porter  v.  Chicago,  etc.  R.  Co.,  99  was  held  an  extinguishment  of  it, 
Iowa,  351,  G8  N.  W.  Rep.  724.  whether  made  by  the  debtor's  con- 

2  Madison  Square  Banii  v.  Pierce,     sent  or  not. 

137  N.  Y.  444,  88  N.  E.  Rep.  557,  88  Am.  In  Pearce  v.  Bryant  Coal  Co.,  121 

St.   751,  20  L.  R.   A.   885,   following  111.  590,   13  N.  E.  Rep.  561,  payment 

Jones  V.  Broadhurst,  9  C.  B.  175,  the  by  a   trustee   at  the  request  of  an 

doctrine  of  which  is  recognized   in  officer  of  the  corporation  ovv-ing  the 

England   in   Thornton   v.  Maynard,  debt  extinguished  the  evidence  of 

L,  R,  10  C.  P.  695.     The  New  York  the  indebtedness  so  that  the  trustee 

case    is    of  first  impression   in   the  could  not  enforce  it. 

United  States.  Payment  made  by  one  who  is  pri- 

3  Gray  v.  Herman,  75  Wis.  453,  44  marily  liable  extinguishes  the  debt. 
N.  W.  Rep.  248,  6  L.  R.  A.  691;  Porter  Smith  v.  Waugh,  84  Va.  806,  6  S.  E. 
V.  Chicago,  etc.  R.  Co.,  supra.  Rep.  132. 

In  Harrison  v.  Hicks.  1  Port.  423,        <  Grady  v.   O'Reilly,  116   Ma  346, 
27  Am.  Dec.  688,  the  payment  of  a    23  S.  W.  Rep.  79a 
•debt  by  a  stranger  to  the  contract 


582  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.       [§  230. 

a  third  person  at  the  request  of  the  debtor  inures  to  the  lat- 
ter's  benefit.^  After  default  in  the  performance  of  the  condi- 
tions of  a  bill  of  sale  providing  that  the  title  to  the  goods 
shall  not  pass  until  full  performance,  the  vendor  is  not  bound 
to  receive  payment  from  any  person  except  his  own  vendee.^ 
If  the  creditor  accepts  payment  under  a  mistake  of  fact,  as  by 
erroneously  supposing  that  the  person  who  made  it  had  au- 
thority to  do  so,  he  may  return  the  money  and  appl}^  to  his 
debtor  for  the  payment  of  his  demand.'  Satisfaction  by  one 
joint  tort-feasor  or  joint  debtor  is  a  bar  to  an  action  against 
another,*  and  a  payment  made  by  one  of  several  joint  debtors 
inures  to  the  benefit  of  all  as  a  credit  upon  the  debt.*  But 
one  joint  maker  of  a  note  cannot,  by  payment  thereon,  unless 
authorized  by  his  co-obligor,  stop  the  running  of  the  statute  of 
limitations.  Where  that  statute  is  involved  and  the  payments 
on  a  note  are  all  indorsed  in  the  payee's  handwriting,  made 
in  the  absence  of  the  maker,  the  former  must  show  that  such 
payments  were  made  by  the  latter  or  by  his  authority.*'  If  a 
creditor,  knowing  the  liability  of  his  debtor,  takes  the  indi- 
vidual note  of  his  agent  in  payment,  without  at  the  same  time 
doing  anything  to  indicate  a  purpose  to  hold  the  principal,  the 
latter  is  discharged.'' 

[387]  A  purchaser  of  mortgaged  property  subject  to  the 
mortgage  may  pay  the  debt,  and  payment  by  him  extinguishes 
the  lien.^  If  a  mere  stranger  or  volunteer  pays  a  debt  for 
which  another  is  bound  he  cannot  be  subrogated  to  the  cred- 


1  Crawford  V.  Tyng,  10  N.  Y.  Misc.  ^Goldbeck    v.     Kensington     Nat. 
143,  30  N.  Y.  Supp.  907.  Bank,  supra. 

2  Lippinc!ott  v.  Rich,  19  Utah,  140,  «  Waughop  v.  Bartlett,  165  IlL  124, 
56  Pac.  Rep.  806.  46  N.  E.  Rep.  197. 

3  Walter  v.  James,  L.  R.  6  Ex.  124.  7  Ames  Packing*  P.  Co.  v. Tucker, 
4 Livingston    v.    Bishop,    1   Johns.  8  Mo.  App.  95;    Paige  v.  Stone.  10 

291,  3  Am.  Dec.  330;  Thomas  v.  Rum-  Met.  169;  Wilkin  v.  Reed.  6  Me.  220. 

sey,   6  Johns.   31;  Barrett  v.  Third  19  Am.  Dec.  211;  French  v.  Price.  24 

Avenue  R.  Co.,  45  N.  Y.  635;  Woods  Pick.  22;  Hyde  v.  Paige,  9  Barb.  250. 

V.    Pangborn,   76    id.   498;    Ellis    v.  A  less  extended  rule    is  applied  in 

Esson,  50  Wis.  138,  36  Am.  Rep.  830,  some  cases.     Coleman   v.  First  Nat. 

6  N.  W.  Rep.  518;  Knapp  v.  Roche,  Bank,  53  N.  Y.  388;  Calder  v.  Dobell, 

94  N.  Y.  329;  Brick  v.  Bual,  73  Tex.  L.  R.  6  C.  P.  486. 

511,  11  S.  W.  Rep.  1044;  Goldbeck  v.  8  Appledorn  v.  Streeter,  20  Midi.  9. 
Kensington  Nat.  Bank,  147  Pa.  267, 
2  !  Atl.  Rep.  565. 


§  231.]  PAYMENT.  583 

iter's  rights  in  respect  to  the  security  given  by  the  real  debtor; 
but  if  the  person  who  pays  is  compelled  to  pay  for  the  pro- 
tection of  his  own  interests  and  rights,  he  is  entitled  to  such 
subrogation.^ 

§  231,  To  whom  payment  may  be  made.  Payment  must 
be  made  to  the  creditor  or  to  one  authorized  by  him  to  receive 
it  as  agent  or  assignee;  or  to  one  whom  the  law  substitutes  in 
the  creditor's  place  as  executor,  administrator,  creditor  by 
trustee  process,  or  the  like.  If  it  is  made  to  one  entitled  to 
receive  it  the  debt  is  extinguished  though  there  was  a  mistake 
as  to  the  right  in  which  the  amount  paid  accrued.^  Payment 
of  a  judgment  or  decree  to  an  attorney  of  record  who  obtained 
it,  before  his  authority  is  revoked  and  notice  of  it  given,  is 
valid  as  to  the  party  making  the  payment,^  but  payment  of  a 
judgment  after  it  has  been  assigned  to  one  who  is  merely  the 
beneficial  owner  is  not  a  discharge  of  it;  it  is  otherwise  when 
payment  is  made  to  the  person  having  the  legal  title  without 
notice  of  his  assignment.*  A  sheriff  is  only  entitled  to  receive 
payment  of  an  execution  when  he  is  in  possession  of  a  judicial 
mandate  directing  him  to  make  the  collection  of  the  sum 
called  for,  unless  he  is  the  creditor's  agent.^  Payment  made 
to  the  party  designated  by  the  creditor  is  good,^  but  such  a 
designation  may  be  changed,  and  if  changed,  the  debtor  pays 
to  the  person  originally  designated  at  his  peril,''  if  he  has  notice 
of  the  substitution.  If  an  attorney  who  has  a  claim  for  collec- 
tion places  it  in  the  hands  of  another  for  that  purpose,  the 
owner  assenting,  payment  to  the  latter  discharges  the  debt.^ 
If  a  principal  has  clothed  his  agent  with  the  indicia  of  au- 
thority to  receive  payment,^  as  by  intrusting  to  him  the  pos- 

1  Hough  V.  ^tna  L.  Ins.  Co.,  57  111.  35  N.  W.   Rep.   475;   Sailer  v.   Bar- 
318,    11    Am.    Rep.    18;     Grady    v.  nousky,  60  Wis.  169,  18  N.  W.  Rep. 
O'Reilly,  116  Mo.  346,  23  S.  W.  Rep.  763;  Fiske  v.  Fisher,  100  Mass.  97. 
798.  7  Kice  &  Bullen  Malting  Co.  v.  In- 

2  Hemphill  v.  Moody,  64  Ala.  468.  ternational  Bank,  185  111.  422,  56  N. 

3  Harper  v.  Harvey,  4  W.  Va.  539;  E.  Rep.  1062.  86111.  App.  136;  Meeker 
Yoakum  v.  Tilden,  3  id.  167,  100  Am.  v.  Manina,  162  111.  203,  14  N.  E.  Rep. 
Dec.  738.  397;  Mechem  on  Agency,  §  224. 

*  Seymour  v.  Smith,  114  N.  Y.  481,  ^  Dentzel  v.  City  &   Suburban  R. 

11  Am.  St.  683,  21  N.  E.  Rep.  1042.  Co.,  90  Md.  434.  45  Atl.  Rep.  201. 

5  Bailey  v.  Hester,  101  N.  C.  538,  8  ^  Florida  Central  &  P.  R.   Co.    v. 

S.  E.  Rep.  164.  Ragan,  104  Ga.  353,  30  S.  K  Rep.  745. 

«  Walker  v.   Crosby,  38  Minn.  34, 


i84 


CONVENTIONAL   LIQUIDATIONS   AND    DISCHARGES.       [§  231. 


session  of  the  goods  to  be  sold,  the  purchaser  is  warranted  in 
paying  the  price  of  such  as  he  buys  to  the  agent;  but  if  the 
latter  is  not  in  possession  of  the  goods  and  is  only  authorized 
to  make  sales,  payments  made  to  him  are  at  the  risk  of  the 
payer.^  Payment  to  an  agent  is  unauthorized  after  the  death 
of  the  principal,^  unless  the  agency  is  coupled  with  an  interest. 
The  fact  that  the  agent  is  entitled  to  commissions  on  sums  col- 
lected does  not  give  him  such  an  interest  as  will  continue  his 
power  after  the  principal's  death ;  the  interest  which  will  work 
that  result  must  be  in  the  thing  on  account  of  which  payment 
is  made  or  in  the  money  paid  as  such.'  If  a  negotiable  note, 
indorsed  by  the  payee  in  blank,  is  in  the  hands  of  an  agent  for 
collection  its  payment  in  good  faith,  after  the  death  of  the 
principal  and  without  notice  thereof,  is  valid.*  Possession  of 
[388]  mercantile  paper  authorizes  the  receipt  of  the  money, 
even  before  it  is  due,^  if  the  possessor  has  authority  from  the 
owner  to  collect  the  amount  payable  on  it.^  But  circumstances 


1  Lakeside  Press  &  Photo-Engrav- 
ing Co.  V.  Campbell,  39  Fla.  523.  23 
So.  Rep.  878;  McKindly  v.  Dunham, 
55  Wis.  515,  13  N.  W.  Rep.  485,  42 
Am.  Rep.  740;  Law  v.  Stokes,  32  N. 
J.  L.  249,  90  Am.  Dec.  655;  Clark  v. 
Murpliy,  164  Mass.  490,  41  N.  E.  Rep. 
674;  Seiple  v.  Irwin,  30  Pa.  513; 
Hirshfield  v.  Waldron,  54  Mich.  649, 
20  N.  W.  Rep.  628;  Chambers  v. 
Short,  79  Mo.  204;  Clark  v.  Smith,  88 
111.  298;  Brown  v.  Lally,  79  Minn.  38, 
81  N.  W.  Rep.  538;  Crawford  v. 
Whittaker,  42  W.  Va.  430,  26  S.  E. 
Rep.  516;  Butler  v.  Dorman,  68  Mo. 
298,  30  Am.  Rep.  795;  Kebwn  v.  Vogel, 
25  Mo.  App.  35;  Pardridge  v.  Bailey, 
20  III  App.  351;  Putnam  v.  French, 
53  Vt.  404,  38  Am.  Rep.  682;  Hoskins 
V.  Johnson,  5  Sneed,  470;  Capel  v. 
Thornton,  3  C.  &  P.  352;  Dean  v.  In- 
ternational Tile  Co.,  47  Hun,  319; 
Higgins  V.  Moore.  34  N.  Y.  417;  Art- 
ley  V.  Morrison,  73  Iowa,  132,  34  N. 
W.  Rep.  779;  Adams  v.  Kearney,  2 
E.  D.  Smitli,  42.  See  Stanton  v. 
French,  83  Cal.  194,  23  Pac.  Rep.  355. 

If  money  is  paid  to  an  agent  who 


is  not  authorized  to  receive  it,  the 
payment  is  ratified  by  the  principal's 
bringing  an  action  against  him  to 
recover  it.  Bailey  v.  United  States, 
15  Ct.  of  Cls.  490.  And  by  suing  to 
recover  the  purchase  price  of  goods 
sold.  Pardridge  v.  Bailey,  supra. 
See  Estey  v.  Snyder,  76  Wis.  624,  45 
N.  W.  Rep.  415;  Payne  v.  Hackney, 
84  Minn.  195,  87  N.  W.  Rep.  608. 

2  Lochenraeyer  v.  Fogarty,  112  111. 
572. 

3  Farmers'  Loan  &  Trust  Co.  v. 
Wilson,  139  N.  Y.  384,  34  N.  E.  Rep. 
784. 

4  Deweese  v.  Muflf,  57  Neb.  17,  77  N. 
W.  Rep.  361,73  Am.  St.  488;  Johnson 
V.  Hollens worth,  48  Mich.  143,  11  N. 
W.  Rep.  843. 

5  Bliss  V.  Cutter,  19  Barb.  9;  Thorn- 
ton  V.  Lawther,  169  111.  228,  48  N.  E. 
Rep.  412.  For  some  limitations  on 
this  rule  see  Dilenbeck  v.  Rehse,  105 
Iowa,  749.  73  N.  W.  Rep.  1077. 

•>  Merchants'  Nat.  Bank  v.  Camp, 
110  Ga.  780,  36  S.  E.  Rep.  201;  Cheney 
v.  Libby,  134  U.  S.  68,  10  Sup.  Ct. 
Rep.  498. 


§  231.]  PAYMENT.  5S5 

raaj  impeach  a  payment  made  to  one  having  possession  of  the 
evidence  of  the  debt.  Thus,  payment  by  the  maker  of  a  note 
before  maturity  to  the  son  of  the  holder,  who  had  been  for- 
bidden to  take  payment,  with  the  knowledge  of  the  party  pay- 
ing, is  not  a  good  payment,  although  the  note  is  delivered  up 
by  the  son;  the  father  may  maintain  a  suit  for  the  note,  not 
having  ratified  the  payment.^  The  circumstances,  however, 
must  show  payment  in  bad  faith;  it  is  not  enough  that  there  is 
gross  negligence  in  not  ascertaining  the  party  entitled  to  the 
money."  Pajniientof  a  lost  negotiable  instrument,  after  notice 
of  its  loss,  will  not  operate  as  a  discharge  against  the  loser  un- 
less the  person  presenting  it  establishes  his  title  thereto.  A 
notice  previously  given  of  the  loss  of  a  coupon,  distinguishable 
by  its  number  or  other  ear-mark,  is  sufficient  to  fix  uj)on  the 
maker  the  duty  of  inquiry  and  of  refusal  to  pay  a  holder  who 
cannot  prove  his  right;  especially  is  this  the  rule  where  an  in- 
strument is  presented  after  it  has  matured.'  Pa3nnent  to  one 
not  in  possession  of  the  evidence  of  debt,  and  without  a  sur- 
render of  it,  is  at  the  risk  of  the  payer;  and  if  the  party  receiv- 
ing the  money  had  no  right  to  receive  it  the  note  is  not  dis- 
charged.^    But  if  the  person  who  receives  the  money,  though 

1  Kingman  v.  Pierce,  17  Mass.  247.  59  Pac.  Rep.  117;  Wheeler  v.  Guild, 

2  Cothran  v.  Collins,  29  How.  Pr.  20  Pick.  543,  32  Am.  Dec.  231;  Rush 
113;  Haescig  v.  Browu,  34  Mich.  503.  v,  Fister,  23  111.  App.  348;  Viskoeii  v. 

3  Hinckley  v.  Union  Pacific  R.  Co.,  Doktor,  27  id.  232;  Stiger  v.  Bent,  111 
129  Mas.s.  52,  37  Am.  Rep.  297.     See  111.  328. 

Hinckley  v.  Merchants'  Nat.  Bank,  Payment  of  a  pledged  note  to  the 

131  Mass.  147.  pledgor  will  not  discharge  it.     Gris- 

*  Fortune  v.  Stockton,  182  111.  454,  wold  v.  Davis,  31  Vt.  390. 

55   N.  E.  Rep.  367,  82  111.  App.    272  The  authorities  recognize  the  rule 

(suhnom,  Stockton  v.  Fortune):  Leon  that  "where  a  principal  has,  by  his 

V.  Mclntyre,  88  id.  349;  Englert  v.  voluntary  act,  placed  an  agent  in  a 

White,  92  Iowa,  97,  60  N.  W.   Rep.  situation  that  a  person  of  ordinary 

224;  Bank  of  Montreal  v.  Ingerson,  prudence,  conversant  with  business 

105  Iowa,  349,  75   N.  W.    Rep.  351;  usages  and  the  nature  of  the  partic- 

Hall  V.  Smith,  3  Kan.  App.  685,  44  ular  business,  is  justified  in  presum- 

Pac.  Rep.  908;  Cummings  v.  Hurd,  ing  that  such  agent  has  authority  to 

49  Mo.  App.  139;  Dodge  v.  Birken-  perform,  on  behalf  of  his  principal, 

feld,  20  Mont.  115,  49  Pac.  Rep.  590;  a  particular  act,  such  particular  act 

Hitchcock  V.  Kelley,  18  Ohio  Ct.  Ct.  having  been  performed,  the  princi- 

808;  Hollinshead  v.  Stuart,  8  N.  D.  pal  is  estopped,  as  against  such  inno- 

35,  77  N.  W.  Rep.  89;     Stalzman  v.  cent  third  person,  from  denying  the 

Wyman,  8  N.  D.  108,  77  N.  W.  Rep.  agent's    authority    to   perform    it." 

285;  Rhodes  v.  Belchee,  36  Ore.  141,  Johnston  v.  Milwaukee  &  Wyoming 


586 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  231. 


he  had  not  possession  of  the  evidence  of  the  indebtedness  or 
authority  to  receive  payment,  pays  it  to  the  person  entitled 
and  such  person  receives  it,  the  debt  is  discharged.^ 

The  rule  that  payment  to  one  who  is  without  the  evidence 
of  indebtedness  is  at  the  risk  of  the  debtor  applies  though  the 
note  is  paid  at  the  place  designated  in  it  for  payment.^  It 
was  heUl  in  Iowa  that  if  a  note  is  made  payable  at  a  bank 
payment  made  there  on  the  date  of  the  maturity  of  the  note 
is  satisfaction  though  the  note  was  not  in  possession  of  the 
bank.^  But  this  position  has  been  receded  from,  in  deference 
to  the  almost  unvarying  current  of  authority,  to  the  extent  of 
holding  that  the  fact  that  a  note  is  so  payable  does  not  au- 
thorize the  bank,  in  the  absence  of  the  note,  to  collect  any- 
thing on  it  before  maturity.*  The  authorities  are  reviewed  by 
the  New  Jersey  court,  and  the  conclusion  arrived  at  (which  is 
concurred  in  by  the  Iowa  court),  that  the  contract  of  the 
maker,  acceptor  or  obligor  is  to  pay  the  holder  of  the  paper, 
and  the  place  for  payment  is  designated  simply  for  the  con- 
venience of  both  parties.     Making  a  bill  or  note  payable  at  a 


Investment  Co.,  46  Neb.  480,  64  N.  W. 
Rep.  1100;  Reid  v.  Kellogg,  8  S.  D. 
596,  67  N.  W.  Rep.  687.  This  doctrine 
has  been  applied  where  an  agent 
who  was  not  possessed  of  the  mort- 
gage or  notes,  or  a  satisfaction  of 
them,  received  payment  of  them  be- 
fore it  was  due.  Harrison  v.  Legore, 
109  Iowa,  618,  80  N.  W.  Rep.  670. 
Doyle  V.  Corey,  170  Mass.  337,  49  N. 
E.  Rep.  651,  is  in  harmony  with  the 
cases  referred  to. 

1  Second  Nat.  Bank  v.  Spottswood, 
10  N.  D.  114.  86  N.  W.  Rep.  359;  Cole- 
man V.  Jenkins,  78  Ga.  605,  3  S.  E. 
Rep.  444. 

-  McNamara  v.  Clark,  85  111.  App. 
439;  Englert  v.  White,  92  Iowa,  97, 
60  N,  W.  Rep.  224;  Klindt  v.  Hig- 
gins,  95  Iowa.  529,  64  N.  W.  Rep.  414; 
Cummings  v.  Hurd,  49  Mo.  App.  139. 

3  Lazier  v.  Horan,  55  Iowa,  75,  7 
N.  W.  Rep.  457. 

*  Bank  of  Montreal  v.  Inger.son,  105 
Iowa,  349,  75  N.  W.  Rep.  351,  distin- 


guishing Bank  of  Charleston  Nat. 
Banking  Ass'n  v.  Zorn,  14  S.  C.  444, 
and  citing  Caldwell  v.  Evans,  5 
Bush,  380,  96  Am.  Dec.  358;  Adams 
v.  Hackensack  Improvement  Com- 
mission, 44  N.  J.  L.  638,  43  Am. 
Rep.  406;  St.  Paul  Nat.  Bank  v.  Can- 
non, 46  Minn.  95,  48  N.  W.  Rep.  526, 
24  Am.  St.  189;  Hills  v.  Place,  48  N. 
Y.  520.  8  Am.  Rep.  568;  Cheney  v. 
Libby,  134  U.  S.  68,  10  Sup.  Ct.  Rep. 
498;  Ward  v.  Smith,  7  Wall.  447; 
Williamsport  Gas  Co.  v.  Pinkerton, 
95  Pa.  62;  Wood  v.  Merchants'  Sav- 
ing. Loan  &  Trust  Co.,  41  111.  267; 
Grissom  v.  Bank,  87Tenn.  350,  3  L.  R. 
A.  273.  10  S.  W.  Rep.  744,  10  Am.  St. 
669;  Turner  v.  Hay  den.  4  B.  &  C.  1; 
Walton  V.  Henderson,  Smith  (N.  H.), 
168,  as  sustaining  tlie  doctrine  that 
the  bank,  in  such  a  case,  is  not  the 
agent  of  the  payee  of  the  note, 
though  the  latter  be  due,  so  as  to  be 
authorized  to  accept  payment  of  it, 
unless  the  note  is  in  its  possession. 


§  231.]  PAYMENT.  587 

banker's  is  authority  to  the  banker  to  apply  the  funds  of  tlio 
acceptor  or  maker  on  deposit  to  the  payment  of  the  paper.  If 
maturing  paper  be  left  with  the  banker  for  collection  he  be- 
comes the  agent  of  the  holder  to  receive  payment;  but  unless 
the  banker  is  made  the  holder's  agent  by  a  deposit  of  the 
paper  with  him  for  collection,  he  has  no  authority  to  act  for 
the  holder.  The  naming  of  a  bank  in  a  note  as  the  place  of 
payment  does  not  make  the  banker  an  agent  for  the  collection 
of  the  note  or  the  receipt  of  the  money.  Ko  power,  authority 
or  duty  is  thereby  conferred  upon  the  banker  in  reference  to 
the  note;  and.  the  debtor  cannot  make  the  banker  the  agent 
of  the  holder  simply  by  depositing  with  him  the  funds  to  pay 
it.  Unless  the  banker  has  been  made  the  agent  of  the  holder 
by  the  indorsement  of  the  paper  or  the  deposit  of  it  for  col- 
lection, any  money  which  the  banker  receives  to  apply  in 
payment  of  it  will  be  deemed  to  have  been  taken  by  him  as 
the  agent  of  the  payer.^ 

The  fact  that  an  attorney  is  authorized  to  collect  interest 
does  not  empower  him  to  receive  the  principal.-  Such  author- 
ity, in  the  absence  of  direct  proof,  may  in  some  cases  be  in- 
ferred from  the  possession  of  the  bond  and  mortgage;  but  it  is 
incumbent  upon  the  debtor  who  pays  to  the  attorney  to  show 
that  the  securities  were  in  his  possession  on  each  occasion 
when  payments  were  made,  for  their  withdrawal  would  be  a 
revocation  of  the  authority.^    If  an  attorney  employed  to  col- 

1  Adams  V.  Hackensack  Imp.  Cora-  Eq.  13;  Eaton  v.  Knowles,  61  Mich, 
mission,  supra;  First  Nat.  Bank  v.  625,  38  N.  W.  Rep.  740;  Brewster  v. 
Chilson.  45  Neb.  257,  63  N.  W.  Rep.  Carnes.  103  N.  Y.  556.  9  N.  E.  Rep. 
31)2;  Baitel  v.  Brown,  104  Wis.  493,  323;  Lane  v.  Duchac,  73  Wis.  646.  41 
80  N.  W.  Rep.  801;  Hollinsliead  v.  N.  W.  Rep.  962.  Contra,  Shane  v. 
rStuart,  8  N.  D.  35.  77  N.  W.  Rep.  89.  Palmer,  43  Kan.  481,  23  Pac.  Rep.  594; 

2  Campbell  v.  O'Connor,  55  Neb.  638,  Quinn  v.  Dresbach,  75  Cal.  159.  7  Am. 
76  N.  W.  Rep.  167.  St.   138,  16  Pac.  Rep.  762.     Compare 

3  Williams  v.  Walker,  2  Sandf.  Ch.  Wilcox  v.  Carr,  37  Fed.  Rep.  130. 
325;  Doubleday  v.  Kress,  50  N.  Y.  A  mortgagor  who  makes  the  agent 
410,  10  Am.  Rep.  502;  Smith  v.  Kidd,  of  his  mortgagee  for  the  collection 
68  N.  Y.  130,  23  Am.  Rep.  157;  Crane  of  the  principal  and  mterest  due  the 
V.  Gruenewald,  120  N.  Y.  274. 17  Am.  latter  his  own  agent  for  the  purpo.se 
St.  643,  24  N.  E.  Rep.  456;  Henn  v.  of  securing  a  loan  to  be  used  in  dis- 
Conisby,  1  Ch.  Cas.  93;  Gerard  v.  charging  a  mortgage  must  stand  a 
Baker,  id.  94;  Garrels  v.  Morton,  26  loss  caused  by  the  agent's  embezzle- 
IIL  App.  433;  Cox  v.  Cutter,  28  N.  J.  ment  of  the  money  so  obtained,  tba 


588  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  231. 

lect  a  note  receives  part  of  the  sum  due  in  cash  and  takes  se- 
curity in  his  own  favor  for  the  balance,  the  payment  is  good 
pro  tanto;  but  the  creditor  may  refuse  to  accept  such  securit}'' 
and  recover  on  the  note  from  the  maker.'  If  payment  of  a 
loan  is  made  to  the  attorney  who  negotiated  it  while  he  has 
the  custody  of  the  bond  and  mortgage,  with  the  consent  of  the 
mortgagee,  and  the  mortgagor  knows  the  fact,  he  is  discharged 
although  the  attorney  was  not  in  fact  authorized  to  receive  it.'- 
If  the  attorney  of  a  plaintiff  comes  into  possession  of  money 
belonging  to  the  defendant  and  the  latter  and  the  attorney 
agree  that  it  should  be  paid  on  the  plaintiff's  claim,  such  agree- 
ment is  payment.' 

The  court  of  errors  and  appeals  of  Is"ew  Jersey  has  ruled, 
by  a  vote  of  eleven  to  one,  reversing  the  vice-chancellor,  that 
the  mere  possession  of  a  bond  and  mortgage  by  one  not  the 
obligee  will  not  warrant  the  payment  thereof  to  such  posses- 
sor. Many  years  before  payment  these  papers  were  drawn  by 
the  person  to  whom  payment  was  made,  but  of  that  fact  it  did 
not  appear  that  the  debtor  had  any  knowledge.  The  papers 
were  in  the  possession  of  the  mortgagee  from  the  time  of 
their  execution  until  they  were  delivered  to  the  scrivener  for 
safe  keeping  in  his  vault,  and  were  put  up  by  the  mortgagee 
in  a  bundle,  tied  with  strings  and  sealed  with  wax.  Interest 
had  been  paid  to  the  scrivener  under  special  authority  from 
the  mortgagee.*  A  late  case  in  New  York  is  hard  to  harmon- 
ize with  the  case  just  stated,  and  holds  a  rule  more  consonant 
with  the  authorities  and  the  analogies  of  the  law.  The  attor- 
ney to  whom  payment  was  made  had  not  made  the  original 
loan,  but  had  negotiated  the  purchase  of  an  outstanding  bond 
and  mortgage.     Of  the  latter  fact  it  does  not  appear  that  the 

mortgagor  not  having  directed  the  ^  Davis  v.  Severance,  49  Minn.  528, 

agent  to  apply  it  to  the  mortgage  in  53  N.  W.  Rep.  140. 

his  possession.      Boardman  v.  Bliz-  2  Crane  v.  Gruenewald,  swpra;  IMc- 

iard,  36  Fed.  Rep.  26.  Connell  v.  Mackin,  22  App.  Div.  587, 

The  apparent  authority  of  an  at-  48  N.  Y.  Supp.  18. 
torney  to  receive  payment  of  inter-  3  Millhiser  v.  Marr,  130  N.  C.  510, 
est  does  not  depend  upon  his  pro-  41  S.  E.  Rep.  1038. 
duction  to  the  debtor  of  the  securi-  *Lawson  v.  Nicholson,  52  N.  J.  Eq. 
ties,  but  on  his  possession  of  them.  821,  SI  Atl.  Rep.  386,  reversing  Law- 
Crane  V.  Gruenewald.  120  N.  Y.  274,  son  v.  Carson,  50  N.  J.  Eq.  370,  25 
17  Am.  St  643.  24  N.  K  Rep.  456.  AtL  Rep.  191. 


§  231.]  PAYMENT.  589 

mortgagor  had  any  knowledge;  indeed,  he  did  not  know  of  the 
assignment  of  the  bond  and  mortgage  until  informed  of  it  by 
the  receipt  of  the  attorney  for  interest  paid  a  short  time  be- 
fore payment  of  the  principal.  The  same  attorney  had  been 
authorized  to  receive  the  interest  from  the  assi"-nor  of  the 

O 

mortgage,  and  was  so  authorized  by  the  assignee,  the  papers 
being  left  in  the  attorney's  possession.  It  is  said:  The  fact 
that  the  agent  or  attorney  has  made  the  loan  does  not  give  him 
authorit}'  to  collect  the  debt,^  nor,  it  seems,  does  the  mere  pos- 
session of  the  security  bj''  such  attorney  give  such  authority .- 
Both  conditions  must  concur.  Jt  is  said  in  the  case  last  cited : 
"  The  reason  of  the  rule  that  one  who  has  made  a  loan  as  a<'ent 
and  taken  the  security  is  authorized  to  receive  payment  wlien 
he  retains  possession  of  the  security  is  founded  upon  human 
experience  that  the  payer  knows  that  the  agent  has  been 
trusted  by  the  payee  about  the  same  business,  and  he  is  thus 
given  a  credit  with  the  payer."'  The  same  rule  was  applied 
to  the  case  before  the  court,' 

In  case  of  a  mortgage  or  other  non-negotiable  evidence  of 
debt,  probably  a  payment  in  good  faith  to  the  original  holder, 
in  the  absence  of  the  paper  evidence,  would  be  treated  as  valid, 
although  there  had  been  an  actual  assignment  of  the  debt.* 
Payment,  however,  may  not  be  made  to  an  assignor  after 

1  To  that  effect  is  Heflin  v.  Camp-  signed    it    is    incumbent  upon   the 

bell,  5  Tex.  Civ.  App.  106,  23  S.  W.  assignee  to  show  that  the  debtor  was 

Rep.  595.  notified  in  order  to  protect  himself 

2Doubleday  v.  Kress,  50  N.  Y.  410,  against  any  payment   made  to  the 

10  Am,  Rep.  502.  original  creditor.     Heermans  v.  Ells- 

3  Central  Trust  Co.  v.  Folsom,  167  worth,  64  N.  Y.  115;  Quinn  v.  Dres- 

N.  Y.  285,  60  N.  E.  Rep.  599,  approv-  bach,  75  Cal.   159,  7  Am,  St.  138,  16 

ing  Williams  v.  Walker,  2Sandf.  Ch.  Pac.  Rep.  762;  Bank  v.  Jones,  65  Cal 

325.  437,  4  Pac.  Rep.  418. 

*  Trustees  of  Union  College  v.  Under  the  recording  acts  the  rec 
Wheeler.  61  N.  Y.  88;  Foster  v.  Beals,  ord  of  the  assignment  of  a  mortgage 
21  id.  247.  See  Richardson  v.  Ains-  is  constructive  notice  to  the  world 
worth,  20  How.  Pr.  521;  Robinson  v.  of  the  rights  of  the  assignee;  a  pur- 
Weeks,  6  id.  161;  Muir  v.  Schenck,  chaser  of  the  equity  of  redemption 
3  Hill,  228,  38  Am.  Dec.  633;  Gamble  cannot  claim  any  benefit  from  pay- 
V.  Cummings,  2  Blackf.  235.  ments  made  to  the  mortgagee  after 

It  is  a  fair  legal  presumption  that  his  assignment  has  been   recorded, 

the  creditor  who  holds  a  non-negoti-  Brewster  v.  Carnes,  103  N.  Y.  556,  9 

able  chose  in  action  is  entitled  to  re-  N.  E.  Rep.  323;   Viele  v.  Judson,  83 

ceive  payment  thereof.     If  it  is  as-  N.  Y.  32. 


590  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  231. 

notice  of  such  assignment;^  and  will  not  be  recognized  even 
if  the  assignor  still  has  possession  of  the  securities;^  not  even 
under  garnishment  proceedings  and  an  order  of  the  court,  if 
that  defense  is  not  made.'  Where  the  demand  has  been  as. 
signed,  payment  as  garnishee  of  the  original  creditor  is  not 
good  unless  it  is  compulsory,  though  there  has  been  no  notice 
of  the  assignment,  for  assignment  passes  the  title  without 
notice.* 

The  hona  fide  payment  of  a  debt  due  a  person  who  died 
intestate  made  to  his  sole  heir  and  the  sole  distributee  of  the 
funds  of  the  estate,  before  administration  is  granted,  will,  if 
equity  requires  it,  relieve  the  debtor  from  liability  to  an  ad- 
ministrator subsequently  appointed.'^  If  the  executor  of  a  de- 
ceased postmaster  has  made  application  for  the  readjustment 
of  the  latter's  salarj'',  requesting  that  payment  be  made  tohira, 
a  payment  to  the  widow  of  the  deceased  is  not  binding  on  the 
executor,  though  she  also  applied  for  readjustment.^  One  who 
pays  a  note  to  a  person  who  had  sued  upon  it  at  law  does  so  at 
his  peril  if,  at  the  time  of  payment,  he  has  notice  of  the  pend- 
ency of  an  appeal  in  a  chancery  suit  brought  against  him  by 
another  person  to  establish  his  right  to  the  note.'^  A  husband 
is  not  authorized  to  accept  payment  for  the  personal  labor  of 
his  wife  rendered  outside  his  family;  but  if  the  debtor  sold 
property  to  the  husband  and  wife  jointly  and  she  agreed  that 
the  money  due  her  might  be  applied  on  the  purchase  price,  her 
demand  is  satisfied.^ 

A  compulsory  payment  under  a  foreign  attachment  from  a 
court  of  competent  jurisdiction  is  good,  and  will  be  recognized 
[389]  even  in  a  foreign  jurisdiction,  though  in  the  latter  an 
earlier  attachment  had  been  levied  for  the  same  debt.^  A  pay- 

1  Lyman  v.  Cartwright,  3  E.  D.  5  Vail  v.  Anderson,  61  Minn.  552, 
Smith,  117;  Meriam  v.  Bacon,  5  Met.  64  N.  W.  Rep.  47;  Hannah  v.  Lank- 
95;  Guthrie  v.  Bashline,  25  Pa.  80;  ford,  43  Ala.  163;  Lewis  v,  Lyons,  13 
Field  V.  Mayor,  6  N.  Y.  179;  Ten  Eick  111.  117. 

V.  Simpson,  1  Sandf.  Ch.  244.  ^  Holt  v.  United  States,  29  Ct.  of 

2  Chase  v.  Brown,  32  Mich.  225.  Cls.  56. 

3  Roy  V.  Baucus.  43  Barb.  310.  ^  McClintock  v.  Helberg,  168  111. 

4  Richardson  v.  Ainsworth,  20  How.  384,  48  N.  E.  Rep.  145,  64  111.  App.  190. 
Pr.  521:  Robinson  v.  Weeks,  6  id.  161;  «  Strickland  v.  Hamlin,  87  Me.  81, 
Muir  V.  Schenck,  3  Hill,  228,  38  Am.  32  Atl.  Rep.  732. 

Dec.  633.  ^  Minor  v.  Rogers  Coal  Co.  25  Ma 


§  231.]  PAYMENT.  59i 

ment  as  trustee  or  garnishee  is  good  though  the  trustee  might 
have  disputed  the  jurisdiction  of  the  court  ordering  such  pa}''- 
raent.'  But  it  is  otherwise  if  the  garnishee,  knowing  that  the 
cLaim  has  been  assigned,  fails  to  set  up  that  fact,  notwithstand- 
ing the  assignee  did  not  intervene,  thoui-h  havinir  knowled"-e  of 
the  garnishment  proceedings.^  Money  paid  by  the  govern- 
ment to  a  receiver  of  the  property  of  a  citizen  by  the  court  of 
a  state  in  which  he  is  domiciled  discharges  the  claim  of  the 
government's  creditor.* 

Where  a  debt  is  owing  to  two  persons  jointly  it  may  be  paid 
to  either.  Thus,  where  two  persons  joined  in  an  agreement 
to  sell  and  convey  land,  it  was  held  that  a  payment  to  one  of 
them  was  good  though  he  had  no  title  to  the  land.*  If  the 
survivor  of  two  joint  payees  of  a  note  is  the  sole  devisee  of  the 
deceased  payee  payment  may  be  made  to  him.'^  But  payment 
made  to  a  third  person  is  not  valid  unless  such  person  was 
authorized  by  all  the  obligees  to  receive  it.^  Payment  of  money 
to  a  part  of  the  heirs  of  a  person  insured  for  their  benefit  does 
'Dot  discharge  the  insurer's  liability;  the  indebtedness  was  not 
joint.^  Payment  of  a  debt  due  to  a  deceased  person,  made  before 
letters  granted,  to  a  person  who  afterward  takes  them  out,  is 
made  good  by  the  subsequent  letters.^ 

The  secondary  liability  of  the  owner  of  a  building  for  the 
services  of  workmen  employed  by  the  contractor  and  for 
materials  supplied  does  not  arise  until  the  steps  prescribed  by 
statute  to  acquire  a  lien  therefor  have  been  taken;  hence 
payment  made  to  other  persons  than  the  contractor  does  not 
bind  him.®     The  right  to  the  emoluments  of  an  office  follows 

App.  78;  Allen  v.  Watt.  79  111.  284;  33  Me.  67;  Moore  v.  Bevier,  60  Minn. 

Lieber  v.  St.  Louis  Agricultural  &  240,  63  N.  W.  Rep.  281;  Heury  v.  Mt. 

M.  Ass'n,    36    Mo.    382;    Holmes   v.  Pleasant,  70  Mo.  500. 

Remsen,  4  Jolins.  Ch.  460,  20  Johns.  ^  Perry  v.  Perry's  Ex'r,  98  Ky.  242, 

229,  11  Am.   Deo.  269;   McDaniel  v.  33  S.  W.  Rep.  755. 

Huglies,  3  East,  367.  «  Moore  v.  Bevier,  60  Minn.  240,  63 

iReed   v.  Parsons,    11    Cush.  255;  N.  W.  Rep.  281. 

Sauntry  v.  Dunlap,  13  Wis.  364.  ^  Brown  v.  Iowa  Legion  of  Honor, 

2  Greenwich  Ins.  Co.  v.  Columbia  107  Iowa,  439,  78  N.  W.  Rep.  73. 

Manuf.  Co.,  73  111.  App.  560.  »  Priest  v.  Watkins.  2  Hill.  235,  38 

'  Boi-cherling  v.  United  States,  35  Am.  Dec.  584;  In  re  Faulkner,  7  Hill, 

Ct.  of  Cls.  311,  329.  18L 

'♦Waters   v.  Travis,  9  Johns.  450;  ^ Walker   v.  Newton,  53  Wis.  336, 

Flanigan  v.  Seelye,  53  Minn.  23,  55  10  N.  W.  Rep.  436. 
N.  W.  Rep.   115:  Oatman  v.  Walker, 


592 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHAEGES.       [g  23U 


the  true  title  to  it.^  As  between  the  person  entitled  to  an  office 
and  the  public,  there  is  no  obligation  upon  the  latter  until  the 
duties  of  the  office  have  been  assumed.  The  salary  fixed 
therefor  is  the  reward  for  express  or  implied  services,  and 
therefore  cannot  belong  to  one  who  has  not  performed  services 
although  he  is  wrongfully  hindered  from  occupying  the  posi- 
tion in  which  he  might  have  rendered  them.^  AVhere  disburs- 
ing officers  pay  compensation  for  official  services,  pursuant  to 
law,  they  are  justified,  by  the  weight  of  authority,  on  grounds 
of  public  policy  in  paying  to  a  de  facto  officer,  and  such  pay- 
ment is  a  good  defense  to  an  action  against  the  public  by 
the  de  jure  officer  to  recover  the  salary,  after  he  has  been 
placed  in  possession  of  the  office.'  The  public  is  liable  for 
the  salary  due  and  unpaid  a  de  jure  officer  before  judgment  in 
his  favor.*     This  is  the  rule  whether  the  compensation  arises 


1  Conner  v.  New  York.  2  Sandf.  370; 
Nichols  V.  MacLean,  101  N.  Y.  526, 
54  Am.  Rep.  730,  5  N.  E.  Rep.  347; 
People  V.  Tieman,  30  Barb.  193; 
Dolan  V.  Mayor.  68  N.  Y.  274.  23  Am. 
Rep.  168;  McVeany  v.  Mayor,  80  N. 
Y.  185,  36  Am.  Rep.  600;  People  v. 
Miller.  24  Mich.  458,  9  Am.  Rep.  131; 
Dorsey  V.  Smith,  28  Cal.  21;  Hunter 
V.  Chandler,  45  Mo.  452;  Glascock  v. 
Lyons,  20  Ind.  1,  83  Am.  Dec.  299; 
Douglass  V.  State,  31  Ind.  429;  War- 
den V.  Bayfield  County,  87  Wis.  181, 
58  N.  W.  Rep.  248. 

2 Smith  V.  Mayor.  37  N.  Y.  518; 
Connor  v.  Mayor,  5  id-  285;  Auditors 
V.  Benoit,  20  Mich.  176,  4  Am.  Rep. 
382. 

s  Dolan  v.  Mayor,  68  N.  Y.  274,  23 
Am.  Rep.  168;  McVeany  v.  Mayor,  80 
N.  Y.  185.  36  Am.  Rep.  600;  Auditors 
V.  Benoit,  supra;  Coughlin  v.  Mc- 
Elroy,  74  Conn.  397,  409,  50  Atl.  Rep. 
1025;  State  v.  Clark,  52  Mo.  508; 
W^estberg  v.  Kansas,  64  Mo.  493; 
Steubenviile  v.  Culp,  38  Ohio  St.  18, 
23,  43  Am.  Rep.  417:  Commissioners 
of  Saline  County  v.  Anderson,  20 
Kan.  298,  27  Am.  Rep.  171;  State  v. 
Milne,  36  Neb.  301,  19  L.  R.  A.  689.  54 
N.  W.  Rep.  521,  38  Am.  St.  724; 
Shannon   v.    Portsmouth,   54   N.   H. 


183;  Shaw  v.  Prina  County,  —  Ari- 
zona, — ,  18  Pac.  Rep.  273.  Contra, 
Dorsey  v.  Smyth,  28  Cal.  21;  Car- 
roll V.  Siebenthaler,  37  Cal.  193:  An- 
drews  v.  Portland,  79  Me.  484,  10  Atl. 
Rep.  458;  Rasmussen  v.  Carbon 
County,  8  Wyo.  277,  45  L.  R.  A.  295, 
56  Pac.  Rep.  1098;  Philadelphia  v. 
Rink,  2  Atl.  Rep.  505  (Pa.). 

In  Tennessee  the  test  applied  is, 
could  the  person  wrongfully  in  office 
compel  the  payment  of  the  salary  to 
him?  The  case  ruled  was  this:  A. 
was  elected  to  succeed  L. ;  the  latter 
obtained  an  injunction  restraining 
A.  and  the  authorities  who  were 
about  to  induct  him  into  office  from 
interfering  with  his  enjoyment  of  it. 
The  injunction  was  made  perpetual 
and  L.  remained  in  possession  and 
drew  the  salary.  After  the  injunc- 
tion was  dissolved  and  A."s  title 
established  by  the  appellate  court, 
he  recovered  from  the  public  the 
salary  provided  for  the  office  and 
paid  L.  during  his  incumbency.  The 
injunction  did  not  require  the  offi- 
cers to  make  payment  thereof  to  L. 
Memphis V.  Woodward,  12Heisk.  499. 

4  Dolan  V.  Mayor,  supra;  Comstock 
V.  Grand  Rapids.  40  Mich.  397;  Peo- 
ple V.  Brenan,  30  How.  Pr.  417. 


§  232.]  PAYMENT.  593 

from  fees  payable  from  the  public  treasury  or  an  annual  salary 
payable  at  intervals,  and  whether  the  officer  was  appointed  or 
elected.^  If  payment  is  made  after  notice  of  an  adjudication 
against  the  right  of  the  person  in  office  the  public  is  liable  to 
the  de  jure  officer  for  the  amount.^  i!^otice  to  the  government 
from  a  corporation  that  it  has  changed  its  treasurer  is  not 
effective  to  prevent  payment  to  the  former  treasurer  in  pur- 
suance of  a  contract  in  his  name.^  Payment  of  a  private  debt 
due  to  a  member  of  a  firm  to  the  firm  of  which  the  creditor  is  a 
member  will  not  support  a  plea  of  payment  in  the  absence  of 
evidence,  express  or  implied,  that  the  creditor  has  authorized 
the  receipt  of  the  money  by  the  firm  as  his  agents.* 

§  233.  Pleading  payment.  By  the  theory  of  common-law 
pleading  in  the  action  of  aasximpsit^  as  well  as  by  the  provis- 
ions of  the  modern  code,  payment,  either  full  or  partial,  being 
in  confession  and  avoidance,  must  be  pleaded.  It  cannot  be 
proved  under  the  general  issue  or  general  denial.  The  issue 
in  debt  was  upon  the  existence  of  present  indebtedness;  and 
therefore  in  that  action  the  rule  was  different.  The  general 
issue  in  asmmpsit^  however,  by  a  later  practice,  came  to  be  so 
expanded  as  to  materially  infringe  this  logical  rule;  and  it  was 
held  to  embrace  many  defenses  which  admitted  all  the  essential 
facts  stated  in  the  declaration,  and  avoided  their  effects  by 
matter  subsequent,  including  payment.'     If  the  plaintiff  al- 

1  McVeany  v.  Mayor,  80  N.  Y.  185,  Morton.  3  Call,  234.  SeeEcIson  v.  Del- 
36  Am.  Rep.  600.  lage,  8  How.  Pr.  273.   But  see  Hirsch 

2  Id.  V.  Caler,  21  Cal.  71;  Davaney  v.  Eg- 
'  Chapter  of  Calvary  Cathedral  v.     genhoff,  43  id.  397. 

United  States,  29  Ct.  of  Cls.  269.  In  Kentucky  it  is  considered  to  be 
*  Powell  V.  Brodhurst,  [1901]  2  Ch.  settled  that  a  partial  payment  on  or 
160.  before  the  day  on  which  the  debt  is 
sMcKyring  v.  Bull,  16  N,  Y.  297.  due  may  be  pleaded;  and  full  pay- 
In  this  case  the  opinion  of  Selden,  J.,  ment  after  the  day  is  pleadable  by 
interestingly  and  instructively  dis-  statute;  but  the  courts  there  have 
cusses  the  subject  and  reviews  many  not  gone  so  far  as  to  sanction  a  plea 
English  cases ;  the  conclusion  reached  of  partial  payment  after  the  day,  but 
being  that  the  code  requires  the  de-  have  decided  that  it  cannot  be 
fendant  to  plead  any  new  matter  pleaded.  Gearhart  v.  Olmstead,  7 
constituting  either  an  entire  or  par-  Dana.  445;  Mc Waters  v.  Draper,  5 
tial  defense,  and  prohibits  him  from  T.  B.  Mon.  494;  Young  v.  Park,  6  J.  J. 
giving  such  matter  in  evidence  upon  Marsh.  540:  Craigs  v.  Whips,  1  Dana, 
the  assessment  of  damages  when  not  375.  Nor  is  either  partial  or  full  pay- 
set  up  in  the  answer.  Skipwith  v.  ment  after  the  day  provable  under 
Vol.  I  —  38 


594 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  232. 


leges  non-payment  and  must  establish  it  to  show  a  cause  of 
action,  payment  may  be  proven  under  a  general  denial.^  Under 
[31)0-31)0]  a  general  allegation  of  payment  the  defendant  may, , 
in  some  jurisdictions,  give  in  evidence  any  facts  which  in  law 
amount  to  payment;^  while  in  others  only  such  facts  can  be 
shown  as  tend  to  establish  a  common-law  or  actual  payment.* 
A  plea  of  payment  need  not  allege  tlie  amount  paid,  the  date 
of  payment  nor  the  person  who  received  it;  *  under  such  plea 
partial  payment  may  be  proven.'^  But  if  payment  in  property'' 
is  relied  on  the  answer  must  be  specific  as  to  its  value.^  And 
this  is  necessary  in  some  cases  where  partial  payment  is  ad- 
mitted and  the  suit  is  on  a  contract  for  the  payment  of  money. 
The  defendant  may  plead  a  payment  in  excess  of  the  admis- 
sion, but  should  allege  the  amount  paid  and .  not  merely  that 
the  plaintiff  has  been  fully  paid  as  to  some  or  all  of  the  items 
of  the  demand,  especially  where  the  amount  payable  is  de- 
pendent upon  another  amount,  also  traversable.'^  An  allega- 
tion of  the  place  of  payment  is  surplusage  and  will  not  preju- 


the  general  issua  Hamilton  v.  Coons, 
5  Dana,  317. 

When  the  petition  states  facts  con- 
stituting the  plaintiff's  claim  a  gen- 
eral denial  does  not  present  an  issue 
authorizing  the  defendant  to  prove 
payment.  St.  Louis,  etc.  R.  Co.  v. 
Grove,  39  Kan.  731,  18  Pac.  Rep.  958. 

iKnapp  V.  Roche,  94  N.  Y.  329; 
Quin  V.  Lloyd.  41  id.  349;  McElwee 
V.  Hutchinson,  10  S.  C.  436;  State  v. 
Roche,  94  Ind.  373;  Robertson  v.  Rob- 
ertson, 37  Oreg.  339,  62  Pac.  Rep.  377; 
Marley  v.  Smith,  4  Kan.  155;  State 
V.  Peterson,  143  Mo.  536, 39  S.  W.  Rep. 
453. 

2  Edmunds  v.  Black,  13  Wasli.  490, 
43  Pac.  Rep.  330;  Bush  v.  Sprout,  43 
Ark.  416;  Morehouse  v.  Northrop,  33 
Conn.  380,  89  Am.  Dec.  311;  Hart  v. 
Crawford,  41  Ind.  197;  Farmers'  & 
Citizens'  Bank  v.  Sherman,  33  N.  Y. 
69;  Whittington  v.  Roberts,  4  T.  B. 
Mon.  173.  See  Day  v.  Clarke,  1  A.  K. 
Marsh.  521. 


3  Lovegrove  v.  Christman,  164  Pa. 
390,  30  Atl.  Rep.  385. 

This  doctrine  is  said  to  have  no 
application  to  suits  in  justices'  courts. 
Rider  v.  Gulp,  68  Mo.  App.  527. 

An  equitable  defense  cannot  be 
proven  without  leave  and  upon  no- 
tice. Steiner  v.  Erie  Dime  Savings 
&  L.  Co.,  98  Pa,  491;  Hawk  v.  Geddis, 
16  S.  &  R.  28. 

In  Massachusetts  the  discharge  of 
a  note  payable  in  money  by  the  de- 
livery and  acceptance  of  property 
must  be  the  result  of  a  subsequent 
and  independent  agreement  resting 
upon  substantial  facts  which  the 
answer  must  set  forth.  Ulsch  v.  Mul- 
ler,  143  Mass.  379.  9  N.  E.  Rep.  736. 

*  Johnson  v.  Breedlove,  104  Ind.  .521, 
6  N.  E.  Rep.  906;  Stacy  v.  Coleman, 
10  Ky.  L.  Rep.  78  (Ky.  Super.  Ct.). 

SKeyes  v.  Fuller,  9  III  App.  .528; 
State  V.  Roche,  94  Ind.  372. 

6  Choate  v.  Hoogstraat,  46  C.  C.  A. 
174.  105  Fed.  Rep.  713. 
^Shipman  v.  State,  43  Wis.  381. 


§  233.]  PAYMENT.  595 

dice.'  It  has  been  held  in  Kentucky  not  necessary  for  a  jury 
when  sworn  on  an  inquiry  of  damages,  or,  indeed,  on  the  trial 
of  an  issue,  to  notice  credits  indorsed  on  a  note,  unless  under 
the  issue  of  payment;  but  under  the  practice  in  that  state 
whenever  a  note  on  which  an  action  is  brought  is  filed  the  courts 
of  original  jurisdiction  notice  it  so  far  as  to  cause  the  clerk 
to  note  on  the  record  all  credits  indorse:!  thereon  as  credits  on 
ihe  judgment,  and  this  after  a  writ  of  inquiry  or  verdict  [.'J07J 
<vhen  the  jury  has  not  noticed  thera.^  Payment  of  a  debt  and 
30sts  while  suit  is  pending  for  its  recovery  extinguishes  the 
jlaim.^  Payment  is  an  aflirmative  defense  and  must  bo 
pleaded.*  Such  defense  may  be  made  to  an  action  upon  con- 
tract under  an  answer  to  a  declaration  in  set-off  alleging  that  if 
the  defendant  shall  prove  that  the  plaintiff  ever  owed  the  de- 
fendant the  amounts  alleged,  he  has  paid  the  same  in  full.' 
The  party  alleging  payment  has  the  onus;  and  if  it  is  claimed 
that  payment  was  made  in  anything  but  money  he  has  also 
the  burden  of  proving  that  what  was  received  was  taken  in 
satisfaction  and  at  the  creditor's  risk.^  Under  a  plea  of  pay- 
ment the  laws  of  the  state  in  which  the  note  sued  upon  was 
made  may  be  received  in  evidence  to  show  that  such  note  was 
there  paid  and  extinguished  by  another  note.'' 

§  233.  Evidence  of  payment.     Possession  of  the  evidence 
of  debt  is  presumptive  evidence  of  authority  to  receive  pay- 

1  Brown  v.  Gooden,  16  Ind.  444  Ilsley  Bank  v.  Child,  76  Minn.  173,  78 

'i  Phelps  V.  Taylor,  4  T.  B.  Mon.  170.  N.  W.  Rep.  1048;  Griffith  v.  Creigh- 

3  Root  V.  Ross,  29  Vt.  488.  ton,  61  Mo.  App.  1;  Godfrey  v.  Cris- 

4  Gregory  v.  Hart,  7  Wis.  533,  540;  ler,  121  Ind.  203,  22  N.  E.  Rep.  999; 
Martin  v.  Pugh,  23  id.  184;  Hawes  v.  Cheltenham  Stone  &  G.  Co.  v.  Gates 
Woolcock,  30  id.  213;  Rossiter  v.  Iron  Works,  124  111.  623. 16  N.  E.  Rep. 
Suhultz,  62id.  655,  22N.W.  Rep.  839;  923;  Hunter  v.  Moul,  98  Pa.  13,  43 
Christian  v.  Bryant,  103  Ga.  561,  27  Am.  Rep.  610;  Brown  v.  Olmsted,  50 
S.  E.  Rep.  666;  Hander  v.  Baade,  16  Cal,  162;  Bradley  v.  Harwi.  43  Kan. 
Tex.  Civ.  App.  119,  40  S.W.  Rep.  422.  314,   23  Pac.   Rep.   566:    Runyon    v. 

SGossv.  Calidns,  164  Mass.  546,  24  Snell,  116  Ind.  164,  9  Am.  St.  839.  18 

N.  E.  Rep.  96;  Swett  v.  Southworth,  N.  E.  Rep.  522;  McWilliams  v.  Phil- 

125  Mass.  417.  lips,   71    Ala.   80;    Insurance  Co.    v. 

An  allegation  of  payment  made  Dunscorab,  108  Tenn.  724,  735,  69  S. 

upon  information  and  belief  is  good.  W.  Rep.  335. 

First  Nat.  Bank  v.  Roberts,  2  N.  D.  ^Thomson-Houston  Electric  Co.  v. 

195,  49  N.  W.  Rep.  722.  Palmer,  52  Minn.  174,  53  N.  W.  Rep. 

6  Atkinson  v.  Linden  Steel  Co.,  138  1137,  38  Am.  St.  536. 
111.  187,  27  N.  E.  Rep.  919;  Marshall  & 


596  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  233. 

ment.^  But,  as  evidence  of  agency,  the  presumption  ceases  on 
the  death  of  the  principal.-  So  possession  of  the  evidence  of 
debt  by  the  malcer,  or  one  who  succeeds  to  his  rights  or  estate, 
is  ^jrma  facie  evidence  of  payment.^  Thus  the  possession  of 
a  bank  check  by  the  bank  on  which  it  is  drawn  is  such  evi- 
dence that  the  bank  has  paid  it.^  The  possession  of  a  canceled 
check  by  the  drawer  who  testifies  that  on  the  day  of  its  date 
he  made  and  delivered  it  to  the  payee  in  payment  of  a  debt 
is  sufficient  prima  facie  proof  of  the  payment  of  the  amount 
it  calls  for.^  It  is  presumed,  where  a  check  payable  to  bearer 
was  one  day  the  property  of  A.  and  the  following  day  was  in 
the  possession  and  apparent  ownership  of  B.,  that  it  was  de- 
livered by  A.  to  B.  in  payment  of  a  debt,  though  it  is  not  pre- 
sumed that  the  transfer  was  direct.^  Possession  of  the  evidence 
of  the  indebtedness  by  the  payee  is  prima  facie  proof  that  the 
debt  has  not  been  paid  J  The  execution  and  delivery  of  a  deed 
which  acknowledges  the  receipt  of  the  purchase-money,  in  the 
absence  of  any  other  proof,  \b  prima  facie  evidence  of  its  pay- 
ment.^ But  possession  of  a  note  by  the  maker  is  such  evidence 
only  after  maturity;^  nor  isthe  presumption  of  payment  from 
such  possession  rebutted  by  proof  of  the  mere  fact  that  the 
payee  or  former  holder  is  dead.'"  The  force  of  the  presumption 
varies  with  the  circumstances  of  the  case  in  which  it  is  sought 
to  be  applied;  and  the  amount  of  evidence  necessary  to  over- 

1  Lochenmeyer  v,  Fogarty,  112  111.  W.  Rep.  272:  Magruder  v.  De  Haven's 
572;  Williams  v.  Walker,  2  Sandf.  Adm'r.  21  Ky.  L.  Rep.  580,  52  S.  W. 
Ch.  325;  Megary  v.  Funtis,  5  id.  376.     Rep.  795. 

See  §231.  6  Poucher  v.  Scott,  98  N.  Y.  422. 

2  Id.  See  Stimson  v.  Vroman,  99  id.  IL 

3 Gibbon  v.   Featherstonhaugh,    1  "Keyes  v.  Fuller,  9  111.  App.  528; 

Stark.  92;    Hollenberg   v.    Lane.  47  Humpeler  v.   Hickman,   13  id.  537; 

Ark.  394,  1  S.  W.  Rep.  687;  Potts  v.  Brooks  v.  Holt,  65  Mo.  App.  618. 

Coleman.  67  Ala.  221;  Grimes  v.  Hil-  8  Crowe  v,  Colbeth,  63  Wis.  643,  24 

liary,  150  111.  141,  36  N.  E.  Rep.  977;  N.  W.  Rep.  478;  Coles  v.  Soulsby,  21 

Smith  V.  Gardner,  36  Neb.  741,  55  N.  Cal.  47;  Kinster  v.  Babcock,  26  N.  Y. 

W.  Rep.  245.  378;  Clark  v.  Deshon,  12  Cush.  589. 

When  such  presumption  arises  it  ^  Erwin  v.  Shaffer,  9  Ohio  St.  43; 

is  inferred  that  payment  was  made  Baring  v.  Clark,  19  Pick.  220;  McGee 

to  a  person  authorized  to  receive  it.  v.  Prouty,  9  Met.  547.  43  Am.  Dec. 

Lipscomb  v.  De  Lanos,  68  Ala.  592.  409.    See  Heald  v.  Davis,  11  Cush.  319. 

4  Wilson  V.  Goodin,  Wright,  219.  i"  Larimore  v.  Wells,  29  Ohio  St.  13. 

6Peavy  v.  Hovey,  16  Neb.  416,  20  N. 


§  233.]  PAYMENT.  597 

come  it  is,  in  general,  for  the  jury.'  A  debtor's  books  of  ac- 
counts are  not  evidence  to  prove  payments  made  by  him  to  his 
creditor.^ 

"  A  bond  and  mortgage  taken  for  the  same  debt,  though  dis- 
tinct securities  possessing  dissimilar  attriljutes  and  subject  to 
remedies  which  are  as  unlike  as  personal  actions  and  proceed- 
ings in  rem,  are,  nevertheless,  so  far  one  that  payment  of  either 
discharges  both,  and  a  release  or  extinguishment  of  either, 
without  actual  payment,  is  a  discharge  of  the  other,  unless 
otherwise  intended  by  the  parties;"  hence,  an  acknowledg- 
ment upon  the  record  of  full  satisfaction  of  the  mortgage,  no 
mention  being  made  of  the  debt  or  the  honiX,  prima  facie  im- 
ports the  extinguishment  of  the  debt.' 

The  receipt  of  rent  for  a  specified  period  is  presumptive  evi- 
dence of  the  payment  of  previous  renf  So  of  taxes.'*  So  where 
A.,  in  consideration  of  a  bill  of  goods  sold  to  him  by  B.,  agreed 
to  pay  the  amount  of  the  bill  in  discharge  of  certain  notes 
signed  by  B.  and  indorsed  by  A.,  it  is  like  evidence  of  the  pay- 
ment of  a  previous  indebtedness  of  B.  to  A.^ 

If  a  debtor  is  placed  in  an  official  or  fiduciary  relation,  in 
which  it  becomes  his  duty  to  receive  money,  the  law  will  in 
general  presume  payment  of  the  debt  —  but  the  presumption 
may  be  rebutted.*  Payment  received  on  Sunday,  though  in 
violation  of  the  law  for  the  observance  of  that  day,  if  it  is  re- 
tained, is  good.* 

An  indorsement  of  credit  on  an  evidence  of  debt  by  [398] 
the  payee,  within  the  period  that  raises  the  legal  presumption 
of  payment,  is  evidence  for  him  for  the  purpose  of  repelling 
that  presumption;^  but  for  that  purpose  it  has  reference  to  the 
time  when  such  payment  purports  to  have  been  made.'"    No 

1  Grimes  v.  Hilliary,  150  111.  141,  36        6  Colvin  v.  Carter,  4  Ohio,  354. 

N.   E.   Rep.   977;    Gray  v.   Gray,  47        nVilson  v.  Wilson,  17  Oliio  St.  150, 

N.   Y.   552;    Larimore   v.    Wells,   29  91  Am.  Dec.  125.     See  i^  222. 

Ohio  St.  13.  8  Johnson  v.   Willis,  7  Gray,  164; 

2  Hess'  Appeal,  112  Pa.  168,  4  Atl.  Shields  v.  Klopf,  70  Wis.  69,  35  N.  W. 
Rep.  340.  Rep.  284;  Jameson  v.  Carpenter,  68 

3  Fleming  v.  Parry,  24  Pa.  47;  Seiple  N.  H.  62,  36  Atl.  Rep.  554 

V.  Seiple,  133  id.  460, 19  Atl.  Rep.  406.  ^  Dabney's  Ex'r  v.  Dabney's  Adm'r, 

•»  Brewer  v.  Knapp,  1  Pick.  332.  2  Rob.  (Va.)  622,  40  Am.  Dec.  761. 

5  Attleborough   v.  Middleborough,  •«  Hayes  v.  Morse,  8  Vt.  316. 

10  Pick.  378. 


598 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES,       [§  234. 


presumption  of  payment  arises  from  the  fact  of  long  delaj^  in 
prosecuting  a  claim  because  the  alleged  debtor  had  property 
near  the  creditor's  phice  of  residence  if  such  property  could  not 
have  been  reached  without  giving  a  bond.^  In  England  "  where 
a  person  serves  in  the  capacity  of  a  domestic  servant,  and  no 
demand  for  the  payment  of  wages  is  made  by  the  servant  for  a 
considerable  period  after  such  service  has  terminated,  the  in- 
ference is  either  that  the  wages  have  been  paid,  or  that  the 
service  was  performed  on  the  footing  that  no  payment  was  to  be 
made.^     This  doctrine  is  fully  recognized  in  Pennsylvania,^ 

Section  2. 

application  of  payments. 

§  234.  General  rule.  The  general  rule  on  this  subject  is 
that  a  debtor  paying  money  to  a  creditor  to  whom  he  owes 
several  debts  may  appropriate  it  to  which  he  pleases.  In  the 
absence  of  an  appropriation  by  the  debtor  the  creditor  has  a 
right  to  make  the  application.  If  both  omit  to  make  an  ap- 
propriation the  law  will  apply  it  according  to  the  justice  and 
equity  of  the  case.*     That  some  of  the  claims  are  secured  is 


1  Ludwig  V,  Blackshere,  102  Iowa, 
366,  71  N.  W.  Rep.  3.-36. 

-'Sellen  v.  Norman,  4  C.  &  P.  80; 
Gough  V.  Findon,  7  Ex.  49. 

3  Taylor  v.  Beatty,  202  Pa.  120,  125, 
51  Atl.  Rep.  771. 

■»  National  Bank  v.  Bigler,  83  N.  Y. 
51;  Wetherell  v.  Joy,  40  Me.  325: 
Thayer  v.  Denton,  4  Mich.  192 ;  Hall 
V.  Constant,  2  Hall,  185;  Baker  v. 
Stack poole,  9  Cow.  420,  18  Am.  Dec. 
508;  Parker  v.  Green,  8  Met.  137; 
Truscott  V.  King,  6  N.  Y.  147;  Stew- 
art V.  Hopkins,  30  Ohio  St.  502;  Mc- 
Daniel  v.  Barnes,  5  Bush,  183;  Parks 
V.  Ingram,  22  N.  H.  283,  55  Am.  Dec. 
153;  Bosley  v.  Porter,  4  J.  J.  Marsh. 
621;  Reed  v.  Board  man,  20  Pick.  441; 
Shaw  V.  Picton,  4  B.  &  C.  715;  Scott 
V.  Fisher,  4  T.  B.  Mon.  387;  Bayley  v. 
Wynkoop,  10  111.  449:  Nutall's  Adm'r 
V.  Brannin's  Ex'r,  5  Bush,  11;  Hall  v. 
Mar.-.ton,    17  Mass.   575;   Goddanl  v. 


Cox.  2  Str.  1194;  Peters  v.  Anderson, 
5  Taunt.  596;  Bosanquet  v.  Wray.  6 
id.  597;  Brooke  v.  Enderby,  2  B.  &  B. 
70;  Bodenham  v,  Purchas,  2  B.  & 
Aid.  39;  Brady's  Adm'r  v.  Hill,  1  Mo. 
315;  Sprinkle  v.  Martin,  72  N.  C.  92; 
Dent  V.  State  Bank,  12  Ala.  275; 
Wooten  V.  Buchanan,  49  Miss.  386; 
Hamilton  V.  Benbury,  Mart.  &  Hayw. 
586;  James  v,  Malone,  1  Bailey,  334; 
Mills  V.  Kellogg,  7  Minn.  469;  Bobe 
V.  Stickney.  36  Ala.  492;  Dennis  v. 
McLaurin,  31  Miss.  606;  Gaston  v. 
Barney,  11  Ohio  St.  506:  Jones  t. 
Smith,  22  Mich.  360:  Waterman  v. 
Younger,  49  Mo.  413;  Starrett  v.  Bar- 
ber, 20  Me.  457;  Irwin  v.  Paulett,  1 
Kan.  418;  Pearl  v.  Clark.  2  Pa.  350: 
Moorehead  v.  West  Branch  Bank, 
3  W.  &  S.  550:  Selleck  v.  Sugar  Hol- 
low Turnpike  Co.,  13  Conn.  459: 
Whetmore  v.  Murdock,  3  Woodb.  & 
M.  390;  Dulles  v.  De  Forest,  19  Conn 


§  23:;.] 


APrLICATION    OF    PAYMENTS. 


599 


immaterial  so  far  as  the  rif^ht  of  either  party  to  make  the  ap- 
plication is  concerned.^ 

§  235.  By  debtor.  The  right  of  the  debtor  who  [390] 
makes  a  voluntary  payment  to  direct  how  it  shall  be  applied 
is  absolute  if  he  sic?nifies  his  election  at  the  time  of  making  it.'-^ 
He  will  not  lose  that  right  unless  he  has  an  opportunity  to 
exercise  it  and  neglects  to  do  so.'  The  rule  is  the  same  in  re- 
spect to  a  partial  payment  accepted  by  the  creditor.''  The 
direction  of  the  debtor  may  be  inferred  from  circumstances, 


1!)0;  Souder  v.  Schechterly,  91  Pa.  83; 
Clarke  v.  Scott,  45  Cal.  86;  Har- 
groves  V.  Cooke,  15  Ga.  321;  Haynes 
V.  Nice,  100  Mass.  827;  Cardineli  v. 
O'Dovvd,  43  Cal.  586;  Putnam  v.  Rus- 
sell, 17  Vt.  54.  42  Am.  Dec.  478:  Rob- 
son  V.  McKoin,  18  La.  Ann.  544; 
Early  v.  Flannery,  47  Vt.  253;  Holmes 
V.  Pratt,  34  Ga.  558;  McMillan  v. 
Grayston,  83  Mo.  App.  425;  Under- 
hill  V.  Wynkoop,  15  Pa.  Super.  Ct. 
1'30;  Burnett  v.  Sledge,  129  N.  C.  114, 
39  S.  E.  Rep.  775. 

^  Post-Intelligencer  Pub.  Co.  v. 
Harris.  11  Wash.  500,  39  Pac.  Rep. 
965;  Wood  v.  Callaghan,  61  Mich.  402, 
28  N.  W.  Rep.  162,  1  Am.  St.  597; 
Arbuckles  v.  Chadwick,  146  Pa.  393, 
23  Atl.  Rep.  346. 

2Eppinger  v.  Kendrick,  114  Cal. 
620.  46  Pac.  Rep.  613;  Long  worth  v. 
Aslin,  106  Mo.  155,  17  S.  W.  Rep. 
294;  Brown  v.  Brown,  124  Mo.  79,  27 
S.  W.  Rep.  552;  Koch  v.  Roth,  150 
111.  212,  226,  37  N.  E.  Rep.  317;  Ader- 
holt  V.  Embry,78  Ala.  185;  McCurdy 
V.  Middleton,  82  id.  131,  2  So.  Rep. 
721;  Baldwin  v.  Flash,  59  Miss.  61; 
Miles  V.  Ogden,  54  Wis.  573,  12  N.  W. 
Rep.  81;  Long  v.  Miller,  93  N.  C.  233; 
Libby  v.  Hopkins,  104  U.  S.  303; 
Washington  N.  Gas  Co.  v.  Johnson, 
123  Pa.  576,  16  Atl.  Rep.  799;  Bray  v. 
Grain,  59  Tex.  649;  Robinson  v.  Doo- 
little,  12  Vt.  246;  Wendt  v.  Ross,  33 
Cal.  650;  Gaston  v.  Barney,  11  Ohio 
St.  506;  Selleck  v.  Sugar  Hollow 
Turnpike  Co.,  13  Conn.  453;  Reynolds 


V.  McFarlane,  1  Overt.  488;  McDaniel 
V.  Barnes.  5  Bush,  183;  Parks  v.  In- 
gram, 22  N.  H.  283,  55  Am.  Dec.  153; 
Bosley  v.  Porter,  4  J.  J.  Marsh,  621 ; 
Parker  v.  Green,  8  Met.  144;  Mann 
V.  Marsh,  2  Cai.  99:  Trotter  v.  Grant, 
2  Wend.  413:  Allen  v.  Culver.  3 
Denio,  284;  Van  Rensselaer  v.  Rob- 
erts, 5  id.  470;  Walther  v.  Wetmore, 
1  E.  D.  Smith,  7;  Pattison  v.  Hull,  9 
Cow.  747;  Baker  v.  Stackpoole,  id. 
420,  18  Am.  Dec.  508;  Webb  v.  Dick- 
inson, 11  Wend.  62;  Stone  v.  Sey- 
mour, 15  id.  19. 

Payments  made  by  an  agent  to  his 
principal's  creditor  after  the  death  of 
the  principal  cannot  be  ap|)lied  to 
the  discharge  of  indebtedness  exist- 
ing before  his  death  in  a  proceeding 
against  the  testator's  estate,  at  least 
when  the  estate  is  insolvent.  Gif- 
ford  V.  Thomas'  Estate,  62  Vt.  34,  19 
Atl.  Rep.  1088. 

Under  the  Louisiana  code  a  debtor 
who  has  the  opportunity  of  ascer- 
taining that  his  creditor  has  made 
an  application  cannot,  after  failing 
to  avail  him.self  of  the  right  to  ob- 
ject thereto  and  allowing  a  long 
time  to  pass,  be  heard  to  ask  for  a 
different  application.  Baker  v. 
Smith,  44  La.  Ann.  925,  11  So.  Rep. 
585. 

3  Jones  V.  Williams,  39  Wis.  300; 
Waller  v.  Lacy,  1  M.  &  G.  54;  2  Pars, 
on  Cont.  631. 

■*  Gaston  v.  Barney,  U  Ohio  St. 
506;  Wetherell  v.  Joy,  40  Me.  325. 


GOO  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  235. 

and  if  his  intention  can  thus  be  shown  it  is  of  the  same  force 
as  though  it  had  been  expressed.^  The  intention  to  appropriate 
[400]  a  payment  to  a  particular  debt  may  be  collected  from 
the  nature  of  the  transaction,  and  be  referred  to  the  jury  as  a 
question  of  fact.^  Thus,  where  two  charges  of  unequal  amounts 
exist,  one  legal  and  the  other  illegal,  the  former  not  due,  and 
a  general  payment  of  an  amount  not  in  excess  of  the  illegal 
claim  is  made  on  account,  it  was  held  to  have  been  paid  upon 
that  claim  although  there  was  no  direction  given.'  And  so 
where  a  payment  is  made  to  a  creditor  who  holds  an  original 
claim  against  the  debtor,  of  which  the  latter  has  knowledge, 
and  also  claims  which  have  been  purchased  without  the  debt- 
or's knowledge,  it  will  be  presumed  that  the  paj'ment  was  in- 
tended to  be  applied  upon  the  former.*  If  the  debtor,  at  the 
time  of  making  the  payment,  makes  an  entry  in  his  own  book, 
stating  that  it  is  upon  a  particular  demand,  and  shows  the 
entry  to  tlie  creditor,  it  is  a  sufficient  appropriation.^  The 
fact  of  the  entries  being  made  must  be  communicated  to  the 
debtor,"  unless  the  right  to  make  them  was  exercised  pursuant 
to  a  previous  direction.'^  The  proper  time  to  direct  the  appli- 
cation of  the  proceeds  of  personal  property  delivered  or  con- 
signed to  a  lienee  for  sale  is  when  the  delivery  or  consignment 
is  made.^ 


1  Snell  V.  Cottingham,  72  111.  124;  out  specifying  any  particular  ac- 
Tayloe  v.  Sandlford,  7  Wheat.  13;  count,  is  not  an  application  of  it. 
Mayor  v.  Patten,  4  Cranch,  317;  Ter-  the  payer  owing  the  creditor  on 
hune  V.  Colton,  12  N.  J.  Eq.  233,  312;  more  than  one  account.  Orr  v. 
Rowland  v.  Rench,  7  Blackf.  236;  Nagle,  87  Hun,  12,  33  N.  Y.  Supp.  879. 
Mitchell  V.  Dall,  2  Har.  &  G.  159:  3  Caldwell  v.  Wentworth.  14  N.  H, 
Robinson  v.  Doolittle,  12  Vt.  246;  431;  Frazer  v.  Bunn,  8  C.  &  P.  704; 
Shaw  V.  Picton,  4  B.  &  C.  715;  Scott  Dorsey  v.  Wayman,  6  Gill,  59.  See 
V.  Fisher,  4T.  B.  Mon.  387;  Keane  v.  McCarty  v.  Gordon,  16  Kan.  35. 
Branden,  12  La.  Ann.  20;  Smuller  v.  ^Holley  v.  Hardeman,  76  Ga.  328; 
Union  Canal  Co.,  37  Pa.  68;  Lanten  Moose  v.  Marks,  116  N.  C.  785,  21  S. 
V.  Rowan,  59  N.  H.  215;  Roakes  v.  E.  Rep.  561. 

Bailey,  55  Vt.  542;  Bray  v.  Grain,  59  «  Frazer  v.  Bunn,  8  C.  &  P.  704. 

Tex.  649;  Hansen  v.   Rounsavell,  74  ^  Reiss  v.  Schemer,  87  111.  App.  84 

111.  238;  Plain  v.  Roth,  107  id.  588.  7  First  Nat.  Bank  v.  Roberts,  2  N. 

2  Pritchard  v.   Comer,   71   Ga.  18;  D.  195,  49  N.  W.  Rep.  722. 

West  Branch  Bank  v.   Morehead,  5  »  Bell  v.  Bell,  20  S.  C.  34;  Frost  v. 

W.    &  S.    542;  Morehead    v.    West  Weathersbee,   23    id.  368;    Baum  v. 

Branch  Bank,  3  id.  550.  Trantham,  42  S.  C.  104,  19  So.  Rep. 

Paying  money  on  account,  with-  973,  46  Am.  St.  697. 


§  235.]  APPLICATION    OF    PAYMENTS.  001 

But  this  right  of  the  debtor  to  elect  to  which  of  several  debts 
^  payment  shall  be  applied  is  confined  to  voluntary  payments. 
It  does  not  extend  to  moneys  collected  by  legal  process.'  The 
right  of  the  debtor  to  so  direct,  however,  cannot  be  defeated 
by  the  creditor  obtaining  possession  of  the  debtor's  funds  with- 
out his  consent,  except  by  legal  proceedings  binding  upon  him. 
Where  a  debtor  intrusted  funds  to  an  agent  with  directions  to 
apply  them  by  way  of  compromise  in  satisfaction  of  two  de- 
mands held  against  him  by  the  same  person,  and  the  creditor, 
knowing  this  fact,  levied  an  attachment  on  the  money  so  con- 
fided to  the  agent,  and  also  on  the  money  of  the  agent,  and 
thereupon  the  latter,  to  regain  possession  of  his  own  money, 
assented,  under  protest,  to  the  application  of  the  debtor's  money 
to  one  of  the  debts  which  was  unsecured,  it  was  held  not  bind- 
ing upon  the  debtor,  and  he  was  allowed,  when  afterwards 
sued,  to  apply  it  to  either  at  his  option.-  So  where  a  surety 
sends  money  by  the  principal  to  the  creditor,  and  such  prin- 
cipal so  informs  the  creditor,  they  can  make  no  other  applica- 
tion than  that  directed  by  the  surety.^ 

Where  money  is  paid  by  the  principal  debtor  a  surety  cannot 
interfere  to  control  the  application  contrary  to  the  intention 
of  the  party  paying.*  Xor  can  subsequent  incumbran-  [401] 
cers  control  the  application  of  moneys  matle  by  the  parties  to 
earlier  liens.'^  But  sureties  on  official  bonds  will  not  be  ren- 
dered liable  as  for  defalcation  by  application  of  funds  received 
in  their  time  to  cancel  prior  balances  or  defalcations.®    Nor 

1  Blackstone  Bank  v.  Hill.  10  Pick.  5  Richardson  v.  Washington  Bank* 

129;   Barrett  v.    Lewis,  3   Pick.   123;  3  Met.  536;  Mills  v.  Kellogg,  7  Minn. 

Wooten  V.  Buchanan,   49   Miss.  386;  469.     But  see  Green  v.  Tyler,  39  Pa. 

Forelander  v.    Hicks.    6    Ind.    448;  361. 

Nichols  V.  Knowles,  3  McCrary,  477,  *>  In    United    States    v.   Eckford's 

17  Fed.  Rep.  494;   Monson  v.  Meyer,  Ex'r,  1   How.  250,  McLean,  J.,  said: 

190  111.   105,  60  N.  E.  Rep.  63,  93  IIL  "The  treasury  officers  are  the  agents 

App.  127.  of    the    law.        It    regulates    their 

'■i  Dennis  V.  McLaurin.  31  Miss.  606;  duties,   as  it   does    the  duties    and 

Pearl  v.  Clark,  3  Pa.  350.  rights  of  the  collector  and  his  .sure- 

3  Reed  v.  Board  man,  20   Pick.  441.  ties.     The  officers    of  the   treasury 

See  Lansdale  v.  Graves.  Sneed,  215.  cannot,  by  any  exercise  of  their  dis- 

^  Mathews  v.  Switzler,  46  Mo.  301;  cretion,  enlarge  or  restrict   the  obli- 

Gaston  v.   Barney,  11  Ohio  St.  506;  gation  of  tlie  collector's  bond.  Much 

Field  V.  Holland,  6  Cranch,  8;  Allen  less  can  they,  by  the   mere   fact  of 

V.  Jones,  8  Minn.  202.  keeping    an     account     current,    in 


602 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  235... 


will  an  intentioQ  of  the  principal  debtor  to  apply  a  payment 
m  favor  of  a  surety  be  presumed,  and  thus  exclude  the  right 
of  the  creditor  to  make  the  application.^  The  right  of  a  debtor 
to  apply  money  regardless  of  his  surety  exists  only  where  the 
payment  is  made  by  his  own  funds  free  from  any  equity  in 
favor  of  the  surety  to  have  the  application  made  in  payment 
of  the  debt  for  which  he  is  liable.  Where  the  specific  money 
paid  to  the  creditor  and  applied  on  a  debt  of  the  principal,  for 
which  the  surety  is  not  held,  is  the  money  for  the  collection 
and  payment  of  which  the  surety  is  bound,  the  latter  is  entitled 
to  have  the  money  applied  to  the  payment  of  the  debt  for 
which  he  is  surety  unless  the  creditor  shows  a  superior  equity 
to  sustain  the  application  made.  The  surety  has  the  burden 
of  showing  that  the  application  made  is  inequitable  to  him.'-' 
The  absolute  right  of  directing  the  application  of  payments 
which  a  debtor  has  does  not  pass  to  his  personal  representa- 
[402]  tives;  nor  does  it  pertain  to  any  one  making  payments 
in  a  fiduciary  capacity.^     If  the  terms  of  an  express  trust  do 


which  debits  and  credits  are  entered 
as  they  occur,  and  without  any  ex- 
press appropriation  of  payments,  af- 
fect the  right  of  sureties.  The  col- 
lector is  a  mere  agent  or  trustee  of 
the  government.  He  holds  the 
money  he  receives  in  trust,  and  is 
bound  to  pay  it  over  to  the  govern- 
ment as  the  law  requires.  And  in 
the  faithful  performance  of  this 
trust  the  parties  have  a  direct  inter- 
est, and  their  rights  cannot  be  disre- 
garded. It  is  true,  as  argued,  if  the 
collector  shall  misapply  the  public 
funds,  his  sureties  are  responsible. 
But  that  is  not  the  question  under 
consideration.  The  collector  does 
not  misapply  the  funds  in  his  hands, 
but  pays  them  over  to  the  govern- 
ment without  any  special  direction 
as  to  their  application.  Can  the  treas- 
ury officers  say,  under  such  circum- 
stances, that  the  funds  currently  re- 
ceived and  paid  over  shall  be  appro- 
priated in  discharge  of  a  defalcation 
which  occurred  long  before  the 
sureties  were  bound  for  tlie  collector. 


and  by  such  appropriation  hold  the 
sureties  bound  for  the  amount?  The 
statement  of  the  case  is  the  best 
refutation  of  the  argument.  It  is  so 
unjust  to  the  sureties,  and  so  directly 
in  conflict  with  the  law  and  its  pol- 
icy, that  it  requires  but  little  consid- 
eration." Jones  v.  United  States,  7 
How.  681;  Boody  v.  United  States,  1 
Woodb.  &  M.  150;  Postmaster-Gen- 
eral v.  Nor  veil,  Gilpin,  106;  United 
States  V.  January,  7  Cranch,  572; 
Seymour  V.  Van  Slyck,  8  Wend.  403; 
Stone  V.  Seymour.  15  id.  19:  United 
States  V.  Linn,  2  McLean,  501. 

1  Smith's  Merc.  L.  672;  Plomer  v. 
Long,  1  Stark.  153;  Hargroves  v. 
Cooke,  15  Ga.  321;  Clark  v.  Burdett, 
2  Hall,  197;  James  v.  Malone,  1 
Bailey.  334.  See  Lansdale  v.  Graves, 
Sneed,  215:  Gard  v.  Stevens,  12  Mich. 
292,  86  Am.  Dec.  52. 

2  Merchants'  Ins.  Co.  v.  Herber,  08 
Minn.  420.  71  N.  W.  Rep.  624. 

3  Putnam  V.  Russell,  17  Vt.  54,  42 
Am.  Dec.  478;  Barrett  v.  Lewis,  2: 
Pick.  123;  Cole  v.  Trull,  9  Pick.  325. 


§    230.J  APPLICATION    OF    PAYMENTS.  G03 

not  determine  the  order  of  payments,  their  order,  it  is  believed, 
must  be  fixed  by  law. 

A  series  of  cases  in  Pennsylvania  have  dealt  with  the  right 
of  members  of  building  and  loan  associations  to  direct  the  ap- 
plication of  payments  made  to  the  latter.  Originally  it  was 
determined  that  all  payments  were  to  l)e  credited  to  the  debt 
created  by  the  loan  made  to  the  member.^  But  tliis  doctrine 
was  qualified,  and  was  not  to  be  regarded  as  laying  down  the 
rule  that  payment  of  dues  on  the  stock,  ipno  facto ^  works  an 
extinguishment  of  so  much  of  the  mortgage.  "The  debtor 
may  so  apply  it,  but  the  payment  itself  is  not  an  application 
of  the  money  to  the  reduction  of  the  mortgage."^  The  right 
of  the  debtor  to  direct  the  application  of  the  payments  on  the 
stock  to  the  extinguishment  of  the  debt  is  now  recognized  if 
the  rights  of  creditors,  based  on  the  assignment. of  the  stock, 
are  not  alBfected,'  or  legal  process  has  not  been  resorted  to  op 
insolvency  has  not  intervened.*  An  application  made  at  the 
inception  of  the  contract  for  the  loan  cannot  be  subsequently 
interfered  with.^  Where  a  borrowing  member  of  such  an  as- 
sociation gives  it  his  obligation  for  the  payment  of  the  princi- 
pal debt  in  equal  monthly  instalments  until  the  whole  is  paid, 
according  to  the  statute  and  the  rules  of  the  association,  such 
instalments  cannot  be  appropriated  to  a  direct  payment  on 
account  of  the  loan  with  the  effect  of  leaving  dues  on  the 
stock  unpaid." 

g  236.  Same  subject.  An  agreement  between  debtor  and 
creditor  for  a  particular  application  of  moneys  expected  from 

But  in  Marshall  v.  Nagel,  1  Bailey,  2  Building  Ass'n  v.  Sutton,  35  Piu 

308,  it  was  held  that  if  a  debtor  pays  463.  78  Am.  Dec.  349. 

a  sum  of  money  on   account  of  dis-  ^Wadlinger  v.   Washington   Ger- 

tinct  debts  due  to  different  creditors  man  B.  &  L.  Ass'n,  153  Pa.  622,  26 

to  a  common  agent  of  all  the  credit-  Atl.  R'^p.  647. 

ors,  and  gives  no  directions  as  to  ''strohen  v.  Franklin  Savings  & 
the  order  in  which  the  money  is  Loan  Ass'n,  115  Pa.  273,  8  Ati.  Rep. 
to  be  applied  to  the  debts,  the  agent  843;  York  Trust,  Real  Estate  &  De- 
may  make  the  application  according  posit  Co.  v.  Gallatin,  186  Pa.  150,  40 
to  his  discretion  and  the  debtor  will  Atl.  Rep.  317. 

be  bound  by  it.     Carpenter  v.  Goin,  »  York,  etc.  Co.  v.  Gallatin,  suipra. 

19  N.  H.  479.  6  preemansburg     Building    &     L. 

iKupfert  V.  Guttenberg  Building  Ass'n  v.  Watts,  109  Pa.  221,  48  AtL 

Ass'n,  30  Pa.  465;  Hughes's  Appeal,  Rep.  1075. 
id.  471. 


60i 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  236. 


a  specific  source  will  preclude  any  diversion  by  either,  without 
the  consent  of  the  other,  when  the  money  is  received.'  Thus, 
where  money  is  realized  by  a  creditor  from  a  collateral  se- 
curity for  a  debt,  such  money  is  deemed  appropriated  to  that 
debt.-  The  plaintiff,  an  equitable  mortgagee  for  600Z.,  lent 
the  title  deeds  of  the  property  to  the  defendant  E.,  the  mort- 
gagor, to  enable  him  to  negotiate  a  sale  of  it,  the  deeds  to  be 
returned.  E.  paid  plaintiff  oOOl.  received  by  him  as  part  of 
the  purchase-money ;  afterwards  E.  became  bankrupt.  Before 
such  payment  was  made  E.  was  indebted  to  the  plaintiff  on  a 
trade  account  for  a  larger  amount.  E.  made  no  application 
of  the  300Z.  he  paid,  and  the  plaintiff  contended  that  he  might 
apply  it  to  the  trade  account,  thus  leaving  the  mortgage  un- 
discharged. This  contention  was  disapproved  of,  it  being  infer- 
able from  the  nature  of  the  transaction  that  E.  made  the  pay- 
ment only  in  respect  to  the  plaintiff's  right  to  the  mortgage, 
and  that  it  must,  from  the  circumstances,  be  understood  that 
the  payer  meant  the  money  to  be  applied  toward  the  satisfac- 
tion of  the  mortgage.^     If  money  is  advanced  by  a  factor  to 


1  Thompson  v.  Hudson,  L.  R.  6  Ch. 
.320;  Lansdale  v.  Mitchell,  14B.  Mon, 
348;  Hughes  v.  McDougle,  17  Ind. 
399;  King  of  Spain  v.  Oliver,  Pet. 
C.  C.  276;  Sproule  v.  Samuel,  5  111. 
135;  Stackpole  v.  Keay,  45  Me.  297; 
Gwathney  v.  McLane,  3  McLean, 
371:  White  v.  Toles.  7  Ala.  569; 
Smith  V.  Wood,  1  N.  J.  Eq.  74;  Hahn 
V.  Geiger,  96  III.  App.  104;  Hansen  v. 
Rounsavell,  74  111.  238.  See  §  235, 
last  paragraph. 

In  Ross  V.  Crane,  74  Iowa,  375,  37  N. 
W.  Rep.  959,  the  purchaser  of  a  note 
and  mortgage  agreed  with  their 
maker  in  writing  to  employ  him  and 
apply  his  wages  in  payment  of  the 
mortgage  debt.  After  money  enough 
had  been  earned  to  pay  the  mortgage 
the  holder  applied  the  amount  to  an- 
other account  and  assigned  the  se- 
curity and  the  note  to  a  third  person. 
The  agreement  was  held  binding  and 
the  debt  to  have  been  satisfied  be- 
fore the  assignment  was  mad& 

2  Howard  v.  Schwartz,  22  Tex.  Civ. 


App.  400.  55  S.  W.  Rep.  348;  Cald- 
well V.  Hall.  49  Ark.  508,  1  S.  W.  Rep. 
62;  Strickland  v.  Hardie,  82  Ala.  412, 
3  So.  Rep.  40;  Greer  v.  Turner,  47 
Ark.  17,  14  S.  W,  Rep.  383;  Pritchard 
V.  Comer,  71  Ga.  18;  Hatcher  v. 
Comer,  73  id.  418;  Taylor  v.  Cock- 
rell,  80  Ala,  236;  Marziou  v.  Pioche, 
8  Cal.  522;  Buckley  v.  Garrett,  47  Pa. 
280;  San  ford  v.  Clark,  29  Conn.  457; 
Masten  v.  Cummings,  24  Wis.  623; 
Cross  V.  Johnson,  30  Ark.  398;  Mo 
Cune  V.  Belt.  45  Mo.  174;  Paine  v. 
Bonney,  6  Abb.  Pr.  99;  Donally  v.  Wil- 
son, 5  Leigh,  329;  Windsor  v.  Ken- 
nedy, 52  Miss.  164;  Hicks  v.  Bing- 
ham, 11  Mass.  300;  Hall  v,  Marston, 
17  Mass.  575.  See  Green  v.  Ford,  79 
Ga,  130;  Baum  v.  Frantham,  24  S.  C 
104. 

3  Young  V.  English,  7  Beav.  10; 
Buster  v.  Holland,  27  W.  Va.  510,  53a 
See  Stoveld  v.  Eade,  4  Bing.  154; 
Waters  v.  Tompkins,  2  Cr.,  M.  &  R 
273;  Pearl  v.   Deacon,  24  Beav.  18a 


§  236.] 


APrLICATION    OF    PAYMENTS. 


C05 


purchase  property,  upon  the  security  of  its  being  shipped  to 
him,  it  will  be  implied  that  the  advances  were  made  upon  tho 
condition  that  they  should  be  paid  out  of  the  proceeds  of  the 
property;  after  the  factor  has  obtained  possession  of  it  the 
debtor  cannot  direct  the  application  of  the  amount  realized 
from  it  to  another  debt.'  But  the  agreement  to  control  the 
debtor's  choice  must  be  such  as  to  give  the  creditor  a  ri"-ht  in 
the  nature  of  a  lien  which  can  be  specitically  enforced.^ 

Where  the  debtor  has  directed  the  application  of  his  pay- 
ment to  a  particular  debt,  he  has  a  right  to  treat  it  as  actually 
so  applied.  The  debt  will  be  deemed  extinguished  to  the  ex- 
tent of  such  payment.'  The  creditor  has  no  option  to  disre- 
gard the  direction,^  and  no  different  application  by  him  will 
avail  unless  afterwards  ratified  or  acquiesced  in  by  the  [403] 
debtor;^  nor  will  the  direction  of  the  latter  be  overruled  or 
changed  in  equity.^    After  a  debtor  has  made  application  of  a 


1  Frost  V.  Weathersbee,  23  S.  C.  354. 

2  Whitney  v,  Traynor,  74  Wis.  289, 
43  N.  W.  Rep.  267;  Stewart  v.  Hop- 
kins, 30  Ohio  St.  502,  See  Mellendy 
V.  Austin,  69  111.  15;  Clarke  v.  Scott, 
45  Cal.  86. 

3Libby  v.  Hopkins,  104  U.  S.  303; 
Washington  N.  Gas  Co.  v.  Johnson, 
123 Pa.  576,  16  Atl.  Rep.  799;  Lauteu 
V.  Rowan,  59  N.  H.  215;  Irwin  v. 
Paulett,  1  Kan.  418. 

4  Runyon  v.  Latham,  5  Ired.  551; 
Wetherell  v.  Joy,  40  Me.  325;  Scott 
V.  Fislier,  4  T.  B.  Mon.  387;  Blanton 
V.  Rice,  5  id.  253;  Rugeley  v.  Smalley, 
12  Tex.  238;  Farmers',  etc.  Bank  v. 
Franklin,  1  La.  Ann.  393;  Stewart  v. 
Hopkins,  30  Ohio  St  502;  Bank  of 
Muskingum  V.  Carpenter,  7  Ohio,  21, 
28  Am.  Dec.  616. 

5  Sherwood  v.  Haight,  26  Conn.  432; 
Jackson  v.  Bailey,  12  111.  159;  Fore- 
lander  V.  Hicks,  6  Ind.  448;  Semmes 
V,  Boy  kin,  27  Ga.  47;  Hall  v.  Marston, 
17  Mass.  575;  Solomon  v.  Dreschler, 
4  Minn.  278;  Tayloe  v.  Sandiford,  7 
Wheat.  13:  Bonaffe  v.  Woodberry, 
12  Pick.  463;  Hussey  v.  Manufact- 
urers', etc.  Bank,  10  Pick.  415;  Blood- 


worth  V.  Jacobs,  2  La.  Ann.  24;  Adams 
V.  Bank.  3  id.  351;  Robson  v. 
McKoin,  18  id.  544;  Treadwell  v. 
Moore,  34  Me.  112;  Black  v.  Shooler, 
1  McCord,  293;  Martin  v.  Draher,  5 
Watts  544;  Mitchell  v.  Dall,  2  Har. 
&  G.  159;  McDonald  v.  Pickett.  2 
Bailey,  617:  Reed  v.  Boardinan,  20 
Pick.  441;  McKee  v.  Stroup,  1  Rice, 
291;  Moorehead  v.  West  Branch 
Bank,  3  W.  &  S.  550;  Jones  v.  Per- 
kins, 29  Miss.  139;  Smith  v.  Wood,  1 
N.  J.  Eq.  74;  Cardinell  v.  ODowd. 
43  Cal.  586. 

^Selfridge  V.Northampton  Bank, 
8  W.  &  S.  320. 

It  has  been  held  that  the  debtor 
cannot  impute  a  payment  to  princi- 
pal when  interest  is  due  thereon 
without  first  paying  the  interest. 
Johnson  v.  Robbins,  20  La.  Ann.  569. 
This  may  be  doubted  if  the  creditor 
receives  the  money.  Unless  the  in- 
terest was  due  as  damages,  it  might, 
notwithstanding,  be  recovered.  See 
Williams  v.  Houghtaling,  3  Cow.  86; 
Pindall  v.  Bank  of  Marietta,  10  Leigh, 
484. 


GOG 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  236. 


payment  he  cannot  himself  revoke  it,  and  apply  it  otherwise, 
without  the  creditor's  consent.^  lie  will  be  held  to  the  applica- 
tion made,  though  it  was  made  for  interest  on  a  debt  not  bear- 
ing interest;  ^  to  a  debt  on  which  the  statute  of  frauds  does  not 
allow  an  action  to  be  brought; '  or  to  an  illegal  claim/  But 
where  usurious  interest  has  been  paid,  it  is  deemed  an  extortion 
and  the  payment  may  be  recovered  or  applied  to  the  principal 
debt.^  A  different  rule  prevails  in  Ohio,®  and  in  the  District  of 
[404]  Columbia."  By  mutual  consent  of  the  debtor  and  creditor, 
where  no  other  parties  are  interested,  the  application  of  a  pay- 
ment may  be  changed;  and  in  that  case  the  indebtedness  first 
discharged  will  be  revived  by  implication,  without  any  express 
promise.^     If  there  are  other  parties  interested  as  a  surety,'' 


1  Long  V.  Miller,  93  N.  C.  233;  York 
Trust,  Real  Estate  &  Deposit  Co.  v. 
Gallatin,  186  Pa.  150,  40  Atl.  Rep. 
317, 

2  Beard  v.  Brooi^lyn,  31  Barb.  142. 
a  Haynes  v.  Nice,  100  Mas&  327,  1 

Am.  Rep.  109. 

^Tomlinson  Carriage  Co.  v.  Kin- 
sella,  31  Conn.  268;  Hubbell  v.  Flint. 
15  Gray,  550:  Dorsey  v.  Way  man,  6 
Gill,  59;  Richardson  v.  Woodbury,  13 
Cush.  279;  Feldman  v.  Gamble,  26 
N.  J.  Eq.  494;  Caldwell  v.  Went- 
worth,  14  N.  H.  431.  See  Plummer 
V.  Erskine,  58  Me.  59;  Mueller  v.  Wie- 
bracht.  47  Mo.  468. 

A  debtor  may  direct  the  applica- 
tion of  a  payment  upon  an  illegal 
item  of  tiie  account  against  iiim, 
neither  party  believing  it  to  be 
illegal,  and  the  transaction  involving 
it  not  being  malum,  in  se,  but  vialum 
prohibitum.  Johnston  v.  Dahlgren, 
48  App.  Div.  537,  62  N.  Y.  Supp.  1115, 
166  N.  Y.  354,  59  N.  E.  Rep.  987. 

5  Wood  V.  Lake.  13  Wis.  84,  and 
cases  cited;  Gill  v.  Rice,  id.  549;  Lee 
V.  Peckham.  17  id.  383;  Fay  v.  Love- 
joy,  20  id.  403;  State  Bank  v.  Ens- 
minger,  7  Blackf.  105:  Smead  v. 
Green,  5  Ind.  308;  Browning  v.  Mor- 


ris, 2  Cowp.  790;  Smith  v.  Bromley, 
2  Doug.  695,  note;  Williams  v.  Hed- 
ley,  8  East,  378;  Wheaton  v.  Hib- 
bard,  20  Johns.  290,  11  Am.  Dec. 
284;  Burrows  v.  Cook,  17  Iowa,  436; 
Stanley  v.  Westrop,  16  Tex.  200; 
Parchman  v.  McKinney,  12  Sm.  & 
M.  631.  See  Second  Nat.  Bank  v. 
Fitzpatrick,  23  Ky.  L.  Rep.  610,  63 
S.  W.  Rep.  459;  Citizens"  Nat.  Bank 
V.  Forman's  Assignee,  33  Ky.  L.  Rep. 
613,  63  S.  W.  Rep.  454. 

In  an  action  to  recover  payments 
made  on  account  of  usury  the  appli- 
cation to  the  principal  debt  will  be 
made  as  of  the  date  of  the  writ,  if 
the  party  who  made  them  so  re- 
quests. Peterborough  Savings  Bank 
V.  Hodgdon,  62  N.  H.  300. 

••See  Conant  v.  Seneca  County 
Bank,  1  Ohio  St.  298;  Shelton  v. 
Gill,  11  Ohio,  417;  Graham  v.  Cooper, 
17  id.  605;  Williamson  v.  Cole,  26 
Ohio  St.  207. 

■^  Kendall  v.  Vanderlip,  2  Mackey, 
105. 

8  Rundlett  v.  Small,  25  Me.  29. 

^Brockschmidt  v.  Hagebusch,  73 
111.  562;  Ruble  v.  Norman,  7  Bush, 
533;  Ware  v.  Otis,  8  Me.  387. 


§    237.]  APPLICATION    OF    PAYMENTS.  GL'7 

co-debtor,'  or  a  subsequent  incumbrancer,^  their  consent  is 
essential; '  but  a  debtor's  general  creditor  cannot  be  heard  to 
complain.* 

§237.  Same  subject;  evidence.  Parol  evidence  is  admis- 
sible to  show  that  at  the  time  a  note  was  given  for  money  lent 
an  agreement  was  made  to  pay  a  certain  sum  as  extra  inter- 
est and  that  all  the  payments  made  were  for  such  interest  and 
not  upon  the  note.*^  A  copy  of  a  letter  addressed  by  a  cred- 
itor to  his  debtor,  contained  in  the  letter  book  of  the  former, 
advising  the  debtor  that  he  had  drawn  on  him  for  the  amount 
of  a  particular  purchase,  is  not  evidence  for  such  creditor  in 
an  action  against  a  guarantor  to  establish  that  a  payment  made 
shortly  afterwards  by  the  debtor,  who  was  indebted  on  several 
accounts,  was  made  in  discharge  of  such  purchase,  though  the 
draft  itself  or  evidence  of  its  contents,  if  lost,  accompanied  by 
a  letter  from  the  debtor  to  the  creditor  regretting  his  inabil- 
ity to  meet  the  draft,  and  promising  speed}'  payment  of  that 
demand,  followed  by  a  payment  a  few  days  after  the  date  of 
such  letter,  is  evidence  to  show  that  it  was  a  payment  made 
in  discharge  of  that  particular  claim."  The  letter  of  a  debtor, 
or  of  his  acknowledged  general  agent,  to  his  creditor,  direct- 
ing him  to  which  of  two  debts  a  payment  he  is  about  to  [405] 
make  shall  be  applied,  is  the  best  evidence  to  show  on  what 
account  such  payment  was  received  by  the  creditor.''  Such  an 
act  of  the  debtor  in  an  action  against  his  guarantor  for  one  of 
the  debts,  where  several  were  due,  is  not  considered  as  merely 
the  declaration  of  a  third  person,  but  it  is  the  act  of  the  party 
who  had  the  legal  right  to  make  the  application.^ 

'  Thayer   v.  Denton,  4  Mich.  192 ;  appropriation   was   made    after    ne 

Miller  v,  Montgomery,    31   111.   350;  had  applied  for  the  benefit  of  the 

Brown  v.  Brabham,  3  Ohio,  275.  insolvent  laws,    and   was  therefore 

2 Chancellor  v.  Sohott,  23  Pa.  68;  invalid.     Richmond  Iron  Works  v. 

Tooke  V.  Bonds.  39  Tex.  419.  Woodruff,  8  Gray,  447.  See  Cremer  v. 

3  In  a  suit  to  foreclose  a  mortgage  Higginson,   1  Mason,   323;  Bank  of 

which   the    defendant    alleged  had  North  America  v.  Meredith.  2  Wash, 

been  paid,  the  plaintiff  proved  an  C.  C.  47. 

agreement  to  change  the  appropria-  ••  Whitney  v.  Traynor,  74  Wis.  289, 

tion    of    the    payments,    previously  42  N.  W.  Rep.  2G7. 

stipulated  to  be  applied  to  the  mort-  ^Rolian  v.  Hanson,  11  Cush.  44. 

page  debt,  to  another  debt.     Held,  6  Mitchell  v.  Dall,  2  H.  &  G.  159. 

that  the  defendant  might  then  prove  '  Id. 

'that  the  agreement   to  chanc-e   the  ^Id. 


008 


CONVENTIONAL   LIQUIDATIONS    AND    DISCHAKGES.        [§  238, 


§  238.  By  creditor.  "Where  the  debtor  omits  to  make  any 
appropriation  at  the  time  of  payment  the  right  to  make  the 
application  devolves  on  the  creditor.  But  its  exercise  is  sub- 
ject to  limitations.  In  one  respect,  however,  it  is  less  restricted 
than  that  of  the  debtor.  The  creditor  is  not  required  to  decide 
at  once  on  receiving  the  money.  Within  what  time  he  must 
exercise  the  choice  has  been  much  discussed.  The  weight  of 
opinion  seems  to  be  that  he  must  make  the  application  within 
a  reasonable  time,  in  view  of  the  circumstances  of  the  particu- 
lar case,  at  the  latest,  before  any  controversy  arises  or  any 
material  change  occurs  in  the  relations  of  the  parties.^  The 
bringing  of  a  suit  may  determine  the  creditor's  election,  as 


1  Applegate  v.  Koons,  74  Ind.  347; 
Robinson  v,  Doolittle,  13  Vt.  246; 
Mills  V.  Fowkes,  5  Bing.  N.  C.  455; 
Philpott  V.  Jones,  2  Ad.  &  El.  41; 
Smith's  Merc.  L.  650;  Peters  v.  An- 
derson, 5  Taunt,  596;  Norris  v.  Beaty, 
6  W.  Va.  477;  Bridenbecker  v.  Low- 
ell, 33  Barb.  9;  Haynes  v.  W'aite,  14 
Cal.  446;  Allen  v.  Culver,  3  Denio, 
284;  Parker  v.  Green,  8  Met.  144: 
Whetmore  v.  Murdock,  3  Woodb.  & 
M.  390;  United  States  v.  Kirk  pat- 
rick,  9  Wheat.  720;  Backhouse  v.  Pat- 
ton,  5  Pet.  160;  Hill  V.  Southerland,  1 
Wash.  (Va.)  128;  Van  Rensselaer  v. 
Roberts,  5  Denio,  470;  McCartney  v. 
Buck,  8  Houst  34,  12  Atl.  Rep.  717. 

In  Marsh  v.  Oneida  Central  Bank, 
34  Barb.  298,  it  was  held  that  a  bank 
which  holds  a  note  against  one  of  its 
depositors  is  not  bound  to  apply  his 
deposits  immediately  when  it  be- 
comes due.  If  not  made  then,  and  a 
judgment  is  recovered  on  the  note, 
the  right  to  make  such  application  is 
not  thereby  waived  or  lost,  and  the 
bank  may  afterwards  avail  itself  of 
the  right  against  an  assignee  of  the 
deposit.  See  Long  Island  Bank  v. 
Townsend,  Hill  &  Denio,  204;  Mayor 
V.  Patten,  4  Cranch,  317. 

In  some  cases  it  is  held  that  an  ap- 
plication made  after  an  action  'has 
been  begun  is  too   late.     Taylor   v. 


Coleman,  20  Tex.  773;  Sanford  v. 
Van  Arsdall,  53  Hun,  70, 6  N.  Y.  Supp. 
494;  Huff  stater  v.  Hayes,  64  Barb. 
573.  But  it  has  been  sustained  when 
made  after  suit  brought  where  it 
harmonized  with  the  intention  of 
the  parties.  Bank  of  California  v. 
Webb,  48  N.  Y.  Super.  Ct.  175.  It  is 
said  in  the  same  case  (94  N.  Y.  467) 
that  the  application  may  be  made 
any  time  before  the  court  makes  it 
unless  the  debtor  previously  requests 
the  creditor  to  exercise  his  right  of 
election. 

In  South  Carolina  the  creditor  has 
until  verdict  or  judgment  to  apply 
the  payments.  Heilbron  v.  Bissell, 
Bailey's  Eq.  *430;  Price  v.  Hamilton, 
12  S.  C.  32;  Thatcher  v.  Massey,  20id. 
543;  Baum  v.  Trantham,  43  S.  C.  104, 
19  So.  Rep.  973,  46  Am.  St.  697. 
These  cases  are  rested  upon  the  prin- 
ciple that  until  the  debtor  pays  the 
money  it  is  his:  and  he  has  the  right 
to  control  its  disposition.  After  the 
creditor  receives  it  he  may  exercise 
such  right,  and  it  continues  until  the 
court  has  exerted  its  power  over  the 
payment. 

Whenever  the  application  is  made 
effect  must  be  given  to  it  as  of  the 
time  the  money  was  received.  Poul- 
son  V.  Collier,  18  Mo.  App.  583;  Bray 
v.  Crain,  59  Tex.  649. 


§  23S.]  APrLIOATION    OF    PAYMENTS.  609 

where  he  holds  two  notes  and  an  unappropriated  payment 
large  enough  to  pay  one  of  them  is  made,  his  suit  on  one  of 
the  notes  is  an  election  to  apply  the  money  to  the  payment  of 
the  other.i  But  if  he  brings  separate  suits  on  them  he  will  not 
bo  allowed  on  the  trial  of  one  to  elect  to  apply  to  the  [iOG] 
satisfaction  of  the  other  a  payment  previously  made,  and  not 
before  specially  applied  by  either  party .^  If  there  is  no  pro- 
vision given  in  securities,  the  payment  of  which  is  enforced  by 
law,  as  to  the  application  of  their  proceeds  the  creditor  has  no 
right  to  make  an  appropriation  thereof.^  A  stipulation  in  a 
note  that  if  the  maker  became  otherwise  indebted  to  the  payee 
before  its  payment  the  latter  might  apply  the  first  payment  to 
such  claims  as  he  chose  does  not  include  property  taken  by 
virtue  of  a  mortgage  securing  such  note,  especially  as  against 
sureties  on  the  latter."*  A  creditor  cannot  appropriate  pay- 
ments after  third  persons  have  acquired  rights  against  the 
debtor,  so  as  to  affect  their  rights  if  an  application  can  bo 
made  which  will  protect  them.-^  In  Arkansas  the  rule  is  that 
where  there  is  a  single  running  account  in  which  third  persons 
are  not  interested,  and  a  general  payment  is  made  without  ap- 
plication by  the  debtor,  the  creditor  has  no  election  to  make 
the  application;  the  law  applies  the  payment  to  the  several 
items  of  the  account  in  the  order  of  their  priority.^ 

A  banker  is  not  required  to  apply  a  balance  due  by  him  on 
an  account  current  to  his  depositor  upon  the  liability  of  such 
customer  on  a  note  or  bill.  And  in  a  suit  by  a  banker  against 
the  acceptor  of  a  bill  the  fact  that  the  drawer  had  an  account 
with  the  banker,  and  that  after  protest  of  the  bill  there  were 
balances  in  favor  of  the  drawer,  would  not  be  evidence  in  favor 

'  AUeu  V.  Kimball,  23  Pick.   473;  that  payments  made  by  a  third  per- 

Starrett  v.  Barber,  20  Me.  457;  Bobe  son,  who  is  not  the  debtor's  agent. 

V.  Stickney,  36  Ala.  492;  Dent  v.  State  are  not  voluntary,  though  they  were 

Bank,  12  Ala.  275.  made  pursuant  to  arrangement  or 

-Stone  V.  Talbot,  4  Wis.  442.  understanding  between  the  parties. 

3  Orleans    County    Nat.    Bank    v.  <  Barrett  v.  Bass,  105  Ga.  421,  31  S. 

Moore,  112  N.  Y.  543,  8  Am.  St.  775,  R  Rep.  435. 

20  N.  E.  Rep.  357,  3  L.  R.  A.  302;  » Willis  v.McIntyre,  70Tex.  34,  7  S. 

Snider  v.  Stone,  78  111.  App,  17;  Mat-  W.  Rep  594,  8  Am.  St.  574 

ter  of  Georgi,  21  N.  Y.  Misc.  419,  47  ^  Hughes  v.  Johnson,  38  Ark.  295; 

N.  Y.  Supp.  1061.  Dunnington  v.  Kirk,  57  Ark.  595,  23 

It  is  said  in  Sanford  v.  Van  Ars-  S.  W.  Rep.  430. 
dall,  53  Hun,  70,  77,  6  N.  Y.  Supp.  494, 
Vol.  1  —  39 


610 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  238. 


of  the  acceptor  to  show  a  pajnnent  or  satisfaction  by  the 
drawer.^  If  a  debtor  owes  to  his  creditor  several  debts  it  is 
generally  said  that  the  creditor  may  apply  a  payment  which 
the  debtor  does  not  appropriate  to  either  at  his  pleasure.-  This 
is  not  true  in  an  absolute  and  unqualified  sense.  He  is  not  at 
liberty  to  apply  a  payment  to  a  disputed,'  contingent,*  or  un- 
liquidated demand  in  preference  to  one  admitted,  absolute  or 
certain,  nor  to  one  not  due  in  lieu  of  another  past  due.^  Money 
collected  on  an  execution  should  be  credited  on  the  writ;  the 
plaintiff  cannot  take  a  part  of  it  and  apply  it  to  an  unsecured 
debt,  though  it  may  be  that  it  could  have  been  applied  to  an 
execution  of  older  date  than  that  which  was  levied.^     This 


1  Citizens'  Bank  v,  Carson,  32  Mo. 
191;  Long  Island  Bank  v.  Townsend, 
Hill  &  Denio,  204  But  see  State 
Bank  v.  Arnastrong,  4  Dev.  519,  and 
State  Bank  v.  Locke,  id.  529. 

2  Giles  V.  Vandiver,  91  Ga.  192,  17 
S.  E.  Rep.  115;  Skinner  v.  Walker,  98 
Ky.  729,  34  S.  W.  Rep.  233;  Coney  v. 
Laird,  153  Mo.  408,  55  S.  W.  Rep.  96; 
On-  V.  Nagle.  87  Hun,  12,  33  N.  Y. 
Supp.  879;  Burt  v.  Butterworth,  19 
R.  L  127,  32  Atl.  Rep.  167;  Perry  v. 
Bozeman,  67  Ga.  643;  Greer  v.  Bur- 
nam,  71  id.  31;  Trotter  v.  Grant,  2 
Wend.  413;  Robbins  v.  Lincoln,  12 
Wis.  1;  Peters  v.  Anderson,  5  Taunt. 
596;  Arnold  v.  Johnson,  2  111.  196 
Brady's  Adm'r  v.  Hill,  1  Mo.  225 
Brewer  v.  Knapp,  1  Pick.  332 
Holmes  v.  Pratt,  34  Ga.  558;  Wash- 
ington Bank  v.  Prescott,  20  Pick. 
339;  Goddard  v.  Cox,  2  Str.  1194; 
Allen  V.  Kimball,  23  Pick.  473; 
Brooke  v.  Enderby,  2  B.  &  B.  70; 
Bodenham  v.  Purchas,  2  B.  &  Aid. 
39;  Bosaiiquet  v.  Wray.  6  Taunt.  597. 

3  Stone  V.  Talbot.  4  Wis.  442.  See 
Ayer  v.  Hawkins,  19  Vt.  26;  Lee  v. 
Early,  44  Md.  80;  McLendon  v.  Frost, 
57  Ga.  448. 

*  Baker  v.  Stackpoole,  9  Cow.  420, 
18  Am.  Dec.  508;  Cremer  v.  Higgin- 
fion,  1  Mason,  338;  Whetmore  v.  Mur- 
dock,  3  Woodb.  &  M.  390.     See  Kid- 


der V.  Norris,  18  N.  H.  532;  Wright 
V.  Laing,  3  B.  &  C.  165. 

6  Richardson  v.  Coddiugton,  49 
Mich.  1.  12  N.  W.  Rep.  886;  Lam- 
prell  V.  Bellericay  Union,  3  Ex.  283; 
Baker  v.  Stackpoole,  9  Cow.  420,  18 
Am.  Dec.  508;  Early  v.  Flannery,  47 
Vt.  253;  Niagara  Bank  v.  Rosevelt,  9 
Cow.  409;  Bobe  v.  Stickney.  36  Ala. 
482;  Burks  v.  Albert.  4  J.  J.  Marsh. 
97.  20  Am.  Dec.  209;  Heintz  v.  Cahn, 
29  111.  308;  Bacon  v.  Brown,  1  Bibb, 
334,  4  Am.  Dec.  640;  Parks  v.  In- 
gram, 22  N.  H.  283,  55  Am.  Dec.  153; 
Cloney  v.  Richardson,  34  Mo.  370: 
Smith  V.  Applegate,  1  Daly,  390.  See 
Dedham  Bank  v.  Chickering,  4  Pick. 
314;  Gass  v.  Stinson,  3  Sumn.  99; 
Hunter  v.  Osterhoudt,  11  Barb.  33; 
Effinger  v.  Henderson,  33  Miss.  449. 

In  Arnold  v.  Johnson,  2  111.  196,  it 
is  held  the  creditor  may  apply  the 
payment  to  any  debt  he  sees  proper, 
unless  there  are  circumstances 
which  would  render  the  exercise  of 
such  discretion  on  the  part  of  the 
creditor  unreasonable,  and  enable 
him  to  work  injustice  to  his  debtor. 
See  Bridenbecker  v.  Lowell,  33 
Barb.  9;  Lindsey  v.  Stevens,  5  Dana, 
107. 

6  Smith  V.  Smith,  105  Ga.  717,31 
S.  E.  Rep.  754. 


§   238.]  Al'l'LICATION    OF    PAYMENTS.  Gil 

principle  does  not  seem  to  be  recognized  in  ]\rissouri.  In  a 
case  where  a  deed  of  trust  secured  two  nott^s,  with  different 
sureties,  the  proceeds  of  the  foreclosure  sale  being  sufficient  to 
pay  either  note,  but  not  both,  the  creditor  was  sustained  in  ap- 
plying- the  money  so  as  to  retain  the  benefit  of  both  securities, 
without  regard  to  the  dates  when  the  notes  matured.^  The 
test  as  to  whether  the  application  made  is  valid  or  not,  as  ap- 
plied to  payments  for  goods  sold,  is  whether  the  debtor  couhl 
recover  the  money  paid,  which,  as  a  rule,  can  only  be  done 
where  payment  has  been  made  in  consequence  of  fraud,  or 
under  duress,  or  under  a  mistake  of  fact.  This  principle  does 
not  extend  to  a  case  where  liquors  are  sold  for  the  purpose  of 
being  resold  in  violation  of  law.  Hence  the  application  of 
money  paid  to  the  items  of  an  account  covering  such  liquors 
is  v^alid,  though  no  action  would  lie  to  recover  their  price.- 

Where  part  of  a  debt  is  barred  by  the  statute  and  a  [407] 
pirt  is  collectible,  and  the  debtor  makes  a  payment,  requiring 
and  receiving  a  receipt  in  full  of  all  demands,  the  law  will 
imply  an  application  of  the  payment  to  the  collectible  portion.' 
But  where  a  debtor  pays  money,  without  any  specific  direc- 
tions, on  account  of  several  debts,  all  of  which  are  barred,  the 
creditor  may  apply  it  to  either  at  his  option;  he  may  apply  it 
to  the  largest  and  thus  revive  it  as  to  a  balance.  But  he  is 
not  at  liberty  to  apply  a  part  of  the  payment  to  each  of  the 
several  demands  and  thereby  revive  them  all.''  And  it  has 
been  held  that  where  a  payment  made  is  less  than  either  of 
several  distinct  demands,  the  creditor  having  a  right  to  apply 
it  is  not  allowed  to  divide  it  and  apply  a  part  to  each  de- 
mand,^ but  in  a  later  case,  the  indebtedness  in  question  consist- 
ing of  two  notes  and  an  account  of  different  dates,  the  creditor 
was  sustained  in  applying  a  general  payment  in  such  manner 
as  to  keep  all  the  debts  alive.'*  This  is  in  accordance  with  the 
prevailing  doctrine,  none  of  the  debts  being  barred  by  statute.'' 

'  Sturgeon  Savings  Bank  v.  Riggs,  5  Wheeler  v.  House,  27  Vt  735. 

72  Mo.  App.  239.  «  Rowell  v.  Estate  of  Lewis.  72  Vt 

^IMiiyberry  v.  Hunt.  34  N.  B.  628.  16:3,  47  At).  Rep.  783;  Beck  v.  Haas, 

3  Berrian  v.   Mayor,  4  Robert.  538.  Ill  Mo.  264,  20  S.  W.  Rep.  19.  33  Am. 

See  Hill  v.  Robbins.  22  Mich.  475.  St.  516. 

■*  Ayer  v.  Hawkins,  19  Vt.  26.     See  "^  Where  money  is  paid  by  a  debtor 

contra,  Jackson    v.    Burke,    1   Dill,  to  a  creditor  wlio   has  several    de- 

311.    See    Armistead    v.  Brooke,  18  mands  against  him,  and  no  tUrec- 

Ark.  521.  tions  are  given  how  he  shall  apply 


612 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES. 


[§  238. 


The  rule  of  Clayton's  Case,'  which  is  that,  where  an  account 
current  is  kept  between  parties,  as  a  banking  account,  there  is 
no  room  for  any  other  appropriation  than  that  which  arises 
from  the  order  in  which  the  receipts  and  payments  take  place 
and  are  carried  into  the  account,  is  not  an  invariable  rule;  the 
circumstances  of  a  case  may  afford  ground  for  inferring  that 
the  transactions  of  the  parties  were  not  intended  to  come 
under  that  rule,  as  where  there  is  no  account  current,  and  no 
setting  off  of  one  item  against  another,  but  credit  is  given  for 
the  entire  sum  paid  at  the  end  of  all  the  items.  In  such  a 
case  the  creditor  may  make  the  application  up  to  the  last  mo- 
ment, by  action  or,  otherwise,  by  intention  expressed,  implied 
or  presumed.^ 


it,  the  creditor  may  apply  it  as  he 
pleases;  therefore,  when  he  holds 
two  bonds  of  his  debtor,  both  due, 
and  payable  with  interest,  and 
money  is  so  paid  to  him,  he  may 
apply  it  to  the  part  extinguishment 
of  both  bonds;  and  he  is  not  bound 
to  apply  it  on  one  bond  until  it  be 
satisfied,  and  the  residue  to  the 
other.  Smith  v.  Screven,  1  McCord, 
368.  See  James  v.  Malone,  1  Bailey, 
334. 

In  Washington  Bank  v.  Prescott, 
20  Pick.  339,  four  notes  were  made 
by  the  same  person,  and  indorsed  by 
the  defendant;  they  were  in  the 
hands  of  the  same  holder;  and  the 
defendant,  before  any  of  them  be- 
came due,  gave  the  holder  an  order 
for  the  payment  of  the  notes  with- 
out expressing  any  priority  out  of 
property  conveyed  by  the  maker  to 
assignees  by  an  indenture  to  which 
the  indorser  was  a  party,  for  the 
payment  of  the  notes  in  full  or  pro- 
portionably,  which  property  proved 
to  be  insufficient.  The  assignees,  in 
pursuance  of  the  order,  made  a  pay- 
ment after  all  the  notes  had  fallen 
due,   and  the    holder    applied    the 


money  to  all  the  notes  pro  rata,  in- 
stead of  applying  it  wholly  to  those 
which  had  first  fallen  due,  and  it 
was  held  that  he  had  a  right  to 
make  such  application.  In  an  ac- 
tion on  two  of  the  notes,  it  was  held 
that  the  other  two,  with  the  indorse- 
ments thereon,  were  admissible  in 
evidence  in  order  to  explain  the  ap 
propriation  of  the  money  paid  on 
the  order.  And  it  vvas  also  held 
that  the  jury  in  assessing  the  dam- 
ages were  not  to  regard  any  div- 
idend which  might  in  the  future  be 
paid  on  such  order.  See  Blackstone 
Bank  v.  Hill,  10  Pick.  129;  Black- 
man  V.  Leonard,  14  La.  Ann.  59; 
White  V.  Trumbull,  15  N.  J.  L.  314, 
29  Am.  Dec.  687. 

In  order  that  the  partial  pay- 
ment of  a  debt  part  of  which  is 
barred  shall  take  it  all  out  of  the 
statute  of  limitations  "there  must 
be  reasonable  evidence  that  the 
debtor  recognized  and  admitted  the 
whole  of  the  indebtedness  to  be  due; 
but  if  he  did  so  admit,  and  made  a 
general  payment  on  account  of  it, 
there  is  no  reason  for  applying  the 
admission  and  payment  to  either  of 


1 1  Merivale,  585. 


2 Cory  V.  Owners  of  Turkish  Steam- 
ship Mecca,  [1897]  App.  Cas.  286. 


§  2;J9.] 


APPLICATION    OF    PAYMENTS. 


613 


§  2V.).  Same  subject.  It  has  been  held  that  a  cred-  [408'' 
itor  may  apply  money  paid  by  the  debtor  without  directions 
to  a  debt  on  which  the  statute  of  frauds  does  not  allow  an  ac- 
tion to  be  maintained/  or  on  a  bill  void  for  want  of  a  stamp,* 
or  to  one  of  two  bills,  or  one  of  two  debts  barred  by  the 
statute  of  limitations.''  The  general  rule,  however,  is  that  the 
creditor  cannot  make  an  application  of  moneys  to  any  demand 
for  which  he  could  not  sustain  an  action.^  lie  is  not  permitted 
to  apply  them  to  an  illegal  demand,  although  a  debtor  may  do 
so.'  A  more  precise  and  accurate  statement  of  the  rule  in  re- 
spect to  a  creditor's  right  to  apply  a  payment  not  appropriated 
by  the  debtor  is  that  the  creditor  may  apply  it  on  either  of 
several  demands  at  his  pleasure  where  they  are  all  equally 
valid,  payable  absolutely,  liquidated,  due,  antl  not  in  fact  con- 
tested.^    A  creditor  will  not  be  allowed  to  make  such  an  ap- 


the  notes  rather  than  to  the  others, 
hut  it  would  carry  out  the  inten- 
tions of  the  parties  to  apply  the 
acknowledgment  and  payment  to 
each  of  the  notes,  that  is.  to  the 
whole  indebtedness."  Taylor  v.  Fos- 
ter, 132  Mass.  30. 

In  Mills  V.  Fowkes,  5  Bing.  N.  C. 
455,  it  is  ruled  that  a  creditor  may 
apply  a  general  payment  to  a  barred 
debt,  though  he  holds  claims  which 
are  not  barred.  But  see  Reed  v. 
Hurd,  7  Wend.  408;  Heath  v,  Gren- 
ell,  61  Barb.  190;  Harrison  v.  Day- 
nes,  23  La.  Ann.  216. 

1  Haynes  v.  Nice,  100  Mass.  327; 
Philpott  V.  Jones,  4  Nev.  &  Man.  14, 
3  A.  &  R  41;  Rohan  v.  Hanson.  11 
Cush.  44;  Ramsay  v.  Warner,  97 
Mass.  13. 

2  Biggs  V.  Dwight,  1  M  &  Ry.  308. 

3  Mills  V.  Fowkes,  7  Scott,  444,  5 
Bing.  N.  C.  458;  Hopper  v.  Hopper, 
61  S.  C.  124,  137,  39  S.  E.  Rep.  366. 
See  last  note  to  §  238. 

4  Kidder  v.  Norris,  18  N.  H.  532; 
Wright  V.  Laing,  3  B.  &  C.  165;  Ban- 
croft V.  Dumas,  21  Vt.  456;  Nash  v. 
Hodgson,  6  De  G.,  M.  &  G.  474;  Ku- 
ker  V.  Mclntyre,  43  S.  C.  117,  20  S. 


E.  Rep.  976  (void  bond  executed  by 
a  married  woman):  Mullooly  v.  Hua- 
tau,  1  N.  Z.  L.  R.  (Sup.  Ct.)  151. 

*  Rohan  v.  Hanson,  11  Cush.  44; 
Greene  v.  Tyler,  39  Pa.  361;  Robinson 
V.  Allison,  36  Ala.  525;  Gill  v.  Rice, 
13  Wis.  549.  See  McCarty  v.  Gor- 
don. 16  Kan.  35;  Fay  v.  Lovejoy,  20 
Wis.  407;  Phillips  v.  Moses,  65  Me,  70. 

In  Clark  v.  Mershon,  2  N.  J.  L.  70, 
it  was  held  where  a  tavern-keeper 
was  indebted  to  his  customer,  the 
items  of  liquor  were  to  be  considered 
as  payment  pro  tanto,  and  not  & 
trust  or  credit,  within  the  tavern  act 
of  New  Jersey. 

In  Adams  v.  Mahnken,  41  N.  J.  Eq. 
332,  3  Atl.  Rep.  520,  it  is  held  that 
creditors  who  hold  a  bond  contain- 
ing a  void  usurious  agreement  and 
other  indebtedness  unaffected  by 
such  agreement  can  only  appropri- 
ate payments  so  far  as  they  might 
have  been  recovered.  Edwards  v. 
Rumph,  48  Ark.  479,  3  S.  W.  Rep.  635: 
Dunbar  v.  Garrity,  58  N.  R  75. 

6  Wellman  v.  Miner,  179  III.  326,  53 
N.  E.  Rep.  609.  See  Stone  v.  Talbot, 
4  Wis.  442. 


614 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  239, 


plication  of  a  pay  merit  as  the  debtor  might  reasonably  object  to, 
or  as  would  work  injustice  to  him.^  He  may  not,  by  applying 
it  to  a  contested  claim,  throw  the  burden  upon  the  debtor  of 
disproving  the  demand.^  An  application  by  the  creditor,  con- 
[409]  trary  to  the  debtor's  directions,  but  acquiesced  in  by  hira,^ 
will  be  binding.'  It  is  not  necessary  that  the  demands  be  all 
of  the  same  grade  or  dignity;  part  may  be  specialties,  and  part 
simple  contract  debts,  and  the  creditor  has  the  choice  on  which 
he  will  apply  a  general  payment.*  As  between  a  legal  and 
equitable  demand,  it  would  seem  that  preference  must  be  given 
to  the  legal;  the  creditor  is  not  at  liberty  to  pay  a  later  equi- 
table claim  instead  of  an  older  legal  debt; "  and  it  is  not  certain 
that  he  has  the  option  to  apply  the  money  to  a  prior  equitable 
demand  in  preference  to  a  later  legal  one.^  He  may  apply  a 
payment  to  a  demand  not  secured  in  lieu  of  one  secured,  or  to 
one  the  securitj^  for  which  is  more  precarious.^  Such  right  is 
not  affected  by  a  clause  in  a  chattel  mortgage  to  the  effect  that, 
upon  the  mortgagor's  default,  the  mortgagee  might  sell  the 
property  and  apply  the  net  proceeds  to  the  payment  of  the 
debt,    returning  the   overplus  to  the  mortgagor.^    Payments 


1  Bonnell  v.  Wilder,  67  111.  327; 
Bridenbecker  v.  Lowell,  32  Bai*b.  9; 
Taylor  v.  Coleman,  20  Tex.  772; 
Lindsey  v.  Stevens,  5  Dana,  107;  Ar- 
nold V.  Johnson,  2  111.  196;  Ayer  v. 
Hawkins,  19  Vt.  26.  See  Bean  v. 
Brown,  54  N.  H.  395;  Gass  v.  Stinson, 
3  Sumn.  99. 

2  Stone  V.  Talbot,  supra. 

3  Pennsylvania  Coal  Co.  v.  Blake, 
85  N.  Y.  226;  Flarsheim  v.  Brestrup, 
43  Minn.  298,  45  N.  W.  Rep.  438. 

*  Meggot  V.  Wild,  1  Ld.  Rayra.  287; 
Mayor  v.  Patten,  4  Cranch,  317; 
Peters  v.  Anderson,  5  Taunt.  596; 
Hargroves  v.  Cooke,  15  Ga.  321; 
Pierce  v.  Knight,  31  Vt.  701;  Penny- 
packer  V.  Umberger,  23  Pa.  492; 
Heintz  v.  Cahn,  29  111.  308;  Brazier 
V.  Bryant,  2  DowL  P.  C.  477;  Chitty 
V.  Naish,  id.  511. 

5  Goddard  v.  Hodges,  1  Cr.  &  M.  33. 

*  See  Bosanquet  v.  Wray,  6  Taunt. 


597;  Birch  v.  Tebbutt,  2  Starkie,  74; 
2  Pars,  on  Cont.  631. 

■^Hargroves  v.  Cooke,  15  Ga.  321; 
Waterman  v.  Younger,  49  Mo.  413; 
Jenkins  v.  Beal,  70  N.  C.  440;  Sim- 
mons V.  Gates,  56  Ga.  609:  Driver  v. 
Fortner.  5  Porter,  9;  Burks  v.  Albert, 
4  J.  J.  Marsh.  97,  20  Am.  Dec.  209; 
Wood  V.  Callaghan,  61  Mich.  402,  1 
Am.  St.  597,  28  N.  W.  Rep.  162; 
White  V.  Beem,  80  Ind.  239;  M.  A. 
Sweeney  Co.  v.  Fry,  151  Ind.  178,  51 
N.  E.  Rep.  234;  Northern  Nat.  Bank 
v.  Lewis,  78  Wis.  475.  47  N.  W.  Rep 
834;  Haynes  v.  Nice,  100  Mass.  327,  1 
Am.  Rep.  109;  Henry  Bill  Pub.  Co.  v. 
Utley,  155  Mass.  366,  29  N.  E.  Rep. 
635;  Risher  v.  Risher,  194  Pa.  164.  45 
Atl.  Rep.  71;  Montague  v.  Stelts,  37 
S.  C.  200.  34  Am.  St.  736,  15  S.  E. 
Rep.  968;  Hall  v.  Johnston,  6  Tex. 
Civ.  App.  110,  24  S.  W.  Rep.  861. 

8  Baum  v.  Trantham,  42  S.  C.  104, 
19  S.  E.  Rep.  973,  46  Am.  St.  697. 


§   239.]  APPLICATION   OF    PAYMENTS.  015 

made  on  a  continuous  account  of  several  items,  the  whole  con- 
stituting but  one  debt,  will  be  applied  to  the  items  in  the  order 
of  their  date.  The  rule  is  not  affected  because  some  of  Lii<; 
items  are  subject  to  a  mechanic's  licn.^ 

The  particular  circumstances  may  give  the  creditor  a  right 
to  infer  the  consent  of  the  debtor  to  an  application  not  otliLT- 
wise  admissible.  He  may  apply  an  unappropriated  payment, 
to  a  contingent  liability,  to  a  debt  not  due,  to  one  barred  by 
the  statute  of  limitations,  or  even  to  an  illegal  demand  if  ho 
has  no  other.  The  payment  of  money  under  such  circum- 
stances necessarily  implies  a  consent  to  apply  it  to  the  demands 
actually  existing.-  If  the  debtor  agrees  that  his  creditor  may 
apply  payments  to  any  indebtedness  due  when  they  are  made, 
they  may  be  applied  to  the  satisfaction  of  an  account  due  in- 
stead of  a  matured  note.' 

Some  distinctions  have  been  made  in  respect  to  the  creditor's 
right  of  application  between  debts  which  the  debtor  paying 
owes  separately  and  alone,  and  those  which  he  owes  jointly 
with  others;  and  also  between  debts  owing  to  the  person  re- 
ceiving the  payment  alone,  and  those  to  which  he  and  others 
are  jointly  entitled.  It  has  been  held  that  if  one  member  of  a 
firm  makes  a  payment  to  a  person  who  has  an  account  against 
him,  and  also  against  the  firm  of  which  he  is  a  member,  [4l0j 
the  creditor  must  apply  the  money  to  the  individual  account 
unless  he  can  show  a  consent  to  have  it  otherwise  applied.^ 
The  law  will  appropriate  it  to  the  individual  debt  in  the  ab- 
sence of  any  application  by  the  parties,  if  the  money  paid  is 
not  shown  to  have  been  derived  from  the  fund  from  which 
the  joint  liability  was  to  be  raet.^    This  strict  rule  has  not  been 

1  Pond  &  Hasey  Co.  v.  O'Connor,  Gass  v.  Stinson,  3  Sumn.  98;  Sneed 
70  Minn.  2C6,  78  N.  W.  Rep.  248.  v.  Wiester,  3  A.  K.  Marsh.  277. 

2  Hall  V.  Clement,  41  N.  H.  166;  »  Baker  v.  Stackpoole,  9  Cow.  420, 
Bowe  V.  Gano,  9  Hun,  6;  Treadwell  18  Am.  Dec.  508;  Camp  v.  Smith,  136 
V.  Moore,  34  Me.  112;  Ayer  v.  Haw-  N.  Y.  187,  33  N.  E.  Rep.  640;  Liver- 
kins,  19  Vt.  26.  See  Rackley  v.  more  v.  Claridge,  33  Me.  438.  See 
Pearce,  1  Ga,  241 ;  Bancroft  v.  Dumas,  Lee  v.  Fountaine,  10  Ala.  755,  44  Am. 
21  Vt.  456;  §  338;  Arnold  v.  Prole.  4  Dec.  505. 

IkL  &  G.  860.  After  the  dissolution  of  a  partner- 

'  Everton  v.  Day,  66  Ark.  73,  48  S.  ship  one  of  its  members  continued 

W.  Rep.  900.  the  business,  agreeing  to  pay  all  the 

<  Johnson  v.   Boone,  2   Harr.  172;  partnership  debts  and  taking  enough 


GIG  CONVENTIONAL   LIQUIDATIONS    AND   DISCHARGES.        [§  2'±tJ. 

uniformly  recognized.  The  creditor  has  been  given  the  choice, 
in  the  absence  of  directions,  to  apply  it  upon  the  joint  debt.^ 
Paj^ments  made  by  a  surviving  partner,  while  carrying  on  the 
partnership  business  for  the  joint  benefit  of  himself  and  the 
estate  of  the  deceased  partner,  pursuant  to  a  stipulation  in  the 
partnership  articles,  upon  an  account,  some  items  of  which 
were  contracted  before  and  some  after  the  death  of  the  other 
partner,  must  be  applied  to  the  discharge  of  the  first  items.'- 
Where  the  debtor  making  a  general  payment  owes  a  debt  to 
a  firm,  and  also  one  to  the  member  of  it  to  whom  the  payment 
is  personally  made,  the  receiver  is  precluded  by  his  relation  of 
agent  for  the  firm  from  preferring  his  own  claim.  It  is  implied 
in  the  very  nature  of  an  agent's  or  trustee's  contract  that  he 
will  take  the  same  care,  at  least,  of  the  property  intrusted  to 
him  that  he  does  of  his  own.'  Therefore,  he  should  apply  the 
payment /^ro  rata  to  both  debts.'*  If  the  debtor  is  a  firm  the 
creditor  cannot  apply  moneys  paid  by  it  to  the  individual 
debts  of  one  or  more  of  the  partners.* 

[411]  §  210.  Same  subject.  A  creditor  cannot  apply  a  pay- 
ment made  generally  on  account  of  existing  debts  to  a  new 

of  the  firm  property  to   do  so;   he  the  money  with  which  payment  was 

added  other  goods  to  the  stock  and  made  could  not  be  presumed  to  have 

mortgaged    it  to    secure    both    the  accrued  out  of  the  funds  of  the  new 

joint  and  individual  debts.     It  was  firm,  and  to  be  applied,  therefore,  to 

held  that  a  creditor  might  apply  pay-  the  benefit  of  the  fund  from  which 

luents  made  to  the  latter  debt.  King  it  had  been  taken;  that  it  could  not 

V.  Sutton,  42  Kan.  600,  23  Pac.  Rep.  be  applied  to  the  portion  of  the  ac- 

695;  St.  Louis  Type  Foundry  Co.  v.  count  accruing  after  the  withdrawal, 

Wisdom,  4  Lea,  695.  on  the  principle  that  it  should  be  ap- 

1  Van    Rensselaer    v.    Roberts,    5  plied  to  the  debt  for  which  there  was 

Denio,  470;  Boyd  v.  Webster,  59  N.  the  least  security,  because  it  did  not 

H.  89.  appear  but  that  the  company  was  as 

2Stanwood  v.  Owen,  14  Gray,  195;  solvent  after  the  withdrawal  as  be- 

Morgan  V.  Tarbell,  28  Vt.  498.  fore;    but  that  the   money  so  paid 

In  Fairchild  v.  HooUy,  10   Conn,  should  be  applied  to  the  oldest  items 

475,  an  account  against  a  partnership,  of  the  account, 

upon  which  sundry  payments   had  ^  Colby  v.  Copp,  35  N.  H.  434 

been  made,  was  entire  and  unbal-  ^Id.;  Favenc  v.  Bennett.  11  East, 

anced;    before    any  payments   had  36;    Barrett    v.  Lewis,  2  Pick.   123; 

been  made  a  secret  partner  had  with-  Scott  v.  Ray,  18  id.  360;  Cole  v.  Trull, 

drawn  from    the  concern,  and  the  9  id.  325. 

payments  were  made  by  one  of  the  ^  Farris  v.  Morrison,  66  Ark.  318, 

partners  who  remained.     Held,  that  50  S.  W.  Rep.  693. 


§    240. J  APPLICATION    OF    PAYMENTS.  CI 7 

debt  subsequently  contracted;'  nor  to  an  instalment  of  the 
same  debt  becoming  due  subsequent  to  the  payment.''  It  has 
been  held  that  the  creditor's  application  is  not  complete  and 
absolute  until  the  debtor  has  been  notified  of  it.'  When  suck 
notice  has  been  given  the  money  is  appropriated.^  An  ob- 
jection to  the  application  made  by  the  debtor  ten  days  after 
he  has  been  informed  of  it  is  too  late.* 

If  the  holder  for  collection  of  several  notes  airainst  one 
debtor,  which  are  owned  by  various  persons,  receives  from  iiim 
a  sum  less  than  the  amount  of  all  the  notes,  and  the  debtor 
makes  no  application  of  the  payment,  it  is  competent  for  the 
creditors  owning  the  notes  to  direct  the  application  to  any  of 
them.  In  an  action  after  such  payment  upon  one  of  such 
notes,  in  the  absence  of  any  application  up  to  the  time  of  the 
trial,  no  part  will  be  applied  to  the  note  in  suit  if  it  appears 
that  the  plaintiff  has  not  received  part  of  the  money .^  An 
attorney  holding  several  notes  for  collection,  belonging  to  dif- 
ferent persons,  and  receiving  a  payment  on  account  of  them 
not  appropriated  by  the  debtor,  may  himself  appropriate  it.'' 
But  if  an  agent,  having  a  demand  himself  against  the  debtor, 
and  also  acting  for  a  principal  who  has  a  demand  against  the 
same  debtor,  receives  an  unappropriated  payment  from  such 
debtor,  he  must  apply  it  ratably  to  both.* 

1  Miles  V.  Ogden,  54  Wis.  573,  12  N.  Ill,  14  S.  W.  Rep.  474;  Seymour  v. 
W.  Rep.  81;   Law's  Ex'r  v.  Suther-    Sexton,  10  Watts,  255. 

land,  5  Gratt.  357;  Baker  v.  Stack-  3  Ryan  v.  O'Neil,  49  Mich.  281.13 

poole,  9  Cow.  420,  18  Am.  Dec.  508.  N.  W.    Rep.  591;  Lane  v.  Jones,  79 

A.  owed  a  debt  to  B.  payable  on  Ala.  156;  Sinison  v.  Ingham,  2  B.  &C. 

demand,  for  which  C.    was  surety.  65;  Allen  v.  Culver,  3  Denio.  284;  Van 

A.  assigned  debts  of  others  to  B.  as  a  Rensselaer  v.  Roberts,  5  id.  470. 

means  of  payment  in   part.     After  ^Id.;  The  Asiatic  Prince,  47  C.  C. 

such  assignment,  but  before  the  as-  A.  325,  108  Fed.  Rep.  287;  Bopp  v. 

signed  debts  were  collected,  A.  con-  Wittich.  88  Mo.  App.  129. 

tracted  another  debt  to  B.  for  which  ^  Risher  v.  Risher,  194  Pa.  164,  45 

there  was  no  security.    Held,  that  B.  Atl.  Rep.  71. 

could  not,  after  collection  of  the  as-  In  North   Carolina  no  change  of 

signed  debts,  apply  the  same  to  pay  the  application  can   be  made  after 

the  debt  contracted  after  the  assign-  the    creditor  has  given  the  debtor 

ment,  and  recover  the  first  debt  from  credit   by  entering  it.     Burnett   v. 

C,  the  surety  for  it.  Donally  v.  Wil-  Sledge,  129  N.  C.   114,  39  S.  E.  Rep. 

son,  5  Leigh,  329.  775. 

2  Gates    V.   Burkett,   44   Ark.    90;  « Taylor  v.  Jones,  1  Ind.  17. 
Heard  v.  Pulaski,  80  Ala.  502,  2  So.  7  Carpenter  v.  Goin,  19  N.  H.  479. 
Rep.  343;  Kline  v.  Ragland,  47  Ark.  8  Barrett  v.  Lewis,  2 Pick.  123;  Cole 

V.  Trull,  9  Pick.  325. 


61S 


CONVKXTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  240.. 


The  right  of  appropriation  is  confined  to  the  parties;  no 
third  person  can  insist  on  any  application  which  neither  of 
them  has  made.^  Thus  the  grantee  of  a  mortgagor  cannot 
[412]  insist  that  money  of  the  mortgagor  in  the  mortgagee's 
hands  shall  be  used  to  pay  off  the  mortgage  unless  this  was 
clearly  contemplated  by  the  parties,  and  the  grantee  made  his 
purchase  upon  that  understanding.'  Strangers  can  demand 
nothing  in  this  regard  which  the  parties  have  not  required.^ 
"Where  creditors  claim  equities  through  their  debtors  they  are 
usually  estopped  by  what  the  debtors  do;  but  fraud  never 
estops  creditors.  This  doctrine  relative  to  the  application  of 
payments  applies  only  where  the  creditor  has  two  or  more 
honest  claims  against  the  debtor;  it  does  not  apply  so  as  to 
conclude  creditors  where  there  is  only  one  such.  Therefore  a 
subsequent  mortgagee  may  object  to  the  application  by  the 
holder  of  an  earlier  mortgage  of  partial  payments  to  usurious 
interest  for  the  purpose  of  keeping  alive  that  part  which  is 
valid.*  As  has  been  already  stated,  a  surety  of  a  debtor  who 
makes  an  indefinite  payment  cannot  interfere  with  the  elec- 
tion of  the  creditor;  nor  will  an  intention  of  the  debtor  be 
presumed  to  apply  it  in  favor  of  the  surety  so  as  to  exclude 
the  right  of  the  creditor  to  make  the  application.^   But  where, 


1  Harding  v.  Tifft,  75  N.  Y.  461; 
Feldman  v.  Beier,  78  id.  393;  Coles  v. 
Withers,  33Gratt.  186;  Mack  v.  Adier, 
23  Fed.  Rep.  570;  Jefferson  v.  Church 
of  St.  Matthew,  41  Minn.  393,  43  N. 
W.  Rep.  74;  Thorn  &  Hunkins'  Lime 
&  Cement  Co.  v.  Citizens'  Bank,  158 
Mo.  373,  59  S.  W.  Rep.  109. 

2  Gordon  v.  Hobart,  3  Story,  243; 
Backhouse  v.  Patton,  5  Pet.  160. 

3  Spring  Garden  Ass'n  v.  Trades- 
men's Loan  Ass'n,  46  Pa.  493.  See 
Parker  v.  Green,  8  Met.  137. 

4  Greene  v.  Tyler,  39  Pa.  361.  See 
Chester  v.  Wheelwright,  15  Conn. 
562. 

5  Hanson  v.  Manley,  73  Iowa,  48,  33 
N.  W.  Rep.  857:  Wilson  v.  Allen,  11 
Ore.  154,  2  Pac.  Rep.  91. 

Payments  made  genei-ally  to  the 
creditors  on  account  of  a  person  for 
whom  a   guaranty  is  given  may  be 


applied  by  them  in  liquidation  of  a 
balance  existing  against  him  before 
it  was  given,  and  the  guarantor  can- 
not insist  on  the  payments  being  ap- 
plied in  exoneration  of  his  liability,. 
although  at  the  time  of  his  assum- 
ing it  the  creditors  did  not  give  him 
notice  that  any  such  balance  was 
then  existing.  Kirby  v.  Marlbor- 
ough, 2  M.  &  S.  18.  See  Merrimack 
Co.  V.  Brown,  13  N.  H.  330. 

It  is  held  in  Gore  v.  Townsend,  105 
N.  C.  328,  11  S.  E.  Rep.  160,  8  L.  R.  A. 
443,  that  a  mortgagee  who  holds 
two  mortgages,  the  older  of  which 
was  executed  by  a  husband  and 
his  wife  to  secure  the  former's 
debt,  and  the  latter  of  which  was 
executed  by  him  alone  on  the  same 
property  to  secure  a  subsequent  note, 
cannot  appropriate  the  proceeds  of 
personal  property  to  the  payment  o£ 


§  241.] 


APPLICATION    OF    PAYMENTS. 


Gl'J 


at  the  inception  of  the  contract  of  suretyship,  a  mode  of  pay- 
ment was  agreed  upon  and  a  particular  fund  identified  fot 
that  purpose,  the  surety  may  insist  on  the  application  of  that 
fund  when  it  is  realized.  Thus,  a  factor  who  has  accepted  a 
bill  drawn  by  his  principal,  as  against  an  accominodation 
drawer  who  becomes  such  on  the  faith  of  a  consifnment  of 
cotton  made  to  meet  it  at  maturity,  cannot  a|)ply  the  proceeds 
of  the  consignment  to  another  debt,  and  no  factor's  lien  for 
such  other  debt  will  be  permitted  to  intervene.'  When  the 
party  having  a  right  to  appropriate  a  payment  has  done  so,  [-IIUJ 
the  appropriation  is  final,  and  he  cannot  change  it.- 

§  '^4^1.  Appropriation  by  the  court.  Where  the  parties 
have  not  made  a  specific  appropriation  of  moneys  paid,  and 
there  are  several  debts  or  demands  for  which  the  party  paying 
the  money  is  liable  to  the  party  receiving  it,  the  fundamental 
rule  or  principle  is  that  the  law  will  appropriate  it  according 
to  the  justice  and  equity  of  the  case.'     It  has  been  said  that  in 


the  second  mortgage;  it  must  e;o  to 
the  payment  of  the  first  in  exonera- 
tion of  the  wife's  dower  right,  she 
being  a  surety  for  her  husband. 

1  Brander  v.  Phillips,  16  Pet.  131. 
See  Marryatts  v.  White,  3  Stark.  101, 
in  which  security  having  been  given 
by  a  surety  for  goods  to  be  supplied 
and  in  respect  of  a  pre-existing  debt, 
tlie  goods  were  supplied,  and  pay- 
ments made  from  time  to  time  by 
the  principal,  in  respect  of  some  of 
which  discount  was  allowed  for 
prompt  payment;  held,  that  it  must 
be  inferred  in  favor  of  the  surety 
that  all  these  payments  were  in- 
tended to  be  in  liquidation  of  the  lat- 
ter account;  also  Shaw  v.  Picton, 
7  D.  &  R.  201,  4  B.  &  C.  715,  where 
the  same  agent  had  a  bill  of  account 
with  the  grantor  of  several  annu- 
ities, for  the  payment  of  which  A. 
became  surety,  and  in  consequence 
of  a  letter  written  by  an  attorney  in 
the  names  of  the  grantees,  at  the  in- 
stance of  the  agents,  demanding  pay- 
ment of  the  arrears  of  the  annuities 
from  the  grantor  and  his  surety,  a 


sum  of  money  was  paid  under  cir- 
cumstances from  which  it  was  to  be 
collected  that  the  money  was  in- 
tended to  be  specifically  appropriated 
to  the  annuity  account,  and  the 
agents  applied  it  to  the  bill  account; 
held,  that  this  was  a  misapplication, 
and  that  the  money  ought  to  be  ap- 
propriated pro  rata  among  the  an- 
nuitants in  relief  of  the  surety. 

^  Wright  V.  Wright,  73  N.  Y.  149. 

3  Martin  v.  Ede,  103  Cal.  157,37  Pac. 
Rep.  199;  McCartney  v.  Buck,  8 
Houst.  34, 13  Atl.  Rep.  717:  Field  v. 
Holland,  6  Cranch,  8;  Souler  v. 
Schechterly,  91  Pa.  83;  Spiller  v. 
Creditors,  16  La.  Ann.  293;  Stone  v. 
Seymour,  15  Wend.  19;  Parker  v. 
Green,  8  Met.  144;  Norris  v.  Beaty,  6 
W.  Va.  477;  Robinson  v.  Doolittle.  13 
Vt.  346:  Randall  v.  Parramore,  IFla. 
409;  Chester  v.  Wheelwright,  15 
Conn.  563;  Calvert  v.  Carter,  18  Md. 
73;  Neidig  v.  Whiteford,  29  McL  178; 
Haden  v.  Phillips,  21  La.  Ann.  517; 
Upham  V.  Lefavour,  11  Met.  174; 
Seymour  v.  Van  Slyck,  8  Wend.  403; 
Hargroves  v.  Cooke,  15  Ga.  331;  Leef 


620 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  241. 


law  that  application  is  made  which  is  most  favorable  to  the 
creditor;  in  equity,  the  payment  is  applied  first  to  the  debt  for 
\vhich  the  security  is  most  precarious.^  In  applying  the  cardinal 
principle  various  subsidiary  rules  have  been  recognized,  in 
respect  to  which  and  in  the  reasons  assigned  therefor  the  de- 
cisions are  not  entirely  in  accord.  Many  cases  proceed  upon 
the  assumption  that  the  intention  of  one  or  both  of  the  parties 
is  to  be  effectuated,  or  that  the  interest  of  one  party  in  prefer- 
[414]  ence  to  that  of  the  other  is  entitled  to  be  subserved.- 


V.  Goodwin,  Taney,  460;  Callahan  v. 
Boazman.  21  Ala.  246;  Bayley  v. 
Wynkoop,  10  111.  449;  Benny  v. 
Rhodes,  18  Mo.  147,  59  Am.  Dec.  293; 
Proctor  V.  Marshall,  18  Tex.  G3;  Oliver 
V.  Phelps,  20  N.  J.  L.  180;  McFarlani 
V.  Lewis,  3  III  344;  Wiiite  v.  Trum- 
bull, 15  N.  J.  L.  314,  29  Am.  Dec.  687; 
Carson  v.  Hill,  1  McMuU.  (S.  C.)  76; 
Selleck  v.  Sugar  Hollow  Turnpike 
Co..  13  Conn.  453;  Rosseau  v.  Cull.  14 
Vt.  83;  Starrett  v.  Barber,  20  Me.  457. 

1  Chicago  Title  &  Trust  Co.  v.  Mc- 
Glew,  90  111.  App.  58. 

^  Conduitt  V.  Ryan,  3  Ind.  App.  1, 
29  N.  E.  Rep.  160;  McDaniel  v.  Barnes, 
5  Bush,  183;  Allen  v.  Culver,  3  Denio, 
284;  Byrne  v.  Grayson.  15  La.  Ann. 
457;  Spiller  v.  Creditors,  16  id.  292; 
Calvert  v.  Carter,  18  Md.  73;  Pierce 
V.  Sweet,  33  Pa.  151;  Poindexter  v. 
La  Roche,  7  Sou  &  M.  699;  Bussey  v. 
Gant's  Adm'r,  10  Humph.  238;  Patti- 
son  V.  Hull.  9  Cow.  747;  Dows  v. 
Morewood,  10  Barb.  183;  Johnson's 
Appeal,  37  Pa.  268;  Seymour  v.  Sex- 
ton, 10  Watts,  255. 

In  Johnson's  Appeal,  supra.  Strong, 
J.,  said:  "The  fact  of  actual  appro- 
priation to  the  earliest  items  of  the 
account  not  being  established,  the 
next  question  is  whether  the  law  re- 
quires that  the  credits  should  be  thus 
applied.  In  the  absence  of  direction 
by  the  debtor,  and  of  actual  appli- 
cation by  the  creditor,  the  law  will 
make  an  equitable  application,  and 
in  making  it  will  regard  the  circum- 


stances of  the  case.  In  the  present 
case  it  should  make  no  difference  to 
Duncan  whether  his  credits  were  ap- 
plied to  the  earlier  or  to  the  later 
items  of  the  account.  He  was  equally 
a  debtor  for  both  and  both  carried 
interest.  It  is  true  that  when  pay- 
ments are  made  upon  a  running  ac 
count  it  is  one  of  the  principles  of 
legal  application  that  they  shall  be 
treated  as  extinguishing  the  earliest 
charges  in  the  account.  But  this  is 
not  a  paramount  principle.  Another 
of  equal  force  is  that  the  payments 
are  to  be  applied  to  that  debt  which 
is  least  secured.  Both  these  rules 
look  to  the  interest  of  the  creditor, 
it  being  presumed  that  the  debtor  by 
neglecting  to  give  any  direction  con- 
sented to  such  an  application  as 
would  be  most  beneficial  to  the  cred- 
itor. But  to  apply  Duncan's  credits 
to  the  first  items  of  the  account  .  . 
against  him  and  thus  extinguish  the 
mortgage  in  the  first  instance  would 
be  an  application  not  beneficial  to 
the  debtor,  and  most  hurtful  to  the 
creditor.  It  would  be  paying  first 
the  debt  which  was  best  secured,  and 
leaving  the  later  advances  without 
the  protection  of  a  factor's  lien  and 
without  any  security  at  all  as  against 
judgments  entered  before  they  were 
made.  It  would  be  reversing  the 
fundamental  rule  of  appropria- 
tions." The  equitable  circumstan- 
ces stated  abundantly  justify  the 
application  which  was  made  with- 


§  2il.] 


AI'l'LICATION    OF    PAYMENTS. 


021 


But  it  is  believed  that  there  is  no  presumption  of  inten-  [415] 
tion  which  controls  where  the  law  makes  the  application.'  If 
there  is  evidence  of  intention,  it  governs,  of  course,-  but  the 
application  then  is  not  made  by  the  law,  but  by  the  party 
whose  intention  controls.  And  when  the  interest  of  one  party 
is  subserved  it  is  not  upon  any  invidious  preference,  but  upon 
some  special  ground  of  equity  which  appeals  to  the  conscience 
of  the  court  in  his  behalf.^     Such  considerations  sometimes  re- 


out  the  presumption  that  "  the 
debtor  by  neglecting  to  give  any  di- 
rection consented  to  such  an  appli- 
cation as  would  be  most  beneficial 
to  the  creditor."  There  would  seem 
to  be  no  more  ground  lor  such  a  pre- 
sumption than  that  the  creditor  by 
neglecting  to  make  an  actual  appli- 
cation of  the  credits  consented  to 
such  an  application  as  would  be 
most  beneficial  to  the  debtor. 

That  there  is  no  such  presumption 
that  the  debtor  consents  to  an  appli- 
cation most  beneficial  to  the  creditor 
is  evident  from  the  cases  that  con- 
sult the  interest  of  the  debtor  where 
there  are  no  countervailing  equities. 
Thus,  in  accordance  with  the  gen- 
eral course  of  authority,  the  law  ap- 
plies a  payment  to  a  debt  bearing  in- 
terest in  preference  to  one  not  bear- 
ing interest.  Seymour  v.  Sexton, 
sujjra.  Crompton  v.  Prall,  105  Mass. 
255,  proceeds  on  the  same  principle. 
Dows  V.  Morehead,  10  Barb.  183, 
holds  that  the  law  will  apply  pay- 
ments to  that  debt,  a  relief  from 
which  will  be  most  beneficial  to  the 
debtor;  as,  for  example,  acceptances 
for  which  an  instrument  in  the 
shape  of  a  mortgage  or  pledge  of 
personal  property  is  given.  Poiu- 
dexter  v.  La  Roche,  7  Sm.  &  M.  699, 
and  Pattison  v.  Hull,  9  Cow.  747,  are 
to  the  same  effect.  But  a  more  satis- 
factory statement  of  the  principle  is 
to  be  found  in  Field  v.  Holland,  6 
Cranch,  8,  where  Marshall,  C.  J., 
says:  "'When  a  debtor  fails  to  avail 
himself  of  the  power  he  possesses. 


in  consequence  of  which  that  power 
devolves  on  the  creditor,  it  does  not 
appear  unreasonable  to  suppose 
that  he  is  content  with  the  manner 
in  which  the  creditor  will  exercise 
it.  If  neither  party  avails  liimself 
of  his  power,  in  consequence  of 
which  it  devolves  on  the  court,  it 
would  seem  reasonable  that  an  equi- 
table application  should  be  made.  It 
being  equitable  tiiat  the  whole  debt 
should  be  paid,  it  cannot  be  inequi- 
table to  extinguish  first  those  debts 
for  which  the  security  is  most  pre- 
carious." See  Langdon  v.  Bowen,  40 
Vu  512;  Truscott  v.  King,  6  N.  Y.  147; 
Worthley  v.  Emerson,  116  Mass.  374: 
The  A.  R,  Dunlap,  1  Low.  350;  Robie 
v.  Briggs,  59  Vt.  443, 59  Am.  Rep.  737. 
In  the  last  case  the  debtor  owed 
an  individual  and  joint  account;  his 
payments  amounted  to  more  than 
the  former;  in  ignorance  of  the  ex- 
act state  of  the  account  the  creditor 
entered  the  whole  sum  paid  to  the 
credit  of  the  individual  account.  The 
court  applied  the  surplus  to  the 
other. 

1  Moore  v.  Gray,  22  La.  Ann.  289. 

2  McMillan  v.  Grayston,  83  Mo.  App. 
425. 

If  the  debtor  pays  with  one  intent 
and  the  creditor  receives  with  an- 
other the  former's  intent  will  be 
given  effect.  Roakes  v.  Bailey,  55 
Vt.  542. 

3  Pierce  v.  Knight,  31  Vt.  701; 
Smith  v.  Loyd,  11  Leigh,  512.  37  Am. 
Dec.  621;  2  Greenlf.  Ev.,  §  533. 


■G22  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  2i2, 

quire  a  jpro  rata  distribution  of  the  payment  to  all  of  several 
debts;  sometimes  its  appropriation  to  one  for  being  the  oldest, 
or  least  secured,  to  relieve  the  debtor  from  some  special  hazard 
or  hardship,  or  to  absolve  a  surety. 

Where  a  bank  is  protected  against  loss  on  future  overdrafts 
by  a  principal  his  sureties  are  entitled  to  have  payments  made 
applied  to  the  account  which  they  have  guaranteed. •  If  the 
money  paid  arises  from  some  property  or  fund  it  will  be  ap- 
plied to  the  discharge  or  reduction  of  the  demand  against  the 
same.-  If  several  chattels  are  bought  at  the  same  time  under 
a  single  contract,  the  promise  to  pay  being  single,  the  court 
will  not  apply  payments  made  on  the  contract  to  the  different 
articles  in  the  order  in  which  they  are  specified  therein ;  but 
will  apply  them  to  the  contract  generally.'  Partial  payments 
made  on  a  note  infected  with  usury  will  be  applied  to  the  ex- 
tinguishment of  lawful  interest,  and  then  to  the  principal/  If 
an  incumbrance  is  void  in  part  only,  payments  will  be  applied 
first  to  the  discharge  of  so  much  as  is  valid.^ 

§  242.  When  payments  applied  pro  rata.  If  an  indefinite 
payment  is  made  where  there  are  several  debts  of  the  same 
nature  and  all  things  equal,  it  is  applied  proportionally.^ 
Moneys  collected  by  judicial  proceedings  founded  on  several 
claims  cannot  be  applied  by  either  party;  the  law  will  apply 
them  jpro  rata.  Thus,  where  a  creditor  having  several  de- 
mands against  his  debtor  recovers  a  portion  of  the  entire 
amount  in  a  judicial  proceeding  founded  on  them  all,  the  law 
[416]  will  apply  such  a  recovery  as  a  payment  ratably  upon 
them  all;  neither  the  debtor  nor  the  creditor  has  the  right  to 
apply  it  to  the  satisfaction  of  some  of  them  in  exclusion  of 
others.^ 

1  Drake  v.  Sherman,  179  IlL  362,  53  292;  Jones  v.  Kilgore,  2  Rich.  Eq.  63; 
N.  E.  Rep.  638.  Baine  v.  Williams,  10  Sm.  &  M.  113; 

2  Brinckerhoff  v.  Greenan,  85  111.  Pointer  v.  Smith,  7  Heisk.  137. 
App.  253.  Matured  notes  given  for  the  same 

3  Hill  V.  McLaughlin,  158  Mass.  307,  consideration  and  in  the  hands  of  a 
53  N.  E.  Rep.  514.  single  person  constitute  butone  debt; 

*  Haskins  v.  Bank,  100  Ga.  216,  27  and  payments  made  after  their  ma- 

S.  E.  Rep.  985.     See  §§  378,  379.  turity  are  applicable   to  them  all. 

5  Wingate  v.  Peoples'  Building  &  Egle  v.  Roman  Catholic  Church,  36 

Loan  Savings  Ass'n,  15  Tex.  Civ.  App.  La.  Ann.  310. 

416.  39  S.  W.  Rep.  999.  '^  Olds  Wagon  Works   v.   Bank  of 

•>  Spiller  V.  Creditors,  16  La.  Ann.  Louisville,  10  Ky.  L.  Rep,  253;  Orleans 


fi    2i2.]  APPLICATION    OF    PAYMENTS.  623 

If  an  insolvent  debtor  assigns  for  the  benefit  of  those  creditors 
who  become  parties  to  the  ussignincnt  and  thereby  release 
their  claims,  and  a  dividend  is  received  by  one  of  them,  it 
must  be  appropriated  ratably  to  all  his  claims  against  the 
debtor,  as  well  to  those  upon  which  other  parties  are  liable,  or 
which  are  otherwise  secured,  as  to  those  which  are  not  secured.* 
A  general  payment  made  by  the  principal  debtor,  pursuant  to 
a  compromise  of  several  debts  in  one  lump,  will  be  applied 
pro  rata  to  all  the  claims  against  him,  in  an  action  against  an 
indorser  for  part.^  And  doubtless  the  same  rule  of  application 
would  be  applied  between  the  debtor  and  creditor  where  there 
has  been  a  general  judgment  pursuant  to  a  compromise  founded 
upon  and  embracing  several  demands.' 

A  pro  rata  distribution  of  a  payment  is  made  on  the  equita- 
ble maxim  that  equality  is  equity.  Other  considerations  may 
concur  and  lead  to  the  same  result.  If  a  debtor  creates  a 
trust  or  security  for  the  payment  of  several  demands,  without 
preference,  money  realized  from  that  source  is  deemed  appro- 
priated by  him  to  the  demands  so  provided  for,  and  to  be  pro- 
portionately distributed  thereto;  and  either  party  may  insist 
on  such  application.'*  If  a  general  payment  is  made  to  a  per- 
son having  two  accounts  against  the  party  paying,  one  due  to 
himself  and  the  other  to  a  third  party,  for  whom  he  was  act- 
ing as  agent,  and  no  appropriation  is  made  by  either,  it  will  bo 
applied  ratably  to  both  accounts.^  So  where  a  debt  is  [417] 
payable   by  instalments,  or  a  mortgage  is  made  to  secure  a 

County  Nat.  Bank  v.  Moore,  113  N.  Tucker  v.  Brackett,  25  Tex.  (Supp.) 

Y.  543,"  8  Am.  St.  775,  20  N.  E.  Rep.  199;  Ordinary  v.  McCoUura,  SStrobh. 

357,    3   L.    R.    A.    302;    Bostick    v.  494;  Van  Aken  v.  Gleason,  34  Mich. 

Jacobs.  133  Ala.  344,  32  So.  Rep.  136;  477;  Stamps  v.  Brown,  Walker  (Miss.), 

Standifer  v.  Codington,  35  La.  Ann.  526.     See  Mahone    v.    Williams,   39 

896;    Cowperthwaite  v.  Sheffield,  1  Ala.  202;    Jones  v.  Kilgore,  2  Rich. 

Sandf.  416,  3N.  Y.  243;  Bridenbecker  Eq.  63;  Baine   v.   Williams.  10  Sm. 

V.  Lowell,  32  Barb.  9.     See  Thompson  &  M.  113. 

V.  Hudson,  L.  R.  6  Ch.  320;    Merri-  i  Commercial    Bank   v.    Cunning- 
mack  County  Bank  v.  Brown,  12  N,  ham.  24  Pick.  270,  35  Am.  Dec.  322. 
H.  320.  2  Butchers'  and  Drovers'  Bank  v. 

Where  a  fund  is  insufficient    to  Brown,  1  N.  Y.  Leg.  Obs.  149. 

satisfy    several   judgments  entered  '  Thompson  v.  Hudson,  L.  R  6  Ch. 

the  same  day,  they  should  be  paid  320. 

Tpro  rata,  though  one  was  entered  a  *  Id. 

-few    hours    later    than   the  others.  ^  Wendt  v.  Ross,  33  Cal.  6.50. 


624: 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  242. 


series  of  notes  payable  at  different  times,  and  a  payment  is 
made  after  all  the  instalments  or  notes  have  become  due,  and 
neither  party  makes  any  special  appropriation  of  it,  according^ 
to  the  weight  of  authority  it  will  be  applied  by  the  court  jt?n> 
rata  to  all  the  instalments  or  notes — and  this  whether  they 
are  held  by  the  original  creditor  or  a  part  have  been  trans- 
ferred, unless  the  assignee  has  specially  acquired  a  preference 
by  the  agreement  of  transfer.^ 

When  a  debt  is  payable  in  instalments,  and  there  are  sep- 
arate notes  or  other  distinct  evidences  of  debt  payable  at  differ- 
ent times,  all  equally  payable  with  or  without  interest,  and  a 
general  payment  made  is  not  appropriated  by  either  party,  if 
it  exceeds  the  interest  and  principal  due  at  the  time  it  was 
made  it  will  be  applied,  of  course,  first  to  pay  what  is  due  of 
interest  and  principal,  and  the  residue  ratably  on  all  and  each 
of  the  instalments  subsequently  payable,  with  accrued  interest 
on  the  part  thus  extinguished.^ 


1  Cage  V.  Her.  5  Sm.  &  M.  410,  43 
Am.  Dec.  531;  Wooten  v.  Buchanan, 
49  Miss.  3S6;  Donley  v.  Hays,  17  S.  & 
R.  400;  Cooper  v.  Ulmann,  Walk. 
Ch.  251;  Mohlen's  Appeal,  5  Pa.  418, 
47  Am.  Dec.  413;  Henderson  v.  Her- 
rod,  10  Sm,  &  M.  631;  English  v. 
Carney,  25  Mich.  178;  McCurdy  v. 
Clark,  27  id.  445;  Youmans  v. 
Heartt,  34  id.  397;  Betz  v.  Heebner, 
1  P.  &  W.  280;  Smith  v.  Nettles,  9 
La.  Ann.  455;  Bailey  v.  Bergen,  2 
Hun,  520;  Parker  v.  Mercer,  6  How. 
(Miss.)  323;  Cremer  v.  Higginson,  1 
Mason,  323;  Perrie  v.  Roberts,  2  Ch. 
Cas.  84  But  see  State  Bank  v. 
Tweedy,  8  Blackt.  447,  46  Am.  Dec. 
486:  Murdock  v.  Ford,  17  Ind.  52; 
Stanley  V.  Beatty,  4  Ind.  134;  CuUum 
V.  Erwin,  4  Ala.  452;  Bank  of  United 
States  V.  Covert,  13  Ohio,  240;  Turner 
V.  Pierce,  31  Wis.  342. 

2  In  Righter  v.  Stall,  3  Sandf.  Ch. 
608,  a  debtor  owed  a  mortgage  debt, 
payable  in  ten  annual  instalments. 
About  two-thirds  of  the  debt  was 
paid  at  a  time  when  a  small  amount 
was  due  for  interest,  and  before  any 


part  of  the  principal  had  fallen  due. 
There  was  no  direction  given  by  the 
debtor,  nor  actual  application  of  the 
payment  made  by  the  creditor;  and 
it  was  held  that  the  law  must  make 
the  application,  and  that  after  dis- 
charging the  interest  due  the  balance 
must  be  applied  ratably  in  exonera- 
tion of  each  and  all  of  the  instal- 
ments. 

In  Jencks  v.  Alexander,  11  Paige, 
619,  the  following  rules  are  laid 
down:  1.  Where  the  principal  is  not 
due,  but  the  interest  is  due,  the  pay- 
ment must  first  be  applied  to  pay 
the  interest  then  due;  and  the  resi- 
due towards  that  part  of  the  princi- 
pal which  will  first  become  due  and 
payable,  so  as  to  stop  the  interest, 
pro  tanto,  from  the  time  of  such 
payment.  2.  When  neither  princi- 
pal nor  interest  has  become  due  at 
the  time  of  the  payment,  the  amount 
paid  should  be  applied  to  the  extin- 
guishment of  principal  and  interest 
ratably;  so  as  to  extinguish  a  part 
of  the  principal  and  the  interest 
which  has  accrued  on  the  part  of 


§  243.] 


APPLICATION    OF    PAYMENTS. 


G25 


§  243.  General  payment  applied  to  oldest  debt.    If  [418] 

no  other  paramount  rule  of  appropriation  governs,  an  indefi- 
nite payment  made  to  a  person  to  whom  a  debtor  paying  the 
money  owes  several  debts  will  be  applied  to  that  which  [419] 


the  principal  thus  extinguished. 
The  facts  of  the  case  were  that  Au- 
gust 24,  1883,  a  mortgap;e  was  given 
for  $650,  payable  in  five  equal  yearly 
payments,  the  first  to  become  due  on 
the  first  of  January  following,  with 
interest  annually.  Five  hundred  dol- 
lars were  paid  and  indorsed  on  the 
day  the  mortgage  was  given.  On 
the  14th  of  the  following  September 
a  further  sum  of  $3  was  paid.  On 
the  4th  of  November,  1835,  proceed- 
ings to  foreclose  were  commenced 
on  a  claim  of  $20.98  of  delinquent 
interest,  and  it  was  held  that  $20.58 
was  then  due.  The  chancellor  said: 
"I  think  the  counsel  for  the  com- 
plainants is  wrong  in  supposing  that 
nothing  had  become  due  and  pay- 
able upon  the  mortgage  at  the  time 
the  proceedings  to  foreclose  were 
instituted.  It  is  true  a  sum  much 
larger  than  the  two  instalments  of 
$130  each,  and  all  interest  upon  the 
residue,  had  been  paid.  But  the 
proper  application  of  the  payments 
was  to  apply  them  towards  the  sat- 
isfaction of  the  principal  of  the  debt 
at  the  time  of  such  payments  re- 
spectively, after  deducting  from 
such  payments  the  interest  which 
had  then  accrued.  The  payment  of 
the  $500  on  the  day  of  the  date  of 
tlie  mortgage,  being  applied  in  sat- 
isfaction of  the  three  first  instal- 
ments of  principal  and  $110  of  the 
fourth  instalment,  left  $20  of  the 
fourth  and  the  whole  of  the  fifth  in- 
stalments still  due.  And  as  by  the 
terms  of  the  bond  and  mortgage  the 
interest  on  the  whole  $650  was  pay- 
able annually,  the  mortgagee  would 
have  been  entitled  to  the  annual  in- 
terest on  the  $150  which  still  re- 
VOL.  1  —  40 


mained  due  on  the  last  two  instal- 
ments, if  there  had  been  no  subse- 
quent payment.  The  payment  of  $3 
on  the  14th  of  September,  1833,  must 
be  applied  towards  the  fourth  instal- 
ment of  principal,  after  deducting 
therefrom  the  interest  on  the  $3 
from  the  24th  of  the  preceding  Au- 
gust. In  other  words,  when  the 
principal  is  not  due,  but  interest  is 
due  (a  different  case),  the  payment 
must  first  be  applied  to  the  extin- 
guishment of  the  mteirest  then  due 
and  payable,  and  the  residue  to  the 
extinguishment  of  that  part  of  the 
principal  which  will  first  become 
due,  so  as  to  stop  interest,  pro  ta.ito, 
from  the  time  of  such  payment. 
But  when  neither  principal  nor  in- 
terest has  become  due  (the  case  in 
hand)  at  the  time  of  the  payment, 
such  payment,  in  the  absence  of  any 
agreement  as  to  the  application,  is 
to  be  applied  to  the  extinguishment 
of  principal  and  interest  ratably,  ac- 
cording to  the  decision  of  the  su- 
preme court  in  the  case  of  Williams 
V.  Houghtaling,  3  Cow.  86." 

In  Williams  v.  Houghtaling  the 
court  say:  "  When,  according  to  the 
terms  of  the  bond  payable  by  instal- 
ments, interest  cannot  be  demanded 
until  the  principal  is  payable  (as  in 
this  case),  payments  made  on  an  in- 
stalment not  due  and  payable  should 
be  applied  to  the  extinguishment  of 
principal  and  such  proportion  of  in- 
terest as  has  accrued  on  the  principal 
so  extinguished.  For  instance,  an 
instalment  on  a  bond  of  $500  is  due 
on  the  1st  of  January,  1825,  with  in- 
terest from  1st  of  January,  18<4;  on 
the  first  of  July,  1824,  the  obligor  pays 
$207;  the  $7  should  be  applied  to  pay 


626 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES. 


[§  243. 


first  accrued.'  This  rule  is  especially  applicable  to  items  of 
[420]  debit  and  credit  in  a  general  account  current.^  When 
both  parties  concur  in  the  entry  of  the  payments  upon  general 
account,  without  specific  application,  the  law  infers  an  inten- 


the  six  months'  interest  accrued  on 
$200.  and  the  $200  extinguishes  so 
much  principal." 

There  is  dictum  in  Jencks  v.  Alex- 
ander apparently  in  conflict  with  the 
text  and  in  conflict  with  Righter  v. 
Stall.  The  conclusion  arrived  at  is 
not  in  conflict.  If  the  payment  of 
§500  had  been  ratably  applied  to  the 
five  instalments,  they  would  have 
been  severally  reduced  to  $80,  and 
interest  on  each  annually  payable 
would  be  the  same,  and  due  at  the 
same  time,  as  upon  a  like  amount  on 
the  two  past  instalments.  When  the 
payment  of  $3  was  made  no  interest 
or  principal  was  dua  It  being  paid 
on  the  mortgage  generally  was  ap- 
plicable ratably  towards  paying  the 
entire  principal  and  interest. 

In  Turner  v.  Pierce.  31  Wis.  342, 
there  was  a  land  contract  made  Oc- 
tober 22,  1863,  upon  which  the  pur- 
chase-money was  $5,600,  due  in  six 
annual  instalments,  payable  August 
1,  1865,  to  1870,  with  interest  on  the 
whole  sum  unpaid,  payable  at  the 
time  each  instalment  became  due  — 
the  purchaser  having  the  option  to 
make  the  payments  on  or  before  the 
times  mentioned,  and  then  to  pay 
interest  only  to  the  time  of  such 
payment.  Before  any  of  the  princi- 
pal became  due  the  purchaser  made 
a  large  payment,  receipted  to  apply 
on  the  land  contract.  On  the  5th  of 
March,  1866,  an  action  for  strict 
foreclosure  of  the  contract  was  be- 
gun on  the  ground  that  the  pur- 
chaser was  in  default.    The  title  had 


failed  to  a  part  of  the  lands,  and  the 
court  held  that  each  instalment 
should  be  reduced  in  the  proportion 
that  the  value  of  that  part  ($1,832) 
bore  to  tlie  whole  value,  and  that  the 
defendant  was  entitled  to  have  the 
payment  applied  to  the  Instalments 
first  becoming  due  at  such  decreased 
rates,  and  that  therefore  nothing 
was  due  when  the  suit  was  com- 
menced. See  Starr  v.  Richmond,  80 
111.  276. 

1  Pond  V,  Harwood,  139  N.  Y.  Ill, 
34  N.  E.  Rep.  768;  Atkins  v.  Atkins, 
71  Vt.  422,  41  Atl.  Rep.  503;  Thomp- 
son V.  St  Nicholas  Nat.  Bank,  113  N. 
Y.  325,  21  N.  K  Rep.  57;  North- 
western Lumber  Co.  v.  American 
Exp.  Co.,  73  Wis.  656,  41  N.  W.  Rep. 
1059;  The  Mary  K.  Campbell,  40  Fed. 
Rep.  906;  Sanford  v.  Van  Arsdall,  53 
Hun,  70,  6  N.  Y.  Supp.  494;  Duncan 
V.  Thomas,  81  CaL  56,  22  Pac.  Rep. 
297;  Jefferson  v.  Church  of  St  Mat- 
thew, 41  Minn.  392,  43  N.  W,  Rep.  74; 
Moses  V.  Noble,  86  Ala.  407,  5  So. 
Rep.  181;  Ashby  v.  Washburn,  23 
Neb.  571,  37  N.  W.  Rep.  267;  Marks  v. 
Robinson,  82  Ala.  69,  2  So.  Rep.  293; 
State  V.  Chad  wick,  10  Ore.  423; 
Mackey  v.  Fullerton,  7  Colo.  556,  4 
Pac.  Rep.  1198;  Bennett  v.  McGillan, 
28  Fed.  Rep.  411;  McGillin  v.  Ben- 
nett, 133  U.  S.  445,  10  Sup.  Ct  Rep. 
122:  Pardee  v.  Markle,  111  Pa,  548, 
56  Am.  Rep.  299;  Kline  v.  Ragland, 
47  Ark.  Ill,  14  S.  W.  Rep.  474; 
Brown  v.  Shirk,  75  Ind.  266;  Mc- 
Curdy  v.  Middleton,  82  Ala.  131,  3 
So.  Rep.  721 ;  Hammett  v.  Dudley,  63 


2  Carey-Lombard  Lumber  Co.  v. 
Hunt,  54  IlL  App.  314;  Winnebago 
Paper  Mills  v.  Travis,  56  Minn.  480, 
58  N.  W.  Rep.  36;  Goetz  v.  Piel,  26 


Mo.  App.  634;  Swett  v.  Boyce,  134 
Mass.  381;  Crompton  v.  Pratt,  105  id. 
255. 


§  243.] 


APPLICATION   OF    PAYMENTS. 


C27 


tion  on  the  part  of  both  that  they  shall  satisfy  the  charges 
therein  in  the  order  of  their  entry;  and  they  will  be  so  ap- 
plied unless  some  controlling  equity  requires  a  different  dispo- 
sition.^ 

It  has  been  held  that  this  rule  should  apply  without  refer- 
ence to  the  fact  that  one  item  may  be  better  secured  than 
another,  since  the  particular  parts,  .being  blended  together  in 
one  common  account,  have  no  separate  existence;  the  balance 
only  is  considered  as  due;^  and  a  payment  made  on  such  ac- 


Md.  154;  Hersey  v.  Bennett,  28  Minn. 
86,  41  Am.  Rep.  281,  9  N.  W.  Rep. 
590;  Helm  v.  Commonwealtli,  79  Ky. 
67;  Bancroft  v.  Holton,  59  N.  H.  141; 
Frost  V.  Mixsell,  38  N.  J.  Eq.  586; 
Wagner's  Appeal,  103  Pa.  185;  Wies- 
enfeld  v.  Byrd,  17  S.  C.  106;  Miliken 
V.  Tufts,  31  Me.  497;  Faircliild  v. 
Holly,  10  Conn.  475;  Smith  v.  Loyd, 
11  Leigh,  512,  37  Am.  Dec.  6'31;  Rol> 
inson's  Adm'r  v.  Allison,  36  Ala.  526; 
Howard  v.  McCall,  21  Gratt.  205; 
Wendt  V.  Ross,  33  Cal.  650;  Seymour 
V.  Sexton,  10  Watts,  255:  Sliedd  v. 
Wilson,  27  Vt.  478;  St.  Albans  v. 
Failey,  46  Vt.  448;  Langdon  v. 
Bowen,  46  Vt.  512;  Upham  v.  Le- 
favour,  11  Met.  174;  Dovvs  v.  More- 
wood,  10  Barb.  183;  Allen  v.  Culver, 
3  Denio,  284;  Webb  v.  Dickinson,  11 
Wend.  62;  Hollister  v.  Davis,  54  Pa. 
508;  Allen  v.  Brown,  39  Iowa,  330; 
Livermore  v.  Rand,  26  N.  H.  85; 
Parks  V.  Ingram,  33  N.  H.  383; 
Thompson  v.  Phelan,  23  N.  H.  339; 
Bacon  v.  Brown,  1  Bibb.  334,  4  Am. 
Dec.  640;  Sprague  v.  Hazenwinkle, 
53  111.  419;  Clayton's  Case,  1  Meriv. 
585;  United  States  v.  Kirkpatrick,  9 
Wheat.  720;  Berrian  v.  Mayor,  4 
Robert.  538;  Home  v.  Planters'  Bank, 
32  Ga.  1;  Mills  v.  Fowkes,  5  Bing.  N. 
C.  455;  Pennell  v.  Deffell,  4  De  G., 
McN.  &  G.  373;  Harrison  v.  Johnston, 
27  Ala.  445;  Postmaster-General  v. 
Furber,  4  Mason,  333:  Hansen  v. 
Rounsavell,  74  III.  238:  Souder  v. 
Schechterly,    91    Pa.    83;    Perry    v. 


Booth,  67  A  pp.  Div.  235,  73  N.  Y. 
Supp.  216;  National  Park  Bank  v. 
Seaboard  Bank,  114  N.  Y.  38,  35,  20 
N.  E.  Rep.  033.  See  Killorin  v.  Ba- 
con. 57  Ga.  497. 

In  the  case  of  mutual  accounts 
the  credits  on  one  side  are  applied 
to  the  extinguishment  of  the  debts 
on  the  other  as  payments  intention- 
ally made  thereon,  and  not  as  the 
set-off  of  one  independent  debt 
against  another.  Sanford  v.  Clark, 
29  Conn.  457. 

As  to  the  application  of  this  rule 
between  cestuis  que  trust,  see  Wood 
V.  Stenning,  [1895J  3  Ch.  433;  Mutton 
v.  Peat,  [1899]  3  Ch.  556. 

1  Id. ;  Jones  v.  United  States,  7 
How.  681;  Sanford  v.  Clark,  20  Conn. 
457;  Souder  v.  Schechterly,  91  Pa. 
83;  Lodge  v.  Ainscow,  1  Pennewill, 
327,  41  Atl.  Rep.  187;  Conduitt  v. 
Ryan,  3  Ind.  App.  1,  29  N.  E.  Rep. 
160;  Grasser  &  Brand  Brewing  Co. 
V.  Rogers,  112  Mich.  113, 70  N.  W.  Rep. 
443. 

If  a  trustee  pays  trust  money  on 
his  account  athis  banker'sand  mixes 
it  with  his  own  funds  and  draws 
checks  against  it  in  the  usual  man- 
ner for  his  personal  use  he  will  be 
presumed  to  have  drawn  his  own  and 
not  the  trust  money.  Knatchbull  v. 
Hallett,  13  Ch.  Div.  696,  overruling 
earlier  cases. 

2  Harrison  v.  Johnston,  27  Ala. 
445. 


628 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.       [§  243. 


count,  without  a  more  specific  appropriation,  is  treated  by  a 
majority  of  the  cases  as  applied  to  the  earliest  items,  although 
for  some  of  these  the  creditor  has  a  lien  or  other  security  and 
has  none  for  the  others.^  Where  there  is  a  single  open  account 
and  a  general  payment  is  made  by  the  debtor  at  full  age,  it  is 
presumed  to  be  in  satisfaction  of  the  earliest  items  although 
they  accrued  during  his  minority .^  Such  a  payment  will  not 
be  judicially  disturbed.^  The  rule  concerning  the  application 
of  payments  to  the  oldest  item  of  the  account  applies  to  an 
open  running  account  with  a  firm  continued  unchanged  witli 
a  member  of  it  who  buys  the  interest  of  his  copartner  and  con- 
tinues the  business.*  As  between  a  debt  due  and  a  contingent 
liability  a  payment  will  be  applied  to  the  former.* 

The  rule  under  consideration  for  applying  an  indefinite  pa}^- 
ment  to  the  debts  which  first  accrued  applies  not  only  to  the 
first  items  of  an  account  but  to  distinct  debts  contracted  at  dif- 
ferent times.^  The  rule  is  not  unjust  or  prejudicial  to  a  debtor; 
it  operates,  however,  more  beneficially  to  the  creditor;  for  it 


'  Conduitt  V.  Eyan,  3  Ind.  App.  1, 
29  N.  E.  Rep.  160;  Dunnington  v. 
Kirk,  57  Ark.  595,  22  S.  W.  Rep. 
430;  Worthley  v.  Emerson,  116  Mass. 
374;  Truscott  v.  King,  6  N.  Y.  147; 
The  A.  R.  Dunlap,  1  Low.  350;  Moore 
V.  Gray,  22  La.  Ann.  289;  Gushing  v. 
Wyman,  44  Me.  121;  Hersey  v.  Ben- 
nett, 28  Minn.  86,  41  Am.  Rep.  271,  9 
N.  W.  Rep.  590;  Miller  v.  Miller,  23 
Me.  22,  39  Am.  Dec.  597.  But  see 
Pierce  v.  Sweet,  33  Pa.  151;  Thomp- 
son V.  Davenport,  1  Wash.  (Va.)  125; 
Schuelenberg  v.  Martin,  2  Fed.  Rep. 
747.  The  last  case  is  distinguishable 
because  tlie  payment  was  not  a 
voluntary  one;  a  fact  which  the 
court  failed  to  observa 

2Thurlow  V.  Gilmore,40  Me.  378. 

3  Pond  &  Hasey  Go.  v.  O'Gonnor, 
70  Minn.  266,  73  N.  W.  Rep.  248. 

4  Schoonover  v.  Osborne,  108  Iowa, 
453.  79  N.  W.  Rep.  2G3;  Morgan  v. 
Tarbell,  28  Vt.  498. 

5  Missouri  Central  Lumber  Go.  v. 


Stewart,  78  Mo.  App.  456;  Niagara 
Bank  v.  Rosevelt,  9  Cow.  409. 

6  Parks  v.  Ingram,  22  N.  H.  283,  55 
Am.  Dec.  153;  Thompson  v.  Phelan, 
22  N.  H.  339;  McDaniel  v.  Barnes,  5 
Bush,  183;  Robinson's  Adm'r  v.  Al- 
lison, 36  Ala.  526;  Byrne  v.  Grayson, 
15  La.  Ann.  457;  Upham  v.  Lefavour, 
11  Met.  174;  Langdon  v.  Bowen,  46 
Vt.  512:  Smith  v.  Loyd,  11  Leigh, 
512,  37  Am.  Dec.  621 ;  Jones  v.  United 
States,  7  How.  681;  McKinzie  v. 
Nevius,  22  Me.  138,  38  Am.  Dec.  291 ; 
AUstan  v.  Gontee,  4  Har.  &  J.  351; 
Draflfen  v.  Boon  vi He,  8  Mo.  395;  Cop- 
land v.  Toulmin,  7  CI.  &  F.  349;  Sim- 
son  v.  Ingham,  2  B.  &  C.  72;  Hooker 
V.  Keay,  1  Q.  B.  Div.  178. 

This  rule  will  not  be  applied  to 
payments  made  by  a  reorganized 
partnership  without  the  consent  of 
its  new  members.  St.  Louis  Type 
Foundry  Co.  v.  Wisdom,  4  Lea. 
695;  Burland  v.  Nash,  2  F.  &  F.  687; 
Thompson  v.  Brown,  1  Mood.  &  M. 
406;  Roakes  v.  Bailey,  55  Vt.  542. 


§  244.]  APPLICATION    OF    PAYMENTS.  629 

often  saves  a  debt  from  the  bar  of  the  statute  of  limitations, 
and  closes  the  door  to  the  older  transactions  which  it  may  bo 
presumed  are  more  ditRcult  of  proof.  But  the  rule  ap-  [421] 
plies  the  payments  in  the  natural  and  logical  order  of  the 
transactions.  It  is  not  supported,  however,  by  reasons  so  co- 
gent but  that  it  will  yield  when  there  is  evidence  of  a  contrary 
intention,^  or  where  some  superior  equity  requires  a  different 
application.'^  "  "Whenever  the  relation  of  the  parties  or  the  nat- 
ure of  the  account  or  transaction  between  them  shows  that  an 
appropriation  of  payments  to  the  earliest  items  of  the  ac- 
count would  do  injustice  between  them  or  fail  to  conform 
to  their  understanding  or  agreement,  another  application 
is  made." '  If  property  is  exempt  from  execution  the  rule  that 
partial  payments  shall  be  so  appropriated  as  to  protect  the 
creditor  does  not  apply  so  as  to  affect  such  property  any  more 
than  such  payments  would  revive  a  debt  barred  by  time,* 

§  214.  General  payment  applied  to  a  debt  bearins;  inter- 
est, and  first  to  interest.  As  between  debts  bearing  and 
those  not  bearing  interest,  the  law  directs  an  indefinite  pay- 
ment to  be  applied  to  the  former.^  The  reason  generally  as- 
signed is  that  of  relieving  the  debtor  in  respect  to  the  debt 
which  is  most  burdensome,  or  the  presumed  choice  of  the 
debtor. •*  This  may  be  conceded  to  be  sufficient  for  this  appli- 
cation, and  some  others,  where  a  particular  one  is  specially 
beneficial  to  a  debtor  without  being  attended  with  a  corre- 
sponding loss  to  the  creditor  which  the  law  is  equally  solicit- 
ous to  prevent.  Interest  due  is  first  to  be  satisfied  when  a 
general  payment  is  made,  and  if  there  be  a  surplus  it  is  to  be 
applied  to  the  principal.  If  the  payment  falls  short  of  the  in- 
terest, the  balance  of  the  interest  is  not  to  be  added  to  the 
principal,  but  remains  to  be  extinguished  by  the  next  payment, 
if  it  is  sufficient.'^     This  rule  yields  to  that  which  requires  that 

1  City  Discount  Co.  v.  McLean,  L.  Scott  v.  Fisher,  4  T.  B.  Men.  387; 
R  9  C.  P.  693;  Langdon  v.  Bowen,  46  Blanton  v.  Rice,  5  id.  253;  Bacon  v. 
Vt.  512.  Brown,  1  Bibb,  334,  4  Am.  Dec.  640; 

2  Upham  V.  Lefavour,  11  Met.  174.    Scott    v.    Cleveland,  33    Miss.   447; 
^Faisst  V.  Waldo,  57  Ark.  270,  21    Bussey  v.  Gant's  Adm'r,  10  Humph. 

S.  W.  Rep.  436.  238. 

*  Sternberger    v.    Gowdy,    93  Ky.  « Id.    See  Neal  v.  Allison,  50  Miss. 

146,  19  S.  W.  Rep.  186.  175. 

5  Heyward  v.  Lomax,  1  Vern.  24;  ^  Weide  v.  St.  Paul,  03  Minn.  07.64 


630  CONVENTIONAL   LIQUIDATIONS    AND   DISCHARGES.       [§  24:4:. 

the  debt  least  secured  shall  first  be  paid ;  hence  if  the  claim  for 
mterest  is  better  secured  than  the  principal  the  application  will 
be  in  favor  of  the  latter;'  and  is  not  to  be  applied  where  the 
defendant  in  foreclosure  appeals  and  gives  a  bond  for  the  pay- 
ment, if  the  judgment  be  aflBrmed,  of  such  interest  as  might 
accrue  and  remain  otherwise  unpaid  upon  the  decree  from  the 
date  thereof.  On  affirmance  of  such  judgment  the  proceeds 
of  the  sale  will  be  applied  to  meet  the  fees,  costs  and  principal 
before  satisfying  the  interest  on  the  decree;  the  deficiency,  if 
any,  will  thereby  be  secured  by  the  appeal  bond.  "  It  would 
not  be  in  accordance  with  natural  justice  or  with  the  rules 
which  govern  courts  of  equity  to  allow  appellant  to  delay  a 
sale  by  his  appeal  and  render  the  security  inadequate  to  pay 
the  accruing  interest,  and  then,  upon  a  sale,  discharge  the  in- 
terest from  the  proceeds  of  such  security  and  free  him  from 
his  obligation."  2 

Where  a  debt  bearing  interest  remains  unpaid  until  interest 
is  due  on  the  interest,  where  that  is  permitted,  general  pay- 
[4-22]  ments  are  to  be  applied,  first,  to  such  interest  on  in- 
terest; second,  to  interest  on  the  principal;  and  third,  to  the 
principal.^    And  in  applying  payments  on  a  sum  secured  by  a 

N.  W.  Rep.  65;   Monroe  v.  Fohl,  73  State  v.  Jackson,  1  Johns.  Cb.  13,  7 

Cal.  568,  14  Pac.  Rep.  514;  Morgan  v.  Am.  Deo.  471;  People  v.  New  York 

Michigan  Air  Line  R  Co.,  57  Mich.  County,    5    Cow.     331;     Jencks    v. 

430,  25  N.  W.  Rep.   161,  26  id.  865;  Alexander,   11  Paige,  619;  Starr  v. 

Bradford  Academy  V.  Grover,  55Vt.  Richmond,  30  111.  276,  83  Am.  Dec. 

463;  Case  V.  Fish.  58  Wis.  56,15  N.  189;  Johnson  v.  Johnson,  5  Jones' Eq. 

W.  Rep.  808;   Hurst  v.  Hite,  20  W.  167;  De  Bruhl  v.  Neuflfer,  1  Strobh. 

Va.  183;  Frazier  v.  Hyland,  1  Har.  &  426.     See  Mercer's  Adm'r  v.  Beale,  4 

J.  98;  Gwinn  v.  Whitaker,  id.  754;  Leigh,  189. 

Bond  V.  Jones.  8  Sm.  &  M.  368;  Spires  If  part  of  the  interest  is  barred  by 

V.  Hamot,  8  W.  &  S.  17;  Peebles  v.  the  statute  of  limitations  an  unap- 

Gee,  1  Dev.  341;  Hampton  v.  Dean,  4  propriated  payment  will  not  be  ap- 

Tex.  455;  Hearn  v.  Cutberth,  10  id.  plied  to  its  discharge  because  it  is 

216;  McFadden  v.  Fortier,  20  111.  509;  not  wholly  due.     In  re  Fitzmaurice's 

Hart  V.  Dorman,  3  Fla,  445:  Lash  v.  Minors,  15  Irish  Ch.  445. 

Edgerton,  13  Minn.  210;  Hammer  v.  'Smythe  v.  New  England  Loan  & 

Nevill,  Wright,  169;  Estebeue  v.  Es-  Trust  Co.,  12  Wash.  424,  41  Pac.  Rep. 

tebene,  5  La.  Ann.  738;  Union  Bank  184. 

V.  Lobdell,  10  id.  130;  Bird  v.  Lobdell,  2  Monson  v.  Meyer,  190  III  105,  60 

id.  159;  Johnson  v.  Robbins,  20  id.  N.  K  Rep.  63,  92  IlL  App.  127. 

569;  Moore  v.  Kiflf,  78  Pa.  96;  Will-  3  Anketel  v.  Converse,  17  Ohio  St. 

iaras    V.    Houghtaling,   3   Cow.    86;  IL 
Righter  v.  Stall,  3  Sandf.  Ch.   60S; 


§  245.] 


APPLICATION    OF   PAYMENTS. 


631 


penal  bond,  they  will  be  applied  to  the  interest  in  the  first  in- 
stance, although  their  sum  exceeds  the  penalty.^  A  payment 
of  usury  will  be  applied  in  law  to  discharge  the  amount  legally 
due.^  Payments  received  on  a  debt  bearing  interest  before 
either  is  due  should  be  applied  to  pay  the  principal  and  the  in- 
terest accrued  on  that  part  of  the  principal  so  extinguished.' 
The  rule  which  applies  a  general  payment  first  to  interest  due, 
rather  than  principal,  is  directly  opposite  to  that  which  ap- 
plies a  payment  on  an  interest-bearing  debt  in  preference  to 
one  not  bearing  interest;  it  does  not  favor  the  debtor,  but  the 
creditor;  for  the  law  in  some  states  allowing  interest  due  to 
bear  interest  is  exceptional. 

§  245.  General  payments  applied  to  the  debt  least  se- 
cured; comments  on  conflicting  views  of  the  general  sub- 
ject. If  one  debt  be  secured  and  another  not,  and  a  general 
payment  is  made,  the  prevailing  rule  is  that  the  court  will  ap- 
ply it  to  the  debt  which  is  not  secured,  or  that  for  which  the 


1  Smith  V,  Macon,  1  Hill  Ch.  (S.  C.) 
339. 

2  Atlanta  Savings  Bank  v.  Spencer, 
107  Ga.  629,  33  S.  E.  Rep.  878;  Bur- 
rows V.  Cook,  17  Iowa,  436;  Parch- 
man  v.  McKinney,  12  Sm.  &  M.  681; 
Stanley  v.  Westrop,  16  Tex.  200; 
Bartholomew  v.  Yaw,  9  Paige,  165. 
See  g  236. 

In  a  suit  under  the  national  bank 
act  to  recover  usurious  interest  and 
the  forfeiture  provided  for,  if  occa- 
sional settlements  have  been  made 
by  the  parties,  payments  deducted 
from  the  principal  and  interest  then 
due  and  new  notes  given  for  the 
balances,  the  payments  will  be  ap- 
plied pro  rata  to  the  principal  and 
interest  due  at  the  time.  Kinser  v. 
Farmers'  Nat.  Bank,  58  Iowa,  728,  13 
N.  W.  Rep.  59. 

3Righter  v.  Stall,  3  Sandf.  Ch.  608; 
Jencks  v.  Alexander,  11  Paige,  619; 
Williams  v.  Houghtaling,  3  Cow.  86; 
Miami  Exporting  Co.  v.  United  States 
Bank,  5  Ohio,  260. 

In  Starr  v.  Richmond,  30  IlL  276, 


83  Am.  Dec.  189,  Walker,  J.,  said: 
"It  appears  to  be  more  equitable 
and  just  that  when  the  holder  re- 
ceives money  before  it  is  due,  on  a 
demand  drawing  interest,  it  should 
be  applied,  in  the  absence  of  an 
agreement  to  the  contrary,  to  the 
principal.  Otherwise,  by  loaning 
the  sum  thus  received,  he  w^ould,  in 
effect,  compound  the  interest,  or 
have  placed  at  interest  before  its 
maturity  a  larger  sum  than  his 
original  claim.  In  other  words,  he 
would  receive  interest  on  the 
maker's  money  as  well  as  his  own. 
After  the  principal  and  interest 
both  become  due  it  would  be  otlier- 
wise.  The  court  below,  we  think, 
erred  in  applying  any  portion  of  the 
payment  made  before  the  maturity 
of  the  note  to  the  extinguishment 
of  interest,  but  should  have  appro- 
priated the  whole  of  the  payment  to 
the  principal."  McElrath  v.  Dupuy, 
2  La.  Ann.  520;  Fay  v.  Lovejoy,  20 
Wis.  407. 


632 


CONVENTIONAL    LIQUIDATIONS    AND   DISCHARGES.        [§  245, 


security  is  most  precarious.^  The  rule  has  been  applied  to 
money  recovered  from  a  defaulting  officer  by  his  sureties  and 
paid  over  by  them  to  the  government,  his  defalcation  being  in 
[4:23]  excess  of  their  liability.^  If,  however,  the  security  of 
one  of  the  debts  is  by  a  surety,  a  general  payment  will  be  ap- 
plied to  the  debt  for  which  he  is  liable  that  he  may  be  relieved.* 


'  Sternberger  v.  Gowdy,  93  Ky.  146, 
19  S.  W.  Rep.  186;  Chicago  Title  & 
Trust  Co.  V.  McGlew,  90  111.  App.  58; 
Mouson  V.  Meyer,  98  IlL  App.  94,  190 
111.  105,  60  N.  E.  Rep.  63:  Gardner  v. 
Leek,  53  Minn.  522,  54  N.  W.  Rep.  746; 
Price  V.  Merritt,  55  Mo.  App.  640; 
McMillan  v.  Grayston,  83  Mo.  App. 
425;  Smith  v.  Lewiston  Steam  Mill, 
66  N.  H.  613,  34  Atl.  Rep.  153;  Pond 
V.  Harvvood,  139  N.  Y.  Ill,  34  N.  E. 
Rep.  768;  Pope  v.  Transparent  Ice 
Co.,  91  Va.  79,  20  S.  E.  Rep.  940; 
Poling  V.  Flanagan,  41  W.  Va.  191,  23 
S.  E.  Rep.  685;  The  Katie  O'Neil  65 
Fed.  Rep.  Ill;  Garrett's  Appeal,  100 
Pa.  597;  Goetz  v.  Piel,  26  Mo.  App. 
634,  643;  Nichols  v.  Knowles,  3  Mc- 
Crary,  477,  17  Fed.  Rep.  494;  Sanborn 
V.  Stark,  31  id.  18;  McOurdy  v.  Mid- 
dleton,  82  Ala.  131,  2  So.  Rep.  721; 
Poulson  V.  Collier,  18  Mo.  App.  583; 
The  D.  B.  Steel  man,  5  Hughes,  210; 
Hare  v.  Stegali,  60  111.  380;  Wilhelm 
V.  Schmidt,  84  id.  183;  Plain  v.  Roth, 
107  id.  588;  Frazier  v.  Lanahan,  71 
Md.  131,  17  At).  Rep.  940,  17  Am.  St. 
516;  Lester  v.  Houston,  101  N.  C.  605, 
8  S.  E.  Rep.  366;  North  v.  La  Flesh, 
73  Wis.  520,  41  N.  W.  Rep.  633;  Mc- 
Daniel  V.  Barnes,  5  Bush,  183;  Thomas 
V.  Kelsey,  30  Barb.  268;  Blanton  v. 
Rice,  5  T.  B.  Mon.  253;  Field  v.  Hoi- 
land,  6  Cranch,  8;  Burks  v.  Albert, 
4  J.  J.  Marsh.  97,  20  Am.  Dec.  209; 
Foster  v.  McGraw,  64  Pa.  464;  Patti- 
Bon  V.  Hull,  9  Cow.  747;  Dows  v. 
More  wood,  10  Barb.  183;  Johnson's 
Appeal,  37  Pa.  268;  Langdon  v. 
Bo  wen,  46  Vt.  512;  Wilcox  v.  Fair- 
haven  Bank,  7  Allen,  270;  Hempfield 
R.  Co.  V.  Thornburg,  1  W.  Va.  261; 
Gaston  v.   Barney,  11  Ohio  St.  510*. 


Moss  V.  Adams,  4  Ired.  Eq.  42;  Ran- 
sour  V.  Thomas,  10  Ired.  104;  State  v. 
Thomas,  11  id.  251;  Jenkins  v.  Beal, 
70  N.  C.  440;  Sprinkle  v.  Martin,  72 
id.  92;  Chester  v.  Wheelwright,  15 
Conn.  562;  Bosley  v.  Porter,  4  J.  J. 
Marsh.  621;  Gordon  v.  Hobart,  2 
Story,  243;  Taylor  v.  Talbot,  2  J.  J. 
Marsli.  49;  Sager  v.  Warley,  Rice  Ch. 
(S.  C.)  26;  Heilbron  v.  Bissell,  1  Bailey 
Eq.  430;  Gregory  v.  Forrester,  1  Mc- 
Cord  Ch.  318;  Smith  v.  Wood,  1  N.  J. 
Eq.  74;  Jones  v.  Kilgore,  2  Rich.  Eq. 
63;  Baine  v.  Williams,  10  Sm.  &  M. 
113;  McQuaide  v.  Stewart,  48  Pa.  198; 
Smith  V.  Brooke,  49  id.  147;  Plant- 
ers' Bank  v.  Stockman,  1  Freeman's 
Ch.  502. 

2  Alexander  v.  United  States,  6  C. 
C.  A.  602,  57  Fed.  Rep.  828. 

sPritchard  v.  Comer,  71  Ga.  18; 
Pearl  v.  Deacon,  1  De  G.  &  J.  461; 
Kinnaird  v.  Webster.  10  Ch.  Div.  139; 
Berghaus  v.  Alter,  9  Watts,  386;  Ross 
V.  McLauchlan.  7  Gratt.  86;  Marry- 
atts  V.  White,  2  Stark.  101;  Gard  v. 
Stevens,  12  Mich.  292,  86  Am.  Dec. 
52;  Bridenbeckerv.  Lowell,  32  Barb.  9. 

Where  one  of  several  accommoda- 
tion makers  of  a  note  has  notified 
the  payee  and  holder  of  his  desire  to 
terminate  his  liability,  he  cannot 
claim  in  diminution  thereof  on  ac- 
count of  outstanding  advances  money 
paid  to  the  holder  by  the  accommo- 
dation payee  after  such  revocation, 
such  monej'  being  the  proceeds  of 
the  business  of  the  payee  conducted 
on  money  advanced  on  the  credit  of 
the  other  accommodation  makers. 
Patterson  v.  Bank  of  British  Colum- 
bia. 26  Ore.  509,  38  Pac.  Rep.  SI'S- 


§  245.]  APPLICATION   OF   PAYMENTS.  633 

No  one  except  a  surety  will  be  heard  to  contend  for  a  different 
application.  The  court  cannot  go  outside  the  case  to  see 
whether  or  not  equity  requires  that  other  than  the  parties  to 
the  record  shall  be  protected ;  and,  it  seems,  that  in  the  absence 
of  fraud  or  imposition  on  the  surety  he  has  no  equity  to  control 
the  application  of  a  payment  for  which  he  is  bound.'  One 
liable  as  guarantor  for  the  prompt  payment  of  interest  on  a 
mortgage  cannot,  in  an  action  upon  the  guaranty,  after  a  fore- 
closure sale  which  failed  to  bring  the  amount  due  on  principal 
and  interest,  assert  the  right  to  have  the  money  applied  to  the 
interest."  In  some  states  the  courts,  carrying  the  rule  first 
stated  in  this  section  to  greater  length,  hold  that  the  applica- 
tion will  be  made  to  the  debt  which  bears  heaviest  upon  the 
debtor,  and  apply  a  general  payment  so  as  to  discharge  a  debt 
for  which  he  has  given  security  in  preference  to  an  unsecured 
demand  in  order  to  release  the  collateral.' 

There  is  a  marked  conflict  of  decision  upon  this  point  relat- 
ing to  the  application  by  the  court  of  indefinite  payments  aris- 
ing, as  before  intimated,  from  the  diverse  judicial  assumptions 
on  the  one  hand,  that  such  payments  are  as  a  general  rule  to 
be  applied  in  the  manner  most  beneficial  to  the  debtor,  and 
-on  the  other,  that  they  are  to  be  applied  most  beneficially  to 
the  creditor.*     No  court,  however,  has  so  far  relied  upon  [424:] 

1  Richards'  Estate,  185  Pa.  155,  39  Payments  will  be  so  applied  as  to 
Atl.  Rep.  1117;  Stamford  Bank  v.  save  a  debtor's  homestead.  First 
Benedict,  15  Conn.  444.  Nat.  Bank  v.  Hollinsworth,  78  Iowa, 

2  Smythe  v.  New  England  Loan  &  575,  43  N.  W.  Rep.  536. 

Trust  Co.,  13  Wash.  434,  41  Pac.  Rep.  *  So  much  has  this  assumption  of 

184.  favoring  one  party  or  the  other  as  a 

3  Compound  Lumber  Co.  v.  Murphy,  rule  entered  into  the  judgment  of  the 
169  111.  343,  48  N.  E.  Rep.  472;  Frazier  courts,  that  it  has  been  a  convenient 
V.  Lanahan,  71  Md.  131,  17  Atl.  Rep.  resort  for  determining  incidental 
940,  17  Am.  St.  516;  Griswold  v.  questions.  Thus  where  it  was  proved 
Onondaga  County  Savings  Bank,  93  that  a  payment  was  made  in  a  certain 
N.  Y.  301;  Pattison  v.  Hull,  9  Cow.  year,  but  the  day  and  montli  could 
747;  Dows  v.  Morewood,  10  Barb.  183;  not  be  shown,  the  court  directed  tlie 
Poindexter  v.  La  Roche,  7  Sm.  &  M.  credit  to  be  given  as  of  tlie  last  day 
699;  Dorsey  v.  Gassaway,  3  Har.  &  J.  of  the  year,  a  day  most  favorable  to 
402,  3  Am.  Dec.  557;  McTavish  v.  the  creditor.  Byers  v.  Fowler,  14 
Carroll,  1  Md.  Ch.  160  (but  see  Gwinn  Ark.  80.  See  Anderson  v.  Mason,  6 
V  Whitaker,  1  Har.  &  J.  754);  The  Dana,  217;  Bank  of  Portland  v. 
Antarctic,   1  Sprague,  206;    Neal  v.  Brown,  22  Me  295. 

Allison,  50  Miss.  175.     See  Thatcher        If  the  course  of  dealing  between 
^v.  Massey,  20  S.  C.  543.  the  parties  indicates  an  understand- 


634:  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAEGEa.       [§  245.. 

either  assumption  as  to  resolve  all  questions  by  it.  As  before 
stated,  neither  assumption,  apart  from  some  special  ground, 
is  founded  in  reason  or  principle.  Xeither  party,  by  reason 
merely  of  being  debtor  or  creditor,  has  any  claim  to  be  pre- 
ferred; each  as  a  general  rule  has  had  an  election  to  appropri- 
ate the  payment,  and  each  having  waived  it  has  an  equal  claim 
to  a  just  application  by  the  court.  The  rule  that  the  debt 
which  is  least  secured  should  be  first  paid,  where  there  are  no- 
special  circumstances,  stands  on  very  slight  preponderance  of 
equity.  The  most  that  can  be  said  for  it  was  said  by  Marsh- 
all, C.  J. :  "  It  being  equitable  that  the  whole  debt  should  be 
paid  it  cannot  be  inequitable  to  extinguish  first  those  debts  for 
which  the  security  is  most  precarious; "  ^  and  it  is  not  surpris- 
ing that  the  humane  consideration  of  relieving  the  debtor  of 
the  more  burdensome  debt  should  determine  the  application 
the  other  way.  But  the  rule  to  pay  first  the  debt  least  se- 
cured seems  to  be  supported  by  a  decided  weight  of  authority. 
There  is  also  considerable  contrariety  of  decision  upon  other 
points  relative  to  the  application  of  payments  by  the  court. 
The  cases  agree  that  an  indefinite  payment  is  to  be  applied  to 
the  oldest  debt,  where  no  other  rule  of  appropriation  conflicts; 
but  it  often  occurs  that  another  and  sometimes  several  rules 
do  conflict.  Then  the  relative  force  of  the  conflicting  rules 
and  the  particular  circumstances  must  control  the  application. 
That  rule  is  often  met  by  the  rule  that  the  least  secured  debt 
shall  be  first  paid.  Both  may  be  said  to  operate  in  favor  of 
the  creditor,  but  they  do  not  always  conduce  to  the  same  ap- 
plication. The  latter  is  paramount  when  no  circumstances 
exist  to  increase  the  force  of  the  other.  Where  the  secured 
and  unsecured  debts  are  by  mutual  consent  items  in  a  general 
account  current,  and  especially  if,  by  like  consent,  the  pay- 
ment is  also  credited  in  the  account,  the  rule  for  applying  the 
credit  to  the  oldest  items  prevails,  notwithstanding  the  partial 
security;^  but  not  without  dissent.  Where  the  creditor's  se- 
curity consisted  in  retaining  title  to  the  property  sold,  and  the 
purchase  price  of  the  articles  so  conditionally  sold  constituted 

ing  that  payments  are  to  be  applied  ^  Field  v.  Holland,  6  Cranch,  8. 

in  the  way  most  beneficial   to  the  2§243. 
creditor  the  court  will  give  effect  to 
it.     Gwin  V.  McLean,  63  Jliss.  12L 


§  2^6.] 


ACCOKD    AND    SATISFACTION. 


635 


the  earliest  items  in  the  account,  and  the  payments  were,  by 
mutual  consent,  entered  as  credits  therein,  the  interest  [l-^.j] 
of  the  purchaser  to  perfect  his  title  to  the  property  was 
deemed  to  preponderate  against  the  interest  of  the  creditor  to 
obtain  payment  of  his  unsecured,  rather  than  his  secured, 
claims;  and  the  concurrence  of  the  parties  in  making  the 
transaction  a  matter  of  account  evinced  their  intention  that 
the  payments  should  satisfy  the  charges  in  the  order  of  their 
entry.' 

Section  3. 


ACCORD   AND   SATISFACTION. 


§  246.  Definition.  A  claim  or  demand  may  be  satisfied  by 
the  party  liable  delivering,  paying  or  doing,  and  the  claimant 
accepting,  something  different  from  that  which  was  owing  or 
claimed,  if  they  so  agree.^    It  is  a  substituted  payment.   When 


1  Crompton  v.  Pratt,  105  Mass.  255. 

In  Pointer  v.  Smith,  7  Heisk.  137, 
A.,  a  Tennessean,  as  agent,  hired  out 
in  Alabama  the  slaves  of  several 
Tennesseans,  and  afterwards  re- 
ceived in  Alabamaapart  of  thehire, 
without  any  appropriation  at  the 
time  by  either  agent  receiving  or  the 
debtor  paying.  Held,  that  the  law 
of  Alabama  would  govern  as  to  the 
subsequent  appropriation  of  the  pay- 
ment; but  in  the  absence  of  any 
proof  as  to  the  law  thereof,  ap- 
plicable to  the  circumstances,  the 
debtor  could  not  make  a  subsequent 
appropriation,  and  it  should  be  dis- 
tributed pro  rata. 

In  Smith  v.  Union  Bank  of  George- 
town, 5  Pet.  518,  it  was  held  that  the 
right  of  priority  of  payment  among 
creditors  of  an  intestate  depends  on 
the  law  of  the  place  where  the  assets 
are  administered,  and  not  on  the  law 
of  the  place  of  the  contract,  or  of  the 
domicile  of  the  deceased;  and,  there- 
fore, where  administration  was  taken 
under  the  laws  of  Maryland  of  assets 
there,  where  all  debts  are  of  equal 
dignity,  and  the  intestate  was  dom- 
iciled and  owed  a  bond  debt  in  Vir- 


ginia, where  bond  debts  have  a  pref- 
erence, the  latter  debt  had  no  prior 
right  of  payment  out  of  the  assets  in 
Maryland. 

2  If  the  amount  due  is  unliquidated 
and  the  party  owing  it  makes  an 
offer  of  a  less  sum  in  settlement  and 
attaches  thereto  the  condition  that 
if  the  sum  is  taken  at  all  it  must  be 
received  in  full  or  in  satisfaction, 
and  the  other  party  receives  it  with 
knowledge  of  the  condition,  he  takes 
it  subject  thereto,  and  it  operates  as 
a  full  accord  and  satisfaction  not- 
withstanding the  payee,  at  the  time 
of  receivmg  it,  declares  that  he  takes 
it  in  satisfaction  pro  tanto  only.  Mc- 
Daniels  v.  Bank,  29  Vt.  230,  70  Am. 
Dec.  406;  Preston  v.  Grant,  34  Vt. 
201;  Berdell  v.  Bissell,  6  Colo.  162; 
Vermont  State  Baptist  Convention 
V.  Ladd,  58  Vt.  95,  4  Atl.  Rep.  634; 
Bull  V.  Bull,  34  Conn.  455;  Patten  v. 
Douglass,  44  id.  541. 

If  a  party  injured,  with  knowledge 
of  all  the  facts,  demands  and  receives 
from  the  wrong-doer  a  sum  of  money 
on  account  of  the  injury,  either  in 
whole  or  in  part,  it  is  presumed  that 
it  was  intended  as  a  full  recompense, 


63G  CONVENTIONAL    LIQUIDATIONS    AND   DISCHARGES.       [§  24T. 

such  agreement  is  executed  —  carried  fully  into  effect' — the 
original  demand  is  canceled,  satisfied,  extinguished.  It  is  thus 
discharged  by  what  the  law  denominates  accord  and  satisfac- 
tion. It  is  a  discharge  of  the  former  obligation  or  liability  by 
the  receipt  of  a  new  consideration  mutually  agreed  upon.^ 
The  rule  requiring  that  an  accord  be  executed  is  satisfied  if  the 
creditor  accepts  the  promise  of  the  debtor  to  perform  some 
act  in  future  in  satisfaction  of  the  debt,  and  where  that  is  the 
case  the  debt  is  extinguished  without  performance.'  But 
there  is  an  obvious  distinction  between  an  engagement  to  ac- 
cept a  promise  in  satisfaction  and  an  agreement  requiring  per- 
formance of  the  promise.  In  the  latter  case  a  tender  of 
performance,  although  made  promptlv  and  in  good  faith,  is 
not  satisfaction.* 

[426]  §  247.  Consideration.  For  the  purpose  of  support- 
ing such  an  agreement  and  giving  it  effect,  the  law  treats  all 
considerations  which  have  value,  without  regard  to  the  extent 
of  that  value,  as  sufficient,  as  it  does  in  all  other  cases  of  con- 
tract;—  inadequacy  is  not  a  valid  objection;  a  court  will  not 
consider  the  disparity,  if  there  is  any,  between  the  value  of 
the  liability  discharged  and  the  thing  done  or  promised,  which 
forms  the  consideration,  if  the  latter  is  of  some  value.*    The 

and  it  is  an  accord  and  satisfaction.  64  N.W.  Rep.  1120;  Rogers  v.  Spokane, 

Hinkle  v.  Minneapolis,  etc.  R  Co.,  31  9  Wash.  168,  37  Pac.  Rep.  300. 

Minn.  434,  18  N.W.  Rtp.  275.     But  it  2Vanbebber  v.   Plunkett,  26  Ore. 

is  otherwise  if  the  party  in    fault  562,  569,  38  Pac.  Rep.  707,  27  L.  R  A. 

pays  money  voluntarily,  and  not  in  811,  quoting  the  text;  Bush  v.  Abra- 

response  to  a  claim   made  by  the  ham,  25  Ore.  336,  345,  35  Pac.  Rep. 

other,  or  if  any  fact  gives  the  pay-  1066,  quoting  the  text, 

ment  the  character  of  a  gratuity.  3  Smith  v.  Elrod,  123  Ala.  269,  24 

Sobieski  V.  St.  Paul&  D.  R  Co.,  41  So.  Rep.  994;  Knowles  v.  Knowles, 

Minn.  169,  42  N.  W.  Rep.  863.  128     111.    110,   29    N.    E.    Rep.    196; 

1  Swoff or d  Brothers  Dry  Goods  Co.  Potts    v.    Polk    County,     80     Iowa, 

y.   Goss,  65  Mo.   App.  55;    Wenz  v.  401,  45  N.  W.   Rep.   775;    Averill  v. 

Meyersohn.  59  App.  Div,  130,  68  N.  Wood,  78  Mich.  342,  44  N.  W.  Rep. 

Y.  Supp.    1091;   First   Nat.  Bank  v.  381;  Oregon  Pacific  R.  Co.  v.  Forrest, 

Leech,  36  C.  C.  A.  263,  94  Fed.  Rep.  128  N.  Y.  83,  28  N.  E.  Rep.  137;  Bab- 

310;  Crow  v.  Kimball  Lumber  Co.,  16  cock  v.  Hawkins,  33  Vt.  561;  Sharp 

C.  C.  A.  127,  69  Fed.  Rep.  127;  Hosier  v.  Mauston,  93  Wis.   629,  66  N.  W. 

V.  Hursh,  151  Pa.  415,  25  AtL  Rep.  53;  Rep.  803.     See  §  252. 

Omaha  F.  Ins.  Co.  v.  Thompson,  50  *  Hosier  v.  Hursh,  151  Pa,  415,  25 

Neb.  580, 70  N.  W.  Rep.  30;  Carpenter  Atl.  Rep.  52. 

V.  Cliicago,  etc.  R.  Co.,  7  S.  D.  584,  5  Savage    v.  Everman,  70  Pa.  315, 


§  248.]  ACCOKD    AND    SATISFACTION.  037 

receipt  of  money  paid  into  court  by  the  defendant  does  not 
deprive  the  plaintiff  of  his  right  to  collect  the  balance  due 
unless  the  payment  was  accompanied  by  a  condition  that  the 
sum  must  be  accepted  in  full  satisfaction.^ 

§  248.  Payment  of  part  of  a  debt  will  not  support  agree- 
ment to  discharge  the  whole.  Where  there  is  an  overdue 
money  demand,  liquidated  and  not  disputed,  and  a  part  only 
of  it  is  paid,  though  this  is  accepted  as  full  satisfaction,  there 
is  only  a  part  performance  of  the  obligation  in  kind;  the 
agreement  to  discharge  the  residue  is  void  for  want  of  con- 
sideration. All  claims  for  damages,  for  torts  committed,  or 
for  contracts  broken,  are  payable  in  money.  When  a  demand 
therefor  is  certain,  or  rendered  certain  by  agreement  or  ad- 
judication, and  is  no  longer  disputed,  it  cannot  be  satisfied 
with  any  less  amount  than  the  precise  sum  owing.  If  a  part 
is  paid  there  is  a  partial  performance  of  the  obligation  of  the 
party  liable,  and  no  more.  His  payment  is  only  a  discharge 
'pro  tanto.  This  part  payment  may  have  been  induced  solely 
by  the  assurance  that  it  would  be  accepted  as  full  satisfaction, 
and  it  may  have  been  impossible  to  compel  payment;  still, 
the  party  paying  has  done  in  kind  only  what  he  was  under 
a  legal  obligation  to  do  in  respect  to  the  amount  paid,  and 
the  corresponding  amount  of  the  obligation  is  thereby  satis- 
fied, but  no  more;  therefore  the  agreement  of  the  creditor  to 
discharge  the  residue  is,  in  a  legal  sense,  gratuitous  and  not 
binding.^ 

10  Am.  Rep.  676;  Hartman  v.  Dan-        iCooley  v.  Kinney,  119  Mich.  377, 

ner,  74  Pa.  33;  Very  v.  Levy,  13  How.  78  N.  W.  Rep.  333. 
345;  Hardman  v.   Bellhouse,  9  M.  &        2  Swofford  Brothers  Dry  Goods  Ca 

W.   596;   Sibree  v.  Tripp.  15  id.  23;  v.  Goss,  05  Mo.  App.  55;  Morrill  v. 

Booth  V.  Smith.  3  Wend.  66;  Kellogg  Baggott.  157  111.  240,  41  N.  R  Rep. 

V.  Richards,  14  id.   116;  Stein  man  v.  639;  Hart  v.  Strong,  183  IIL  349,  55 

Magnus,  11  East,  390;  Lewis  v.  Jones,  N.  E.  Rep.  629;  Pottlitzer  v.  Wesson, 

4  B.   &    C.  506;  Blinn  v.  Chester,  5  8  Ind.  App.  472,  35  N.  E.  Rep.  1030; 

Day,  360;  Webster  v.  Wyser,  1  Stew.  Jennings  v.  Durflinger,  23  Ind.  App. 

181;   Davis  v.  Noaks,  3  J.  J.  Marsli  673,  55    N.  E.  Rep.  979;    Stengel  v. 

497;  Wood  v.  Roberts,  2  Stark.  417;  Preston,  11  Ky.  L.  Rep.  976,  13  S.  W. 

Boothby   v.   Sowden,  3    Camp.  175;  Rep.   839;   Leeson   v.   Anderson,   99 

Bradley  v.  Gregory,  2  id.  383;  Bush  Mich.  247,  58  N.  W.  Rep.  72;  Wet- 

V.  Abraham,  25  Ore.  336, 35  Pac.  Rep.  more  v.  Crouch,  150  Mo.  671,  51  S. 

1066;   Griffith  v.  Creighton,  61  Mo.  W.  Rep.  738;  Griffith  v.  Creighton, 

App.  1;  Howard  v.  Morton,  65  Barb.  61  Mo.  App.  1;  Howe  v.  Robinson,  13 

161.     See  §  249.  N.   Y.  Misc.  256,  34  N.  Y.  Supp.  85; 


638 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  248. 


[427]  The  actual  value  of  a  debt  or  demand  depends  on  the 
probability  of  voluntary  payment,  or  the  possibility  of  collec- 
tion by  legal  process.  Where  a  debt  is  doubtful,  a  creditor 
may  obtain  a  part  of  the  nominal  amount  by  discharging  the 
residue,  and  thus  realize  all  that  it  is  actually  worth,  and  per- 


Jones  V.  Rice,  19  N.  Y.  Misc.  357,  43 
N.  Y.  Supp.  491;  Toledo  v.  Sanwald, 
13  Ohio  Ct.  Ct.  496  (applying  the 
rule  to  a  judgment);  Mt.  Holly 
Water  Co.  v.  Mt.  Holly  Springs,  10 
Pa.  Super.  Ct.  162;  Commonwealth 
V.  Cummins,  155  Pa.  30,  25  Atl.  Rep. 
996;  Chicago,  etc.  K  Co.  v.  Clark,  35 
C.  C.  A.  120,  92  Fed.  Rep.  968  (the 
opinion  of  Lacombe,  C.  J.,  reviews 
many  cases);  Hodges  v.  Truas,  19 
Ind.  App.  651,  49  N.  E.  Rep.  1079; 
Rued  V.  Cooper,  119  Cal.  463,  51  Pac. 
Rep.  704;  Gurley  v.  Hiteshue,  5  Gill, 
217;  Markel  v.  Spitler,  28  Ind.  488; 
Dederick  v.  Leman.  9  Johns.  333; 
Harris  v.  Close,  2  Johns.  448,  3  Am. 
Dec.  244;  Seymour  v.  Minturn,  17 
Johns.  169,  8  Am.  Dec.  380;  White  v. 
Jordan,  27  Me.  370;  Latapee  v.  Pecho- 
lier,  2  Wash.  C.  C.  180;  Warren  v. 
Skinner,  20  Conn.  559:  Campbell  v. 
Booth,  8  Md.  107;  Curtiss  v.  Martin, 
20  111.  575;  Donohue  v.  Woodbury.  6 
Cush.  150;  Bryant  v.  Proctor,  14  B. 
Mon.  451;  Williams  v.  Langford,  15 
id.  560;  Conkling  v.  King,  10  Barb. 
372, 10  N.  Y.  440;  Keeler  v.  Salisbury, 
33  N.  Y.  648:  Fellows  v.  Stevens,  24 
Wend.  299;  Harper  v.  Graham,  20 
Ohio,  105;  Fell  v.  McHenry,  42  Pa. 
41;  Pierson  v.  McCahill,  21  Cal.  122; 
Irvine  v.  Millbank,  56  N.  Y.  635; 
Hinckley  v.  Arey,  27  Me.  362;  Riley 
V.  Kershan,  52  Mo.  224;  Peterson  v. 
Whe-ler,  45  id.  369;  Rose  v.  Hall,  26 
Conn.  392,  68  Am.  Dec.  402;  Bailey  v. 
Day,  26  Me.  88;  Redfield  v.  Holland 
Purchase  Ins.  Co.,  56  N.  Y.  354,  15 
Am.  Rep.  424;  Lewis  v.  Jones,  6  D.  & 
R.  567.  4  B.  &  C.  513;  Ogborn  v.  Hoff- 
man, 52  Ind.  439;  Keen  v.  Vaughan, 
48  Pa,  477;  Carrington  v.  Crocker,  37 


N.  Y.  336;  Cumber  v.  Wane,  1  Str. 
426;  Sibree  v.  Tripp,  15  M.  &  W.  23; 
Fitch  V,  Sutton,  5  East,  230;  Pin 
nell's  Case,  5  Rep.  117:  Lynn  v. 
Bruce,  3  H.  Bl.  317;  Thomas  v. 
Heathorn,  2  B.  &  C.  477;  Mitchell 
V.  Cragg,  10  M.  &  W.  367;  Skaife  v. 
Jackson,  3  B.  &  C.  421;  Graves  v. 
Key,  3  B.  &  Ad.  313;  Straton  v.  Ras- 
tall,  2  T.  R.  366;  Churchill  v.  Bow- 
man, 39  Vt.  518;  Hardey  v.  Coe,  5 
Gill,  189;  Smith  v.  Bartholomew,  1 
Met.  276,  35  Am.  Dec.  365;  Arnold  v. 
Park,  8  Bush,  3;  Tyler  v.  Odd  Fel- 
lows' Mut.  Relief  Ass'n,  145  Mass. 
134,  13  N.  E.  Rep.  360;  Smith  v.  Chil- 
ton, 84  Va.  840,  6  S.  E.  Rep.  142;  Mar- 
tin V.  Frantz,  127  Pa.  389,  14  Am.  St. 
859,  18  Atl.  Rep.  20;  Hayes  v.  Massa- 
chusetts Mut.  L.  Ins.  Co.,  125  III 
626.  18  N.  E.  Rep.  322;  Sheibley  v. 
Dixon  Count}',  61  Neb.  409,  85  N.  W. 
Rep.  399;  Helling  v.  United  Order 
of  Honor,  29  Mo.  App.  309;  Emmitts- 
burg  R.  Co.  V.  Donoghue,  67  Md.  383, 
1  Am.  St.  396,  10  Atl.  Rep.  233;  St. 
Louis,  etc.  R.  Ca  v.  Davis,  35  Kan. 
464, 11  Pac.  Rep.  421;  Foakes  v.  Beer, 
9  App.  Cas.  605,  11  Q.  B.  Div.  221; 
Eldred  v.  Peterson,  80  Iowa,  264,  20 
Am.  St.  416,  45  N.  W.  Rep.  755. 

In  Gordon  v.  Moore,  44  Ark.  349, 
355,  51  Am.  Rep.  606,  it  is  held  "that 
an  agreement  by  a  creditor  to  ac- 
cept a  smaller  sum  in  satisfaction  of 
a  debt,  carried  into  effect  by  the 
receipt  of  the  money,  and  the  exe- 
cution of  a  formal  and  positive  re- 
lease, with  all  other  acts  essential 
to  an  absolute  relinquishment  of  his 
right,  is  a  valid  and  iri'evocable 
act." 


•§  24:8(2.]  ACCORD    AND    SATISFACTION.  639 

^aps  more.  For  this  reason  the  rule  stated  has  been  ref^arded 
by  the  courts  as  only  a  technical  one;  and  they  have  satisfied 
it  on  nice  distinctions;^  or,  as  has  been  judicially  said,  "they 
have  seemed  to  seize  with  avidity  upon  any  consideration  to 
support  the  agreement  to  accept  the  lesser  sum  in  satisfaction 
of  the  larger,  or,  in  other  words,  to  extract  if  possible  from  the 
■circumstances  of  each  case  a  consideration  for  the  new  aoree- 
ment  in  place  of  the  old,  and  thus  to  form  a  defense  to  the 
action  brought  upon  the  old  agreement."^ 

§  24-8a.  Same  subject.  In  a  recent  case  the  Mississippi 
court  refused  to  recognize  the  rule  stated  in  the  last  section, 
notwithstanding  it  had  been  applied  there.  In  a  strong  opin- 
ion Woods,  C.  J.,  argues  that  the  case  in  Coke'  which  is  relied 
upon  as  the  foundation  of  the  rule  decided  no  such  question. 
"An  examination  of  that  mischievous  and  misleading  reported 
case  will  make  it  appear  at  once  that  the  question  before  us 
was  not  in  any  way  involved.  PinneFs  plea  was  that,  before 
the  maturity  of  his  bond  for  the  larger  sum,  plaintiff  had  ac- 
cepted a  lesser  sum  agreed  upon  between  the  parties,  in  full 
satisfaction  of  the  original  debt.  Kow,  all  the  authorities, 
American  and  English,  including  Coke  himself,  agree  that  this 
was  a  good  defense,  and  that  the  plaintiff  was  bound  by  it,  if 
defendant  should  properly  plead  it  to  a  suit  for  the  entire 
original  debt.  But  the  hapless  Pinnel,  in  that  remote  period 
when  courts  were  almost  as  zealous  for  the  observance  of  tech- 
nical rules  of  special  pleading  as  for  the  execution  of  justice  ac- 

1  Kellogg  V.   Richards,   14  "Wend,  less  because  the  debtor  was  unable 

116;  Smith  v.  Ballou.  1  R  I.  496;  Har-  to  pay  it.  Judge  Marshall  said:  "  We 

per  V.  Graham.  20  Ohio,  105;  Brooks  think  his  acceptance  is  sufficient  to 

V.  White,  2  Met.   283,   37   Am.  Dec.  establish  the  adequacy  of  the  satis- 

95;  McDaniels  v.  Lapham,  21  Vt.  222.  faction.  It  cannot  be  said  that  there 

See  Weymouth  v.  Babcock,  42  Me.  was  no  consideration  for  giving  up 

44;  Milliken  v.  Brown,  1  Rawle,  391;  any  part  of  the  debt  of  the  defend- 

Lamb  v.  Goodwin,  10  Ired.  320;  Mc-  ant,  because  although  the  value  of 

Daniels  v.  Bank,  29  Vt.  230;  Mathis  the  entire  consideration  given  can 

V,    Bryson,  4   Jones,     509;  Brink  v.  be  measured,  there  is  no  measure  of 

Garland,  58  Mo.  A  pp.  356.  the  value  of  the  debt  which  the  de- 

In  Woolfolk  V,  McDowell,  9  Dana,  fendant  could  not  pay." 

268,  a  creditor  accepted  his  own  note  -^  Jaffray  v.  Davis,  124  N.  Y.  164,  26 

outstanding  in  the  hands  of  a  third  N.  E.  Rep.  351,  11  L.  R  A.  7ia 

person,    in  satisfaction  of  a   larger  ^  Pinnel's  Case,  5  Rep.  117. 
amount  against  his  debtor,  but  worth 


GiO  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  24S«. 

cording  to  right, was  adjudged  to  pay  the  whole  debt,  the  plaint- 
iff having  judgment  against  him  because  of  his  '  insufficient 
pleading,  for,'  sa^^s  Coke,  '  he  did  not  plead  that  he  had  paid 
the  ol.  2s.  2d.  in  full  satisfaction  (as  by  law  he  ought),  but 
pleaded  the  payment  of  part  generally,  and  that  the  plaintiff 
accepted  it  in  full  satisfaction.'"  After  showing  that  the 
courts  of  this  country  generally  adopted  the  rule  supposed  to 
be  so  laid  down,  the  writer  comes  to  the  question  of  consider- 
ation, the  absence  of  which  is  usually  given  as  the  reason  for 
the  rule:  "The  absurdity  and  unreasonableness  of  the  rule 
seem  to  be  generally  conceded,  but  there  also  seems  to  remain 
a  wavering,  shadowy  belief  in  the  fact,  falsely  so  called,  that 
the  agreement  to  accept,  and  the  actual  acceptance  of,  a  lesser 
sum  in  the  full  satisfaction  of  a  larger  sum,  is  without  any 
consideration  to  support  it  —  that  is,  that  the  new  agreement 
confers  no  benefit  upon  the  creditor.  However  it  may  have 
seemed  three  hundred  years  ago  in  England,  when  trade  and 
commerce  had  not  yet  burst  their  swaddling  bands,  at  this  day 
and  in  this  country,  where  almost  e\ery  man  is  in  some  way 
or  other  engao:ed  in  trade  or  commerce,  it  is  as  ridiculous  as  it 
is  untrue  to  say  that  the  payment  of  a  lesser  part  of  an  origi- 
nally greater  debt,  cash  in  hand,  without  vexation,  cost,  and 
delay,  or  the  hazards  of  litigation  m  an  effort  to  collect  all,  is 
not  often  —  nay,  generally  —  greatly  to  the  benefit  of  the 
creditor.  Why  shall  not  money  —  the  thing  sought  to  be  se- 
cured by  new  notes  of  third  parties,  notes  whose  payment  in 
money  is  designed  to  be  secured  by  mortgage,  and  even  nego- 
tiable notes  of  the  debtor  himself  —  why  shall  not  the  actual 
payment  of  money,  cash  in  hand,  he  held  to  be  as  good  con- 
sideration for  a  new  agreement,  as  beneficial  to  the  creditor, 
as  any  mere  promises  to  pay  the  same  amount,  by  whomsoever 
made  and  howsoever  secured  ?  And  why  may  not  men  make 
and  substitute  a  new  contract  and  agreement  for  an  old  one, 
even  if  the  old  contract  calls  for  a  money  payment  ?  And 
why  may  one  accept  a  horse  worth  one  hundred  dollars  in  full 
satisfaction  of  a  promissory  note  for  one  thousand  dollars,  and 
be  bound  thereby,  and  yet  not  be  legally  bound  by  his  agree- 
ment to  accept  nine  hundred  and  ninety-nine  dollars,  and  his 
actual  acceptance  of  it,  in  full  satisfaction  of  the  one  thousand 
dollar  note  ?     No  reason  can  bs  assigned,  except  that  just  ad- 


§  249.] 


ACCOED    AND    SATISFACTION. 


641 


verted  to,  and  this  rests  upon  a  mistake  in  fact.  And  a  rule  of 
law  which  declares  that  under  no  circumstances,  however 
favorable  and  beneficial  to  the  creditor,  or  however  hard  and 
full  of  sacrifice  to  the  debtor,  can  the  payment  of  a  less  sum  of 
money  at  the  time  and  place  stipulated  in  the  original  obli- 
gation, or  afterwards,  for  a  greater  sum,  though  accepted  by 
the  creditor  in  full  satisfaction  of  the  whole  debt,  ever  amount 
in  law  to  satisfaction  of  the  original  debt,  is  absurd,  irrational, 
unsupported  by  reason  and  not  founded  in  authority,  as  has 
been  declared  by  courts  of  the  highest  respectability,  and  of 
last  resort,  even  when  yielding  reluctant  assent  to  it."^ 

§  249.  Any  other  act  or  promise  which  is  a  new  consider- 
ation will  suffice.  If  there  be  any  benefit  or  even  legal  [428] 
possibility  of  benefit  ^  to  the  creditor  thrown  in,  the  additional 
weight  will  turn  the  scale  and  render  the  consideration  suffi- 
cient to  support  the  agree  ment.'  Payment  at  a  different  place,* 
or  before  the  original  debt  is  due,*  is  sufficient.  8o  if,  instead 
of  offering  payment  of  a  less  sum,  the  debtor  procures  a  third 
person  to  become  security,  either  by  engaging  his  personal 


I  Clayton  v.  Clark,  74  Miss.  499,  60 
Am.  St.  521,  37  L.  R.  A.  771,  21  So. 
Rt-p.  565,  23  id.  189,  modifying  or 
overruling  Jones  v.  Perkins,  29  Miss. 
139;  Pulliam  v.  Taylor.  50  Miss.  251, 
and  Burrus  v.  Gordon,  57  Miss.  93.  To 
much  the  same  effect  as  the  princi- 
pal case  is  Harper  v.  Graham,  20 
Ohio,  105.  See  Shelton  v.  Jackson, 
20  Tex,  Civ.  App.  443,  49  S.  W.  Rep. 
414 

2 '-What  is  called  'any  benefit,  or 
even  any  legal  possibility  of  benefit,' 
is  not  that  sort  of  benefit  which  a 
creditor  may  derive  from  getting 
payment  of  part  of  the  money  due  to 
him  from  a  debtor  who  might  other- 
wise keep  him  at  arm's  length,  or 
possibly  become  insolvent,  but  is 
some  independent  benefit,  actual  or 
contingent,  of  a  kind  which  might  in 
law  be  a  good  and  valuable  consider- 
ation for  any  other  sort  of  agreement 
not  under  seal."  Foakes  v.  Beer,  9 
App.  Cas.  605  (1884).  Compare  the 
preceding  section. 
Vou  1  —  41 


3  Grayson's  Appeal,  108  Pa.  581; 
Hendrick  v.  Thomas,  106  Pa.  327;  Ty- 
son V.  Woodruff,  108  Ga.  308,  33  S.  E. 
Rep.  981;  1  Smith  Lead.  Cas.  600; 
Steinman  v.  Magnus,  2  Camp,  124; 
Bradley  v.  Gregory,  id.  383;  Wood  v. 
Roberts,  2  Stark.  417;  Boothby  v. 
Snowden,  3  Camp.  175;  Sibree  v. 
Tripp,  15  M.  &  W.  23;  Bidder  v. 
Bridges,  37  Ch.  Div.  406. 

4  Smith  V.  Brown,  3  Hawks,  580; 
Harper  v.  Graham,  20  Ohio,  105;  Aus- 
tin V.  Dor  win,  21  Vt  39;  Spann  v. 
Baltzell,  1  Fla.  302,  46  Am.  Dec.  340: 
Arnold  v.  Park,  8  Bush,  3;  Milliken 
V.  Brown,  1  Rawle,  391. 

5  Sonnenberg  v.  Riedel,  16  ]\Iinn.  83; 
Goodnow  V.  Smith,  18  Pick.  414,  29 
Am.  Dec.  200;  Brooks  v.  White,  2 
Met.  283,  37  Am.  Dec.  95;  Levy  v. 
Very,  12  Ark.  148;  Boyd  v.  Moats,  75 
Iowa,  151,  39  N.  W.  Rep.  237;  Schwei- 
der  v.  Lang,  29  Minn.  254,  13  N.  W. 
Rep.  33;  Ricketts  v.  Hall,  2  Bush,  249, 
43  Am.  Rep.  302;  Smith  v.  Brown,  3 
Hawks,  580. 


642 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  249. 


credit  or  pledging  his  property  for  the  payment  of  a  smaller 
sum;^  or  the  payment  of  such  sum  by  a  third  person  ;2  or  if 
the  debtor  alone  gives  negotiable  paper  for  a  smaller  sum  to 
satisfy  a  larger  debt  not  in  negotiable  form; "  or  if  one  of  sev- 
eral joint  debtors,  whether  in  partnership  or  not,  does  so,  and 
the  note  or  bill,  and  not  the  payment  of  it,  is  accepted  as  satis- 
faction, it  is  valid;  giving  such  security  is  a  new  considera- 
tion, for  it  may  be  more  advantageous  than  the  debt  in  its 
previous  form.*  Giving  notes  for  smaller  sums  than  the  amount 
of  the  indebtedness  which  was  represented  by  a  single  note, 
so  that  the  creditor  may  sue  on  them  in  justice's  court,  is  a  suf- 


1  Lincoln  Savings  Bank  &  Safe  De- 
posit Co.  V.  Allen,  27  C.  C.  A.  87,  82 
Fed.  Rep.  148;  Keeler  v.  Salisbury, 
33  N.  Y.  648;  Brooks  v.  White,  2  ]\Iet. 
283,  37  Am.  Dec.  95;  Babcock  v.  Dill, 
43  Barb.  577;  Le  Page  v.  McCrea,  1 
Wend.  164,  19  Am.  Dec.  469;  Harri- 
son V.  Close,  2  Johns.  448,  3  Am.  Dec. 
444;  Seymour  v.  Minturn,  17  Johns. 
169,  8  Am.  Dec.  380;  Conkling  v. 
King,  10  N.  Y.  440;  Welby  v.  Drake, 
1  C.  &  P.  557;  Belshaw  v.  Bush,  11  C. 
B.  191;  James  v.  Isaacs,  12  id.  791; 
Steinman  v.  Magnus,  11  East,  390; 
Henderson  v.  Stobart,  5  Ex.  99;  Dias 
V.  Wanmaker,  1  Sandf.  469;  Seymour 
V.  Goodrich,  80  Va.  303;  Bidder  v. 
Bridges,  37  Ch.  Div.  406;  Roberts  v. 
Brandies,  44  Hun,  468;  Varney  v. 
Conery,  77  Me.  527,  1  Atl.  Rep.  683; 
Laboyteaux  v.  Swigart,  103  Ind.  596, 
3  N.  R  Rep.  373.  See  Warburg  v. 
Wilcox,  7  Abb.  Pr.  336. 

2  Fowler  v.  Smith,  153  Pa,  639,  25 
AtL  Rep.  744;  Clark  v.  Abbott,  53 
Minn.  88,  55  N.  W.  Rep.  542,  39  Am. 
St.  577;  Laboyteaux  v.  Swigart,  103 
Ind.  596,  3  N.  E.  Rep.  373;  Varney  v. 
Conery,  77  Me.  527,  1  Atl.  Rep.  683; 
Welby  V.  Drake,  1  C.  &  P.  557;  Gordon 
V.  Moore,  44  Ark.  349,  51  Am.  Rep. 
606;  Pettigrew  Machine  Co,  v.  Har- 
mon, 45  Ark.  290. 

3  Jaflfray  v.  Davis,  124  N.  Y.  164,  26 
N.  E.  Rep.  351,  11  L.  R.  A.  710,  dis- 
tinguishing or  disapproving  Keeler 


V.  Salisbury,  73  N.  Y.  653,  and  Platts 
V.  Walrath,  Lalor's  Supp.  59;  Me- 
chanics' Bank  v.  Houston,  11  W.  N. 
C.  388  (Pa.  Sup.  Ct.) ;  Curlewis  v.  Clark, 
3  Ex.  375;  Cooper  v.  Parker,  15  C.  B. 
825;  Sibree  v.  Tripp,  15  M.  &  W.  23; 
Goddard  v.  O'Brien,  9  Q.  B.  Div.  37. 

*  Thompson  v.  Percival,  5  B.  &  Ad. 
925;  Sheehy  v.  Mandeville,  6  Cranch, 
253;  Mason  v.  Wickersham,  4  W.  & 
S.  100;  Cole  v.  Sackett,  1  Hill,  516; 
Waydell  v.  Luer,  5  id.  448,  3  Denio, 
410;  Arnold  v.  Camp,  12  Johns.  409, 
7  Am.  Dec.  328;  Lodge  v.  Dicas,  3  B. 
&  Aid.  611;  Pearson  v.  Thomason,  15 
Ala.  700,  50  Am.  Dec.  159;  Russell  v. 
Lytle,  6  Wend.  390,  22  Am.  Dec.  537; 
Barron  v.  Vandvert,  13  Ala.  232; 
Webb  V.  Goldsmith,  2  Duer,  413; 
Cartwright  v.  Cooke,  3  B.  &  Ad.  701; 
Evans  v.  Powis,  1  Ex.  601;  Kinsler 
V.  Pope,  5  Strobh.  126;  Evans  v. 
Drummond,  4  Esp.  89;  Reed  v.  White, 
5  id.  122;  Lyth  v,  Ault,  7  Ex.  669; 
Bedford  v.  Deakin,  2  Stark,  178.  See 
Ricketts  v.  Hall,  2  Bush,  249;  Keeler 
v.  Salisbury,  27  Barb.  485,  33  N.  Y. 
648;  Conkling  v.  King.  10  Barb,  372. 

In  Bowker  v.  Harris,  30  Vt  425,  a 
wife's  note  was  held  sufficient  con- 
sideration, she  having  paid  it, 
though  it  was  void  when  made.  See, 
also,  Kirwan  v.  Kirwan,  4  Tyrwh. 
491;  Hart  v.  Alexander,  2  M.  &  W. 
484;  Powles  v.  Page,  3  C.  B.  16. 


§  249.] 


ACCOKD    AKD    SATISFACTION. 


64J 


ficient  consideration.'  An  accord  and  satisfaction  mov-  [420] 
ing  from  a  stranger,  or  a  person  having  no  i)ecuniary  interest 
in  the  subject-matter,  if  accepted  in  discharge  of  the  debt,  con- 
stitutes a  good  defense  to  an  action  to  enforce  the  liability 
against  the  debtor.^  He  sufficiently  adopts  it  by  taking  ad- 
vantage of  it  by  plea.'  There  must  be  something  received  to 
which  the  creditor  was  not  before  entitled.*  And  it  must  pos- 
sess some  value  or  by  legal  possibility  be  of  benefit  to  him.' 
The  extent  of  the  value  is  not  material.^  Part  of  a  claim  may 
be  satisfied  by  withdrawal  of  the  defense  of  infancy  to  the 
residue.^  Suspension  or  abandonment  of  a  suit  is  a  sufficient 
consideration.^  If  there  is  a  new  consideration  of  some  value, 
it  is  enough,  though  it  is  of  much  less  value  than  the  debt  dis- 
charged.^ The  voluntary  acceptance  by  an  injured  railroad 
employee  of  the  benefits  provided  for  in  his  contract  of  mem- 
bership in  the  relief  department  maintained  by  his  employer, 
knowing  the  effect  of  such  acceptance,  bars  a  suit  to  recover 
for  the  injury  sustained.'"   Where  a  debtor  pays  part  of  a  debt 


1  In  re  Dixon,  S  McCrary,  556. 

2  Jones  V.  Broadhurst,  9  C.  B.  173; 
Leavitt  v.  Morrow,  6  Ohio  St.  71,  67 
Am.  Dec.  o34;  Harrison  v.  Hicks,  1 
Port.  433,  27  Am.  Dec.  638;  Daniel  v. 
Hallenbeck,  19  Wend.  408;  Clow  v. 
Borst,  6  Johns.  37;  Stark  v.  Thomp- 
son, 3  Mon.  296;  Wool  folk  v.  Mc- 
Dowell, 9  Dana,  268;  Belshaw  v. 
Bush,  11  C.  B.  191;  Jackson  v.  Penn- 
sylvania R.  Co..  66  N.  J.  L.  319,  49 
Atl.  Rep.  730;  Armstrong  v.  School 
District,  28  Mo.  App.  169. 

3  Belshaw  v.  Bush,  supra;  Snyder 
V.  Pharo,  25  Fed.  Rep.  398;  Bennett 
V.  Hill,  14  R.  L  322. 

*  Thurber  v.  Sprague,  17  R.  L  634, 
24  Atl.  Rep.  48;  Bryant  v.  Proctor, 
14  B.  Mon.  451;  Hethcoate  v.  Crook- 
shanks.  3  T.  R.  24;  Harper  v.  Gra- 
ham, 20  Ohio,  105;  Good  v.  Chees- 
man,  2  B.  &  Ad.  328;  Fitch  v.  Sutton, 
5  East,  230;  Acker  v.  Phoenix,  4 
Paige,  305;  Commonwealth  v.  Mil- 
ler, 5  Mon.  205;  Riley  v.  Kershan,  52 
Mo.  224;  Rose  v.  Hall,  26  Conn.  392, 


68  Am.  Dea  402;  Bartlett  v.  Rogers, 
3  Sawyer,  62. 

SBIinn  v.  Chester,  5  Day,  360: 
Booth  V.  Smith,  3  Wend.  66;  Web- 
ster V.  Wyser,  1  Stew.  184;  Keeler  v. 
Neal,  2  Watts,  424;  Davis  v.  Noaks, 
3  J.  J.  Marsh.  494.  See  §  247 ;  Foster 
V.  Dawber,  6  Ex.  839. 

«Id.;  Pinnel's  Case,  5  Rep.  117; 
Andrew  v.  Boughey,  1  Dyer,  75a. 

^  Cooper  V.  Parker,  15  C.  B.  823. 

8  Smith  V.  Monteith,  13  M.  &  W. 
427;  Lewis  v.  Donohue,  27  N.  Y. 
Misc.  514,  58  N.  Y.  Supp,  319. 

9  1  Smith's  Lead.  Cas.  pt.  1,  *445; 
Kellogg  V.  Richards,  14  Wend.  116: 
Jones  v.  Bullitt,  2  Litt.  49;  Brooks  v. 
White,  8  Met.  283;  Harper  v.  Gra- 
ham, 20  Ohio,  105;  Boyd  v.  Hitch- 
cock, 20  Johns.  76,  11  Am.  Dec.  347; 
Le  Page  v.  McCrea,  1  Wend.  164,  19 
Am.  Dec.  469;  Sanders  v.  Branch 
Bank,  13  Ala.  353. 

i^Eckman  v.  Chicago,  etc.  R  Co., 
169  111.  312.  48  N.  E.  Rep.  496,  38  L. 
R.  A.  750,  04  IlL  App.  444    See  §  & 


6J-4  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  249. 

for  which  the  creditor  holds  a  note,  upon  an  agreement  that 
such  part  payment  shall  be  full  satisfaction,  and,  in  pursuance 
of  such  agreement,  the  note  is  surrendered  or  canceled,  the 
transaction  will  amount  to  full  accord  and  satisfaction.^  The 
surrender  is  equivalent  to  a  release."  If  the  principal  and  surety 
in  a  bond  given  to  secure  the  performance  of  a  contract  which 
involves  matters  uncertain  in  their  nature  are  insolvent,  pay- 
ment of  less  than  the  face  of  the  bond  is  a  good  consideration 
for  its  discharge.^  An  agreement  between  grantor  and  grantee, 
subsequent  to  a  conveyance,  in  pursuance  of  which  the  former 
places  a  sum  of  money  in  the  hands  of  a  third  person  to  be  for- 
feited to  the  grantee  in  full  satisfaction  of  all  damage  he  may 
sustain  by  reason  of  the  breach  of  the  former's  covenant,  is  a 
good  accord  and  satisfaction.^ 

An  accord  and  satisfaction  by  one  of  several  jointly  liable 
is  a  discharge  of  all.^  At  common  law  an  accord  and  satisfac- 
tion to  one  of  two  obligees  of  a  common  money  bond  was  good 
because  they  were  considered  as  having  a  joint  interest  in 
the  debt,  with  its  incident  of  survivorship,  and  the  satisfaction 
to  one  of  them  of  the  full  amount  due  to  all  put  an  end  to  the 
bond.^  But  in  equity  the  general  rule  with  regard  to  money 
lent  by  two  persons  to  a  third  was  that  they  v^qtq  prima  facie 
regarded  as  tenants  in  common,  and  not  as  joint  tenants,  both 
of  the  debt  and  of  any  security  held  for  it.  "  Though  they  take 
a  joint  security,  each  means  to  lend  his  own  money  and  to  take 
back  his  own."  '^  This  is,  however,  but  a  presumption,  and  may 
be  rebutted.  The  accord  is  good  as  to  the  obligee  who  re- 
ceived his  share.* 

1  Ellsworth  V.  Fogg,   35  Vt.   355;  57  id.  497,  10  N.  W.  Rep.  875;  Go.=?s  v. 

Draper  V.  Hitt,  43  Vt  439,  5  Am.  Rep.  Ellison,    136  Mass.   503;   Coonley  v. 

293;  Beach  v.  Endress,  51  Barb.  570;  Wood,  36  Hun,  559. 

Kent  V.  Reynolds,  8  Hun,  559.  The    discharge    of    a    party    not 

-  Id.  shown  to  be  a  wrong-doer  will  not 

sShelton  v.  Jackson,  20  Tex.  Civ.  affect  the  right  of  action  against  the 

App.  443,  49  S.  W.  Rep.  414.  other  defendants.     Wardell  v.   Mc- 

4  Reichel  v.  Jeffrey,  9  Wash.  250,  37  Connell,  25  Neb.  558,  41  N.  W.  Rep. 
Pac.  Rep.  296.  548. 

5  Chicago  V.  Babcock.  143  III  358,  6  Wallace  v.  Kelsall,  7  M.  «fe  W.  264, 
82  N.  E.  Rep.  271;  Atwood  v.  Brown,  'Morley  v.  Bird,  3  Ves.  631;  Mat- 
72  Iowa,  723,  32  N.  W.  Rep.  108;  Tur-  son  v.  Dennis,  10  Jur.  (N.  S.)  461,  12 
ner  v.  Hitchcock,  20  Iowa,  310:  Metz  Week.  Rep.  926. 

V.  Soule,  40  id.  236;  Long  v.  Long,        8  steeds  v.  Steeds,  22  Q.  B.  Div.  537. 


§§  250,  251.] 


ACCORD    AND    SATISFACTION. 


G45 


§  2.)0.  Composition  with  creditors.  There  is  no  want  [430] 
of  consideration  in  agreements  for  composition  between  a 
debtor  and  two  or  more  of  his  creditors;  for  the  enirajrement 
of  one  is  a  sufficient  consideration  for  that  of  the  others.^  The 
fact  that  a  creditor  whose  claim  was  disputed  was  not  a  party 
to  the  agreement  does  not  invalidate  it,  no  such  contingency 
being  provided  for.^  When  an  unliquidated  or  disputed  de- 
mand is  the  subject  of  accord,  and  a  certain  sum  is  paid  and 
accepted  as  full  satisfaction,  the  consideration  is  manifest. 

§  251.  Compromise  of  disputed  claim.  The  settlement  or 
compromise  of  a  disputed  or  doubtful  claim  is  a  good  consid- 
eration for  a  promise.''  The  claim  must  be  a  real  one  and  the 
parties  must  regard  their  rights  concerning  it  as  in  fact  or  in 
law  doubtful,  and  the  compromise  must  be  made  lonafide}  A 


iPierson  v.  McCahill,  21  Cal.  132 
Fellows  V.  Stevens,   24  Wend.   292 
Steinman  v.  Magnus,  11  East,  390 
Keeler  v.  Salisbury,    33  N.  Y.  648 
Way  V.    Langley,   15  Ohio  St.   392 
Ricketts  v.  Hall,  2  Bush.  249;  Tuck 
erman  v.  Newhall,  17  Mass.  581;  Dier 
raeyer  v.  Hackman,  52  Mo.  282;  Keay 
V.    Whyte,   3   Tyrvvh.    596;    Boyd   v. 
Hin.l,  1  H.  &  N.  938;  Cutter  v.  Reyn- 
olds, 8  B.  Mon.  596;  Boothby  v.  Sow- 
den,  3  Camp.  174;  Bradley  v.  Gregory, 
2  id.  383;  Wood  v.  Roberts,  2  Stark. 
417;  Cockshott  v.  Bennett,   2  T.  R. 
765;   Hale  v.    Holmes,    8    Mich.  37; 
Hartle  v.  Stahl,  27  Md.  157.  See  Case 
V.  Gerrish,  15  Pick.  49. 

2  Crawford  v.  Krueger,  201  Pa.  348, 
50  Atl.  Rep.  931. 

3  Brockley  v.  Brockley.  122  Pa.  1, 15 
Atl.  Rep.  646;  Schaben  v.  Brunning, 
74  Iowa,  102,  36  N.  W.  Rep.  910;  Zim- 
mer  v.  Becker,  66  Wis.  527,  29  N.  W. 
Rep.  228;  Stewart  v.  Ahrenfeldt,  4 
Denio,  189;  Wehrura  v.  Kuhn,  61  N. 
Y.  623;  Hammond  v.  Christie,  5 
Robert.  160;  United  States  v.  Clyde, 

13  Wall.  35;  United  States  v.  Child, 
12  Wall.  232;  United  States  v.  Justice, 

14  Wall.  535;  Brett  v.  Universalist 
Society,  63  Barb.  610. 


<  Wahl  V.  Barnum,  116  N.  Y.  87.  22 
N.  K  Rep.  280,  5  L.  R  A.  623:  Zoe- 
bisch  V.  Von  Minden,  120  N.  Y.  406, 
24  N.  E.  Rep.  795;  Moon  v.  Martin, 
122  Ind.  211,  23  N.  E.  Rep.  608;  Gilliam 
V.  Alford.  69  Tex.  267,  6  S.  W.  Rep. 
757;  Grandin  v,  Grandin.  49  N.  J.  L. 
508,  60  Am.  Rep.  642.  9  Atl.  Rep.  756; 
Cook  V.  W^right,  1  B.  &  S.  559:  Cal- 
lisher  v.  Bischoffscheim,  L.  R.  5  Q.  B. 
449;  Ockford  v.  Barrelli.  20  Week. 
Rep.  116;  Miles  v.  New  Zealand  Al- 
ford Estate  Co.,  32  Ch.  Div.  266; 
Demars  v.  Musser-Sauntry  Land  Co., 
37  Minn.  418,  35  N.  W.  Rep.  1;  An- 
thony V.  Boyd,  15  R.  I.  495,  8  AtU 
Rep.  701,  10  id.657;Headley  v.  Hack- 
ley,  50  Mich.  43,  14  N.  W.  Rep.  693. 

In  Miles  v.  New  Zealand  Alford 
Estate  Co.,  supra,  the  court  dissents 
from  some  observations  made  by 
Lord  Esher,  M.  R.,  in  Ex  parte  Ban- 
ner, 17  Ch.  Div.  480,  490,  to  the  effect 
that  it  was  not  only  necessary  to  the 
validity  of  a  settlement  that  the 
plaintiff  believed  he  had  a  good  cause 
of  action,  but  that  the  circumstances 
must  in  fact  raise  some  doubt 
whether  there  was  or  was  not  a  good 
cause  of  action. 


t46 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  251. 


mere  statement  that  the  amount  of  a  claim  was  in  dispute  is 
not  enough  to  show  that  there  was  a  consideration  for  ac- 
cepting less  than  was  due*/  but  it  is  suflHcient  if  the  contro- 
versy be  real  and  the  issue  respecting  it  be  considered  by  the 
parties  as  doubtful.^  "Whether  the  compromise  amount  be  re- 
ceived or  a  promise  to  pay  it,  the  original  claim  is  extin- 
guished if  the  parties  so  agree  and  there  is  a  sufficient  consid- 
eration.^ Inequality  of  consideration  will  not,  of  itself,  avoid 
a  settlement.*  The  adjustment  of  any  unliquidated  demand, 
whether  in  dispute  or  not,  stands  on  a  similar  principle.^    Stated 


1  EmmittsburgR  Co.  v.  Donoghue, 
67  Md.  383,  1  Am.  St.  396,  10  AtL 
Rep.  233. 

It  was  observed  in  Edwards  v. 
Baugh,  11  M.  &  W.  641:  "The  dec- 
laration alleges  that  certain  disputes 
and  controversies  were  pending  be- 
tween the  plaintiff  and  the  defend- 
ant whether  the  defendant  was  in- 
debted to  the  plaintiff  in  a  certain 
sum  of  money.  There  is  nothing  in 
the  use  of  the  word  '  controversy'  to 
render  this  a  good  allegation  of  con- 
sideration. The  controversy  merely 
is  that  the  plaintiff  claims  the  debt 
and  the  other  denies  it." 

^  Galusha  v.  Sherman,  105  Wis.  263, 
81  N.  W.  Rep.  495,  47  L.  R.  A.  417. 

As  applied  to  the  subject  of  accord 
and  satisfaction  a  demand  is  not 
liquidated,  even  if  it  appears  that 
something  is  due,  unless  it  appears 
how  much  is  due,  and  when  it  is  ad- 
mitted that  one  of  two  specific  sums 
is  due,  but  there  is  a  real  difference 
as  to  which  is  the  proper  amount,  the 
demand  is  unliquidated.  Nassoiy  v. 
Tomlinson,  148  N.  Y.  326,  42  K  K 
Rep.  715,  51  Am.  St.  695. 

An  account  cannot  be  considered 
as  liquidated  so  as  to  prevent  the 
receipt  of  a  less  amount  than  is 
claimed  from  being  a  satisfaction  if 
there  is  a  controversy  over  a  set-off 
and  the  amount  of  the  balance.  Os- 
trander  v.  Scott,  161  111.  339,  43  N.  E. 
Rep.  1089.     See  Bingham  v.  Brown- 


ing, 197  III  122,  64  N.  R  Rep.  317,  97 
111.  App.  443. 

3  Wilder  v.  St  Johnsbury,  etc.  R. 
Co.,  65  Vt.  43,  25  AtL  Rep.  896;  Gran- 
din  V.  Grandin.  49  N.  J.  L.  508,  9  Atl. 
Rep.  756,  60  Am.  Rep.  642;  Korne  v. 
Korne,  30  W.  Va.  1;  Tuttle  v.  Tuttle, 
12  Met.  551,  46  Am.  Dec  701;  Peace 
v.  Stennet,  4  J.  J.  Marsh.  449;  Jones 
V.  Bullitt,  2  Litt.  49;  Reid  v.  Hibbard, 
6  Wis.  175;  Pulling  v.  Supervisors,  3 
Wis.  337;  Calkins  v.  State,  13  Wis. 
389;  Metz  v.  Soule,  40  Iowa,  236;  Og- 
born  V.  Hoffman,  52  Ind.  439;  Riley 
V.  Kershan,  52  Mo.  224;  Merry  v.  Al- 
len, 39  Iowa,  235;  Gates  v.  Shutts,  7 
Mich.  127;  Converse  v.  Blumrich,  14 
id.  109,  90  Am.  Dec.  230;  May  hew  v. 
Phoenix  Ins.  Co.,  23  Mich.  105; 
Hooper  v.  Hooper,  26  id.  435;  Bo  wen 
v.  Lockwood,  id.  441;  Hull  v.  Swarth- 
out,  29  id.  249;  Campbell  v.  Skinner, 
30  id.  32;Reithmaier  v.  Beckwith,  35 
id.  100;  Neary  v.  Bostwick,  2  Hilt* 
514. 

4  Galusha  v.  Sherman,  105  Wis.  263, 
81  N.  W.  Rep.  495,  47  L.  R  A.  417. 

6  Sanford  v.  Abrams,  24  Fla.  181,  2 
So.  Rep.  373;  Donohue  v.  Woodbury, 
6  Cush.  148,  52  Am.  Dec.  777;  Eate- 
man  v.  Daniels,  5  Blackf.  71;  Harris 
V.  Story,  2  E.  D.  Smith,  363;  Long- 
ridge  V.  Dorville,  5  B.  &  Aid.  117; 
Watters  v.  Smith,  2  B.  &  Ad.  889; 
Haigh  V,  Brooks,  10  A.  &  K  309; 
Wilkinson  v.  Byers,  1  id.  106;  Wright 
v.  Acres,  6  id.  726;  Atlee  v.  Back- 


§  251.]  ACCORD    AND    SATISFACTION.  647 

accounts  and  settlements  are  treated  with  favor,  and  are  con- 
clusive unless  there  is  proof  of  mistake  or  fraud.^  A  def-  [431] 
inite  sum  paid  or  agreed  to  be  paid,  and  adopted  by  the  par- 
ties as  an  adjustment  and  compensation  for  either  a  doubtful 
and  disputed  demand,  or  one  which  is  uncertain  and  unliquid- 
ated, constitutes  a  sufficient  consideration  for  the  discharge  of 
such  original  demand.  And  upon  such  adjustment,  by  which 
a  definite  sum,  paid  or  to  be  paid,  is  substituted  for  the  claim 
as  it  formerly  existed,  the  latter  is  extinguished  on  the  princi- 
ple of  accord  and  satisfaction.-  An  infant's  action  for  dam- 
ages is  barred  by  the  acceptance,  in  full  satisfaction  from  the 
party  liable  therefor,  of  a  sum  of  money  which  is  undisposed 
of  and  not  returned,  notwithstanding  an  offer  to  credit  it  on 
any  judgment  that  might  be  obtained.^  If  a  receipt  for  money 
paid  contains  anything  in  the  nature  of  an  agreement  upon  the 
compromise  or  settlement  of  a  disputed  claim  that  the  payee 
accepts  and  receives  the  sum  designated  in  it  in  satisfaction 
and  discharge  of  his  claim,  it  is  a  contract  and  cannot  be  var- 
ied or  contradicted  by  parol.* 

Where  money  is  due  and  there  is  an  agreement  to  accept 
something  else  in  lieu  of  it,  and  that  something  else  is  deliv- 
ered and  accepted,  the  agreement  cannot  be  said  to  be  without 
consideration,  though  the  thing  so  delivered  and  accepted  is 
of  less  value  than  the  nominal  amount  of  the  debt.    Anything 

house,  3  M.&W.  633;  Sibree  V.Tripp,  ing,   197   111.  123,  64  N,  E.  Rep.  317; 

15  id.  23;  Llewellyn  v.  Llewellyn,  3  Housatonic  Nat.  Bank  v.  Foster,  85 

Dowl.  &  L.  318;  Allis  v.   Billing,  2  Hun,  376,  32  N.  Y.  Supp.  1031. 

Cush.   19;  Durham  v.  Wadlington,  2  The  satisfaction  of  a  cause  of  ac- 

Strobb.  Eq.  258;  Abbott  v.  Wilmot,  tion  for  personal  injury  made  by  the 

22  Vt.  437;  Ellis  v.  Bitzer,  2  Ohio,  295.  person  injured  bars  his  representa- 

1  Id. ;  Wilde   v.  Jenkins,   4  Paige,  tives  after  his  death  from  asserting 

481;  Lockwood  v.  Thorne,  11  N.  Y.  any  claim  because  of  theactofneg- 

170;  Pulliam  v.  Booth,  21  Ark.  420.  ligence  for  which  satisfaction   was 

See   Purtel   v.  Morehead,  2  Dev.  &  made.     Read  v.  Great  Eastern  R.  Co., 

Bat.  239;  Galusha  v.  Sherman,  105  L.   R.   8  Q.   B.  355;   Dibble  v.   New 

Wis.  263.  81  N.  W.  Rep.  495,  47  L.  R.  York  &  E.  R.  Co.,  25  Barb.  183. 

A.  417.  2  Lane  v.  Dayton,  etc.  Co.,  101  Tenn. 

2Storch  V.  Dewey,  57  Kan.  370,  46  581.  48  S.  W.Rep.  1094 

Pac.    Rep.  698;  Maack  v.  Schneider,  *  Komp  v.  Raymond,  42  App.  Div. 

51  Mo.  App.  92;   Lapp  v.  Smith,  183  33,  58  N.  Y.  Supp.  909;  Coon  v.  Knapp, 

111.   179,  55  N.  E.  Rep.  717;  Home  F.  8  N.  Y.  402.  59  Am.   Dec.   502;  Ryan 

Ins.  Co.  V.  Bredehoft,  49  Neb.  152,  68  v.  Ward,  48  N.  Y.  204. 
N.  W.  Rep.  400;  Bingham  v.  Brown- 


G48  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  251. 

of  legal  value,  whether  a  chose  in  possession  or  in  action,  act- 
ually received  in  full  satisfaction  of  a  debt  is  good  for  that 
effect.'  Nor  is  the  adequac}''  of  the  consideration  affected  be- 
cause the  value  of  the  collateral  thing  received  in  satisfaction 
was  fixed  by  agreement  of  the  parties  at  a  less  sum  than  the 
amount  of  the  debt.  Thus,  where  a  larger  sum  than  S750  was 
owing  and  actually  due  in  money,  an  agreement  to  receive 
$750  worth  of  salt  and  the  actual  reception  of  it  in  discharge  of 
the  whole  debt  was  held  to  have  that  effect.'^  The  right  to 
compromise  a  suit  may  be  exercised  by  the  person  who  is  au- 
thorized to  bring  it  in  the  first  instance,'  and  a  compromise 
made  by  one  plaintiff  will  bind  his  co-plaintiffs  if  it  appears 
that  the  amount  paid  was  received  as  full  satisfaction  for  the 
whole  injury.*  Where  a  statute  gives  the  widow  the  prior 
right  to  sue  for  the  death  of  her  husband,  she  has  the  right  to 
compromise  her  suit  over  the  objections  of  her  children,  and 
without  let  or  hindrance  from  any  one.^  She  may  also  com- 
promise the  whole  right  of  action  before  suit  is  brought,  and  a 
payment  to  her  of  the  sum  agreed  upon  will  discharge  the 
wrong-doer.^  But  if  the  suit  is  brought  by  an  administrator 
on  behalf  of  the  widow  and  children  she  cannot  compromise 
without  the  plaintiff's  consent  or  the  concurrence  of  the  other 
beneficiaries.^ 

1 1  Smith's  Lead.  Cases,  pt.  1,  445;  In  Platts  v.  Walrath,  Hill&  Denio, 

Jones  V.  Bullitt,  2  Litt.  49;  Brooks  59,  it  was  held  that  giving  a  mort- 

V.  White,  2  Met.  283,  37  Am.  Dec.  95;  gage  for  a  debt,  less  a  certain  deduc- 

New  York  State  Bank  v.  Fletcher,  5  tion  agreed  to  be  made  in  considera- 

Wend.  85;  Frisbie  v.  Larned,  21  id.  tion  of  the  security,  is  not  payment 

451;  Bullen  V.  McGillicuddy,  2  Dana,  of  the  debt  so  that  a  note  subse- 

90;    Pope   v.  Tunstall,   2   Ark.    209;  quently  given  for  the  sum  deducted 

Booth  V.  Smith,  3  Wend.  66;  Boyd  v.  will  be  deemed  without  considera- 

Hitchcock,  20  Johns.  76, 11  Am.  Dec.  tion. 

247;  Le  Page  v.  McCrea,  1  Wend.  s  Stephens  v.  Nashville,  etc.  R,  10 

164;    Sanders  v.    Branch   Bank,   13  Lea.  448. 

Ala.  353;  Blinn   v.    Chester,  5   Day,  <Pogel  v.  Meilke,  60  Wis.  248,  18 

359;  Watkinson  v.  Inglesby,5  Johns.  N.  W.  Rep.  927;  Ellis   v.    Esson,   50 

386;  Eaton  v.  Lincoln,  13  Mass.  424;  Wis.  138,  36  Am.  Eep.  830,  6  N.  W. 

Musgrove  v.  Gibbs,  1  Dall.  216;  Ar-  Rep.  518. 

nold  V.  Post,  8  Bush,  3;  Churchill  v.  5  Webb  v.  Railway   Co.,  88  Tenn. 

Bowman,  39  Vt.  518;  Gavin  v.  Annan,  119,  12  S.  W.  Rep.  428. 

2  Cal.  494.  6  Holder  v.  Railroad,  92  Tenn.  141, 

••J  Jones  v.  Bullitt,  2  Litt.  49;  Wool-  20  S.  W.  Rep.  537,  36  Am.  St.  77. 

folk  V.  McDowell,  9  Dana,  268;  Gaff-  'Railroad  v.  Acuff,  92  Tenn.  26,  20 

ney  v.  Cliapman,  4  Robert.  275.  But  S.  W.  Rep.  34a 
see  Howard  v.  Norton.  65  Barb.  161, 


5§  252,  252«.]         ACCORD  and  satisfaction. 


G49 


§252.  Agreement  must  be  executed.  The  agreement  [432] 
or  accord  must  be  executed.*  But  if  the  agreed  satisfaction 
consists  of  an  agreement  rather  than  the  performance  of  it,  the 
accord  is  executed  when  the  agreement  which  is  the  consider- 
ation of  the  discharge  is  entered  into,  whether  it  is  ever  per- 
formed or  not.2  Formerly  to  an  action  on  a  bond,  accord  and 
satisfaction  could  be  pleaded  by  deed  only,  for  an  obligation 
under  seal  could  not  be  discharged  but  by  an  instrument  of 
equal  dignity.^  But  this  rule  is  not  now  followed  if  there  has 
been  actual  performance.* 

§  252a.  Rescission  or  exoneration  before  breach.  Kescis- 
sion  of  an  executory  contract,  or  exoneration  before  breach, 
is  not  accord  and  satisfaction.^  After  breach,  however,  when 
the  demand  becomes  due  for  damages,  whatever  may  be  the 


iHearn  v.  Kiefe,  38  Pa.  147,80  Am. 
Dec.  472;  Green  v,  Lancaster  County, 
fil  Neb.  473,  85  N.  W.  Rep.  439; 
Williams  v.  Stanton,  1  Root.  426; 
Pope  V.  Tunstall,  2  Ark.  209;  Hall  v. 
Smith,  10  Iowa,  48;  Flack  v.  Garland, 
8  Md.  191;  Woodward  v.  Miles,  24 
N.  H.  289;  Coit  v.  Houston.  3  Johns. 
Cas.  248:  Watkinson  v.  Inglesby,  5 
Johns.  386;  Russell  v.  Lytle.  6  Wend. 
390,  22  Am.  Dec.  537;  Bank  v.  De 
Grauw,  23  Wend.  342,  35  Am.  Dec. 
569;  Fey  toe's  Case,  9  Co.  79;  Walker 
V.  Seaborne,  1  Taunt.  526;  Fitch  v. 
Sutton,  5  East,  230;  Tuckerman  v. 
Newhall,  17  Mass.  581;  Spruneberger 
V.  Dentler,  4  Watts,  126;  Rising  v. 
Patterson,  5  Whart.  316;  Daniels  v. 
Hatch,  21  N.  J.  L.  391,  47  Am.  Dec. 
109;  Bayley  v.  Homan,  3  Bing.  N.  C. 
915;  Allies  v.  Probyn,  5  Tyrwh.  1079; 
Edwards  v.  Chapman,  1  M.  &  W.  231; 
CoUingbourne  v.  Mantel!,  5  id.  292; 
Gabriel  v.  Dresser,  15  C.  B.  622; 
Brown  v.  Perkins,  1  Hare,  564;  Hel- 
ton V.  Noble,  83  CaL  7,  23  Pac.  Rep. 
58;  Gulf,  etc.  R.  Co.  v.  Gordon,  70 
Tex.  80,  7  S.  W.  Rep.  695;  Burgess  v. 
Denison  Paper  Manuf.  Co.,  79  Me.  266, 
9  Atl.  Rep.  726;  San  ford  v.  Abrams, 
24  Fla.  181,  2  So.  Rep.  373;  Hoxsie  v. 
Empire  Lumber  Co..  41  Minn.  548,43 
N.  W.  Rep.  476:  Johnson  v.  Hunt,  81 


Ky.  321;  Schlitz  v.  Meyer,  61  Wis.  418. 
21  N.  W.  Rep.  243:  Fink  v.  Joseph,  2 
New  Mex.  138.  See  §  240. 

2  Woodward  v.  Miles.  24  N.  H.  289; 
Watkinson  v.  Inglesby,  5  Johns.  386; 
Eaton  V.  Lincoln,  13  Mass.  424;  Sea- 
man V.  Haskins,  2  Johns.  Cas.  195; 
Heaton  v.  Angier,  7  N.  H.  397,  28  Am. 
Dec.  353;  Good  v.  Cheesman,  2  B.  & 
Ad.  328;  Reeves  v.  Hearne,  1  M,  &  W, 
323;  Buttigieg  v.  Booker,  9C.  B.  089; 
Kromer  v.  Heim,  75  N.  Y.  574,  31  Am. 
Rep.  491;  McCreery  v.  Day,  119  N.  Y. 
1,  16  Am.  St.  793,  23  N.  E.  Rep.  198, 
6  L.  R.  A.  503;  Bennett  v.  Hill,  14  R. 
L  432. 

3  Levy  V.  Very,  12  Ark.  148;  Ligon 
V.  Dunn,  6  Ired.  133. 

*  McCreery  v.  Day,  supra;  Capital 
City  Mutual  F.  Ins.  Co.  v.  Detwiler, 
23  111.  App.  656:  Hastings  v.  Love- 
joy,  140  Mass.  261,  54  Am.  Rep.  462, 
2  N.  E.  Rep.  776. 

5  Barelli  v.  O'Conner,  6  Ala,  617.  It 
is  said  to  be  a  general  rule  that  a 
simple  contract  may,  before  breach, 
be  waived  or  discharged  without 
deed  and  without  consideration;  but 
after  breach  there  can  be  no  dis- 
charge except  by  deed  or  upon  suffi- 
cient consideration.  Byles  on  Bills, 
168.  See  Foster  v.  Dawber,  6  Ex, 
838;  Dobsou  v.  Espei,  2  H.  &  N.  79. 


650 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  253. 


[433]  grade  of  the  contract  which  is  broken,  it  may  be  satis- 
fied by  matter  in  jpais^  and  is  subject  to  the  defense  of  accord 
and  satisfaction.  That  is  a  good  defense  to  an  action  for 
breach  of  covenant.^  And  the  modern  doctrine  is  that  it  is 
good  to  an  action  on  a  judgment.* 


Section  4. 


KELEASB. 


§  253.  Definition.  A  release  of  a  chose  in  action  is  an  im- 
mediate technical  discharge  of  it  by  deed.^  It  operates  di- 
rectly upon  the  demand  to  extinguish  it,  and  must  be  pleaded 


This  is  doubtless  true  of  contracts 
mutually  executory.  In  such  con- 
tracts mutual  waiver  is  a  rescission. 
See  1  Smith's  Lead.  Cas.  *465.  If  the 
consideration  be  executed  on  one 
side,  the  executory  obligation  of  the 
other  party  founded  thereon  cannot 
be  waived  without  consideration,  or 
such  act  of  renunciation  as  would 
amount  to  a  release,  unless  it  has 
been  acted  upon.-  See  upon  this 
general  subject.  Blood  v.  Enos,  12 
Vt.  625;  Johnson  v.  Reed,  9  Mass.  78, 6 
Am.  Dec.  36;  Rogers  v.  Atkinson,  1 
Ga.  12;  Richardson  v.  Cooper,  25  Me. 
450:  Cuff  V.  Peun,  1  M.  &  S.  21;  Goss 
v.  Nugent,  5  B.  &  Ad.  58;  Cummings 
V.  Arnold,  3  Met.  48G.  37  Am.  Dec. 
155;  Weld  v.  Nichols,  17  Pick.  538; 
Ward  v.  Walton,  4  Ind.  75;  Low  v. 
Forbes,  18  111,  568;  Crowley  v.  Vitty, 
7  Ex.  322;  Grafton  Bank  v.  Wood- 
ward, 5  N.  H.  99,  20  Am.  De&  566; 
Payne  v.  New  South  Wales  Coal  Co., 
10  Ex.  291;  Kellogg  v.  Olmsted,  28 
Barb.  96;  Hunt  v.  Barfield,  19  Ala. 
117;  Thurston  v.  Ludwig,  6  Ohio 
St.  1;  Adams  v.  Nichols,  19  Pick. 
275,  31  Am.  Dec.  1P7;  McKee  v.  Mil- 
ler, 4  Blackf.  222;  Harrison  v.  Close, 
2  Johns.  448,  3  Am.  Dec.  444;  Sard  v. 
Rhodes,  1  M.  &  W.  155;  Crawford  v. 
Millspaugh,  13  Johns.  87;  Seymour 
v.  Minturn,  17  id.  169,  8  Am.  Dec. 
380;   Foster  v.   Daw  bar,   6  Ex.  839; 


King  V.  Gillett,  7  K  &  W.  55;  Lang- 
den  v.  Stokes,  Cro.  Car.  383. 

The  technical  distinction  between 
a  satisfaction  before  or  after  the 
breach  is  disregarded,  and  a  new 
parol  agreement  followed  by  its  act- 
ual performance,  whether  made  or 
executed  before  or  after  the  breach, 
is  a  good  accord  and  satisfaction  of 
a  covenant.  McCreery  v.  Day,  119 
N.  Y.  1,  16  Am.  St.  793,  23  N. 
E.  Rep.  198,  6  L.  R.  A.  503,  and 
cases  cited;  Hastings  v.  Lovejoy,  140 
Mass.  261,  54  Am.  Rep.  462,  2  N.  K 
Rep.  776. 

1  Payne  v.  Barnet,  2  A.  K.  Marsh. 
312;  Strang  v.  Holmes,  7  Cow.  224; 
Keeler  v.  Salisbury,  33  N.  Y.  648; 
United  States  v.  Howell,  4  Wash.  C. 
C.  620. 

^  Savage  v.  Everman,  70  Pa.  315, 
10  Am.  Rep.  676;  Jones  v.  Ransom,  3 
Ind.  327;  Reid  v.  Hibbard,  6  Wis. 
175;  Farmers'  Bank  v.  Groves,  12 
How.  51;  McCullough  v.  Franklm 
Coal  Co.,  21  Md.  256;  Campbell  v. 
Booth,  8  Md.  107;  Le  Page  v.  McCrea, 
1  Wend.  164, 19  Am.  Deo.  469;  Brown 
V.  Feeter,  7  Wend.  301;  Evans  v. 
Wells,  22  id.  324,  341;  Boyd  v. 
Hitchcock,  20  Johns.  76,  11  Am. 
Dec.  247;  Witherby  v.  Mann,  11 
Johns.  518;  Baum  v.  Buntyn,  62 
Miss.  10. 

3  A  parol  release  of  a  money  judg- 


§  254.]  EELEASE.  C51 

as  a  release.'  But  a  release  implies  a  consideration,  and  there- 
fore the  demand  is  inferentially  satisfied.^  The  cancelment  of 
a  released  demand,  however,  is  not  the  consequence  of  the 
supposed  satisfaction,  but  the  direct  effect  of  the  release.  The 
release  is  not  merely  evidence  of  the  extinguishment,  but  is 
itself  the  extinguisher.'^  Though  it  recites  only  a  nominal 
consideration,*  or,  under  statutes  allowing  the  consideration 
of  sealed  instruments  to  be  inquired  into,  it  is  proved  [l-M] 
to  -be  only  nominal,  the  release  will  still  operate  to  extinguisli 
the  claim  to  which  it  relates.^  An  agreement  by  one  of 
several  defendants  not  to  defend  a  suit  supports  a  release  as 
to  him.^  A  release  is  binding  notwithstanding  the  party  re- 
leased does  not  keep  his  promise  to  give  the  other  employ- 
ment, that  being  part  of  the  consideration  for  the  release;' 
and  so  if  the  contract  re-employing  an  injured  servant  does 
not  fix  the  time  the  employment  shall  continue,  the  fault  be- 
ing his,  and  he  is  discharged.^  If  there  are  two  debts  in  ex- 
istence, established  and  known,  the  payment  of  one  is  not  a 
consideration  for  the  release  of  the  other.^ 

§  254.  Ditters  from  accord  and  satisfaction.    A  seal  is  not 
necessary  to  render  a  release  and  discharge  of  a  liability  ef- 

ment  in  consideration  of  the  receipt  N.  BL  229,  17  Am.  Dec.  419;  Gully  v. 

of  a  less  sum  than  it  calls  for  is  in-  Grubbs,  1  J.  J.  Marsh.  387;  Maclary 

valid,  tliough  the  release  be  indorsed  v.  Reznor,  3  Del.  Ch.  445. 

upon   the   execution    issued  in   the  5  Eckman  v.  Chicago,  etc.  R.  Co., 

original  action.  Weber  v.  Couch,  134  169  111.  312,  48  N.  E.  Rep.  496;  Stearns 

Mass.  26,  45  Am.  Rep.  274.  v.  Tappen,  5  Duer,  294.     See  Davis  v. 

Voluntary  declarations  by  a  ci-ed-  Boveker,  2  Nev.  487;  Green  v.  Lang- 

itor   of   an    intention   to   release  a  don,  28  Mich.  222. 

debtor,  unless  accompanied  by  some  A  cause  of  action  may  be  released 

act  vi^hich  amounts  to  a  release  at  upon  a  consideration  coming  from  a 

law,  will  not  operate  as  an  equitable  third  person.     Compton  v.  Elliott, 48 

release.     Irwin  v.  Johnson,  36  N.  J.  N.  Y.  Super.  Ct.  211. 

Eq.  347,  overruling  Leddel  v.  Starr,  ^  McClung  v.  Mabry,  2  Tentu  Cas. 

20  id.  274.  91. 

1  Corbett  v.  Lucas,  4  McCord,  323.  "^  Szymanski  v.  Chapman,  45  A  pp. 

2  Warner  v.  Durham,  Hill  &  Denio.  Div.  369,  61  N.  Y.  Supp.  310. 

206;  Matthews  v.  Chicopee    Manuf.  8  Xexas  Midland  R.  v.  Sullivan,  20 

Co.,    3   Robert.    711;    MoAIlester  v.  Tex.  Civ.  App.  50,  48  S.  W.  Rep.  598; 

Sprague,  34  Me.  296.  East  Line,  etc.    R.  Co.   v.  Scott,  73 

3  McCrea  v.  Purmort,  16  Wend.  460,  Tex.  70,  10  S.  W.  Rep.  99,  13  Am.  St. 
474.  753. 

*  Wilt  v.  Franklin,  1    Bin.  502,  2        » Fire  Ins.  Ass'n  v.  Wickham,  141 
Am.  Dec.  474;  Morse  v.  Shattuck,  4    U.  S.  564,  580,  12  Sup.  Ct.  Rep.  84. 


G52  CONVENTIONAL   LIQUIDATIONS   AND   DISCHARGES.       [§  255. 

fectual  if  the  agreement  embraces  the  demand  and  is  upon  a 
sufficient  consideration.  It  can  operate  to  extinguish  the  de- 
mand by  way  of  accord  and  satisfaction,'  and  in  this  form  a 
debtor  may  avail  himself  of  a  release  made  by  an  agent  in  his 
own  name.2  A  mere  receipt  may  have  such  an  effect;  but  it 
is  only  prima  facie  evidence  of  payment.'  In  Connecticut  a 
receipt  approximates  in  its  effect  to  a  release.'*  The  general 
rule,  however,  is  that  a  mere  receipt  is  but  evidence  of  the 
pajnnent  which  it  states,  and  is  open  to  contradiction.*  A  re- 
lease not  under  seal,  and  without  consideration,  is  void.^  Nor 
will  equity  compel  a  creditor  to  affix  a  seal  to  a  release  not 
founded  on  a  consideration,  even  upon  an  averment  that  the 
seal  was  omitted  by  mistake.^ 

§  255.  Extrinsic  evidence  and  construction.  Extrinsic 
proof  is  not  allowed  to  restrict  a  release  of  all  demands,  by 
showing  it  was  not  intended  to  cover  particular  ones  within  its 
terms  ;^  but  according  to  some  authorities  this  rule  is  operative 
only  between  the  parties  to  the  contract,  and  a  joint  tort-feasor 
is  not  a  party  to  a  release  given  his  co-wrongdoer,  and  may  con- 
tradict it  by  parol  evidence.^     The  weight  of  authority  seems 

1  Farmers'  Bank  v.  Blair,  44  Barb.  1  Am.  St.  721;  Shoemaker  v.  Stiles, 
641;  Corbett  v.  Lucas,  4  McCord,  323;  103  Pa.  549;  Bulwlnkle  v.  Cramer,  27 
Coon  V.  Knap,  8  N.  Y.  402,  59  Am.  S.  C.  376,  8  S.  E.  Rep.  776, 13  Am.  St. 
Dec.  502;  Lewiston  v.  Junction  R.  645;  Hill  v.  Durand,  58  Wis.  160,15 
Co.,  7  Ind.  597.  N.  W.  Rep.  390;  2  Jones  on  Evidence, 

2  Evans  v.  Wells,  22  Wend.  324  §  502  et  seq. 

3  Thompson  v.  Fausate,  1  Pet.  C.  C.  '^  Crawford  v.  Millspaugh,  13  Johns. 
182;  Maze  v.  Miller,  1  Wash.  C.  C.  87;  Seymour  v.  Minturn,  17  id.  169,  8 
328.  Am.  Dec.  380;  Dewey  v.  Derby,  20 

*Hurd  V.  Blackman,  19  Conn.  177;  Johns.  462;   Barnard  v.  Darling,  11 

Bishop  V.  Perkins,  id.  300;  Tucker  v.  Wend.  28. 

Baldwin,  13  id.  136,  33  Am.  Dec.  384;  ■?  Jackson   v.   Stackhouse,   1   Cow. 

Bonnell  v.  Chamberlin,  26  Conn.  487.  122,  13  Am.  Dec  514. 

^Danziger  v.  Hoyt,  46  Hun,  270;  ^Qreen  v,  Chicago,  etc.  R.  Co.,  35 
Coon  V.  Knap,  supra;  Egieston  v.  C.  C.  A.  68,  92  Fed.  Rep.  873;  Denver, 
Knickerbacker,  6  Barb.  458;  Houston  etc.  R.  Co.  v.  Sullivan,  21  Colo.  302, 
v.  Shindler,  11  id.  36;  White  v.  41  Pac.  Rep.  501;  Deland  v.  Ames- 
Parker,  8  id.  48;  Thompson  v.  Max-  bury  Manuf.  Co.,  7  Pick.  244;  West 
well,  74  Iowa,  415,  38  N.  W.  Rep.  125;  Boylston  Manuf.  Co.  v.  Searle,  15  id. 
Grant  v.  Frost,  SO  Me.  202,  13  Atl.  225;  Rice  v.  Woods,  21  id.  30.  See 
Rep.  881;  Hart  v.  Gould.  62  Mich.  Van  Brunt  v.  Van  Brunt,  3  Edw.  Ch. 
262,  28  N.  W.  Rep.  831;  Elsbarg  v.  14;  Hoes  v.  Van  Hoesen,  1  Barb.  Ch. 
Myrman,  41  Minn.  541,  43  N,  W.  Rep.  379. 

572;   McFadden  v.  Missouri  Pacific  9  0'Sheav.  New  York,  etc.  R.  Co., 

R.  Co.,  92  Mo.  343,  4  S.  W.  Rep.  208,  44  C.  C.  A.  601,  105  Fed.  Rep.  559. 


§  255.]  KELEASE.  053 

to  be  against  the  exception  to  the  general  rule.'  A  release 
may  extinguish  a  particular  demand,  although  it  was  not  in 
the  minds  of  the  parties  at  the  time  of  its  execution.  It  will 
be  held  to  embrace  demands  which  are  within  its  terms, 
whether  contemplated  or  not.'^  Eut  under  a  statute  to  [435] 
the  effect  that  a  general  release  does  not  extend  to  ckiims 
which  the  creditor  does  not  know  or  suspect  to  exist  in  his 
favor  at  the  time  of  executing  the  release,  which  if  known  by 
him  must  have  materially  affected  his  settlement  with  his 
debtor,  a  release  does  not  extend  to  claims  of  which  the  debtor 
was  ignorant  through  his  ignorance  of  law.^  In  construing  re- 
leases, however,  general  words,  and  even  those  the  most  com- 
prehensive, may  be  limited  to  particular  demands,  where  it 
appears  by  the  consideration,  the  recitals  and  the  nature  and  cir- 
cumstances of  the  demands,  to  one  or  more  of  which  it  is  pro- 
posed to  apply  the  release,  that  such  restriction  was  intended 
by  the  parties.*  And  even  where  the  word  "release  "  is  used,  and 
the  instrument  is  under  seal,  if  it  be  apparent  from  the  whole 
of  it  and  the  circumstances  of  the  case  that  the  parties  did  not 
intend  a  release,  such  intention  as  may  appear  will  prevail,  and 
the  instrument  may  be  construed  simply  as  an  agreement  not 
to  charge  the  person  to  whom  it  is  executed.^  Where  the  re- 
lease for  personal  injuries  specified  the  injuries  and  expressed 
that  it  also  covered  all  manner  of  actions,  causes  of  action, 
claims  and  demands  whatever  from  the  beginning  of  the  world 
to  this  day,  the  particular  recital  was  a  qualification  of  the 

1  Brown  V.  Cambridge,  3  Allen,  474;  not    be    added    to    or    taken  from. 

Goss  V.  Ellison,  136  Mass.  503;  Den-  Rowe  v.  Rand,  111  Ind.  206,  12  N.  E. 

ver,  etc.  R.  Co.  v.  Sullivan,  21  Colo.  Rep.  377.     If  only  general  words  are 

302,  41  Pac.  Rep.  501.  used    the   instrument   will    be  con- 

2 Hyde  V.  Baldwin,  17  Pick.  307.  strued    most    strongly    against    its 

3  Rued  V.  Cooper,  119  CaL  463,  51  maker.     Ibid. 

Pac.  Rep.  704.  A  release  will  not  be  given  retro- 

*  Jeffreys  v.  Southern  R.  Co.,  127  active  effect  unless  its  terms  require 

N.  C.  377,  37  S.  E.  Rep.  515;  Rich  v.  it.     Hughson  v.  Richmond  &  D.  R 

Lord,  18  Pick.  322.  Co.,  2  D.  C.  App.  Cas.  98. 

A  release  will  be  construed  from  ^  Solly  v.  Forbes,  2  Brod.  &  Bing. 

the  standpoint  occupied  by  the  par-  46;  1  Par  on  Cont.  28.     See  Jackson 

ties  to  it  when  it  was  executed;  in  v.  Stackhouse,  1  Cow.  122,   13   Am. 

order  to  do  this  extrinsic  evidence  is  Dec.  514;  Mclntyre  v.  Williamson,  1 

admissible  to  show  the  circumstances  Edw.  34;  Kirby  v.  Turner,  Hopk.  309; 

then  existing,  and  the  nature  of  tlie  Matthews  v.  Chicopee  Manuf.  Co.,  3 

transaction.     The  words  used  must  Robert.  711. 


C51  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  255. 

general  words,  and  these  were  limited  by  the  specific  recital  of 
the  injuries  that  the  payment  was  made  to  cover;  hence  an  in- 
jury unknown  to  both  parties  when  the  release  was  made  was 
not  included  in  it.^  A  release  of  all  claims  for  damages  by 
reason  of  the  construction  of  a  railroad  upon  the  lands  of  the 
releasor  cuts  off  his  right  and  any  right  of  his  lessee  or  grantee 
to  recover  for  injuries  resulting  from  the  careful  and  skilful 
construction  of  the  road,  and  carries  with  it  to  the  company 
the  right  to  do  all  incidental  acts  essential  to  the  enjoyment  of 
the  right  granted ;  ^  and  an  agreement  on  the  part  of  the  land- 
owner to  sell  a  railroad  company  a  right  of  way  across  his 
land  covers  all  damages  for  which  the  vendor  is  entitled  to 
compensation,'  unless  they  result  from  negligence  and  occur 
after  the  release  is  given.*  A  covenant  to  discontinue  a  pend- 
ing action  at  law  and  to  release  all  claim  or  right  of  action  for 
present  or  future  damages  arising  from  a  specified  cause  bars 
all  judicial  proceedings  for  that  cause  —  a  suit  for  an  injunc- 
tion as  well  as  an  action  for  damages.^  In  determining  the 
scope  to  be  given  a  release  the  consideration  for  it  will  have 
great  influence;  if  that  is  nominal  or  small  as  compared  with 
the  rights  surrendered,  and  the  generality  of  the  language 
used  indicates  that  it  affects  rights  of  which  the  party  who  ex- 
ecuted it  was  ignorant,  equity  will  restrict  its  effect  to  that  in- 
tended.^ The  obligation  imposed  upon  a  railroad  company  to 
fence  its  road  cannot  be  got  rid  of  by  any  release  it  may  ob- 
tain from  the  owner  of  the  land  over  which  the  road  is  con- 
structed.'' 

1  Union  Pacific  R  Co.  v.  Artist,  9  'Kemp  v,   Pennsylvania    R,    156 

C.  C.  A.  14,  60  Fed.  Pep.  365,  23  L.  R.  Pa.  430,  26  Atl.  Rep.  1074* 

A.  581;  Lumley  v.  Wabash  R.  Co.,  22  <  Brown  v.  Pine  Creek  R.  Co.,  183 

C.  C.  A.  60,  76  Fed.  Rep.  66.     See  Mc-  Pa.  38,  38  Atl.  Rep  401;  Missouri,  etc. 

Carty  v.  Houston,  etc.  R  Co.,  21  Tex.  R.  Co.  v.  Hopson,   15  Tex.  Civ.  App. 

Civ.  App.  568,  54  S.  W.  Rep.  421.  126.  39  S.  W.  Rep.  384.     See  g  1090. 

2DenverU.  &  P.  R.   Co.  v.  Barsa-  ^  Kennerty  v.  Etiwan    Phosphate 

loux,   15  Colo.  297,  25  Pac.  Rep.  165;  Co.,  17  S.  C.  411,  43  Am.  Rep.  607. 

Burrow  v.  Terre  Haute  &  L.  R  Co.,  "  Blair  v.  Chicago  &  A.  R  Co.,  89 

107  Ind.  432,  8  N.  E.  Rep.  167;  Hoffe-  Mo.  383;  Lusted  v.  Chicago  &  N.  R 

ditz  v.  Railroad  Co.,  129  Pa.  264,  18  Co.,  71  Wis.  391,  86  N.  W.  Rep.  857; 

Atl.  Rep.  125;  Updegrove  v.  Pennsyl-  Kirchner  v.  New  Home  Sewing  Ma- 

vania.  etc.  R  Co.,  132  Pa.  540,  19  Atl.  chine   Co.,    59  Hun,   186,   13  N.   Y. 

Rep.  283,  7  L.  R.   A.   213.     Compare  Supp.  473. 

St.  Louis,  etc.  R  Co.  v.  Hurst,  25  IIU  ^Cincinnati,  etc.   R   Co.    v.  Hild- 

App.  98.  reth,  77  Ind.  504 


§§  256,  257.]  RELEASE.  655 

§  256.  Who  may  execute.  A  release  will  be  effectual  to 
discharge  a  debt  or  liability  within  its  terras,  although  it  is 
not  executed  by  all  in  whom  the  right  of  action  is  vested,  and 
though  it  is  to  only  one  of  several  persons  jointly  liable.  Where 
several  must  join  as  plaintiffs  in  bringing  an  action  a  release 
of  the  cause  of  action  by  one  of  them  is  a  bar.*  One  partner 
may,  without  being  specially  authorized  thereto,  bind  his  firm 
by  a  sealed  release  of  a  partnership  claim.^  The  right  to  exe- 
cute a  release  cannot  be  exercised  to  the  detriment  of  third 
persons.  If  a  grantee  by  a  covenant  in  a  deed  has  assumed 
the  payment  of  a  mortgage  upon  the  premises,  the  grantor 
cannot,  after  the  mortgagee  has  accepted  the  grantee  as  his 
security,  and  without  the  mortgagee's  assent,  release  the 
grantee.^  The  person  who  is  entitled  to  the  damages  resulting 
from  the  death  of  another  may  release  the  right  of  action 
therefor.*  If  a  ward,  after  attaining  majority,  makes  a  settle- 
ment with  his  guardian  without  the  mtervention  of  the  court, 
and  after  having  received  the  amount  agreed  to  be  coming  to 
him  gives  a  release  to  the  guardian,  he  cannot  thereafter  trouble 
either  court  or  guardian  unless  he  shows  that  he  has  been  preju- 
diced by  the  guardian's  fraud.® 

§  257.  Effect  when  executed  by  or  to  one  of  several 
claiming  or  liable.  One  of  several  joint  creditors  may  receive 
payment  or  satisfaction  and  discharge  the  entire  obligation, 
and  the  others  will  be   bound.®    But  the  case  must  be  free 

lOsborn  v.  Martha's  Vineyard  R.  Mason,  206;  Wiggin  v.  Tudor,  23  Pick, 

Co..  140  Mass.  549,  5  N.  E.  Rep.  486;  4.34;  Wilkinson  v.  Lindo,  7  M.  &  W, 

Pattison  v.  Skillman,  48  N.  J.  Eq.  392,  81;  Gibson  v.  Winter,  5  B.  &  Ad.  96. 

13  Atl.  Rep.  808;  Wallace  v.  Kelsall,  2  Allen  v.  Cheever,  61  N.  H.  32. 

7  M.  &  W.  264;  Clark  v.  Dinsmore,  3  Giflford  v,  Corrigan.  117  N.  Y.  2-57, 

5  N.  H.  136;  Kimball  v.  Wilson,  3  id.  15  Ana.  St.  508,  22  N.  K  Rep.  756,  6 

96,  14  Am.  Dec.  342;  Austin  v.  Hall,  L.  R.  A.  610. 

13  Johns.  286, 7  Am.  Dec.  376;  Decker  *  Stuebing  v.  Marshall,  10  Daly,  406. 

V.  Livingston,  15  Johns.  479;  Sher-  See  §6. 

man  v.  Ballou,  8  Cow.  304;  Pierson  ^  Luken's  Appeal,  7  W.  &  S.  48; 

V.  Hooker,3Johns.  68,3  Am.  Dec.  467;  Alexander's  Estate,  156  Pa.  368,  27 

Napier    v.    McLeod,  9  Wend.    120;  AtL  Rep.  18. 

Bulkley  v.   Dayton,   14  Johns.   387;  e  Hall  v.  Gray,  54  Me.  230;  Piersoa 

Murray  v.  Blatchford,  1  Wend.  583,  v.  Hooker,  3  Johns.  68,  8  Am.  Dec. 

19  Am.  Dec.  537.     See  Gram  v.  Cad-  467;  Kimball  v.  Wilson.  3  N.  H.  96, 

well,  5  Cow,  489;  Bruen  v.  Marquand,  14  Am.  Dec.  342;  Lumbermen's  Ins. 

17  Johns.  58;  Halsey  v.  Fairbanks,  4  Co.  v.  Preble,  50  III  333. 


656 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  257, 


[436]  from  fraud  on  the  co-creditors  who  do  not  join.^  Where^ 
however,  the  release  on  its  face  purports  to  be  a  satisfaction 
of  only  the  portion  of  the  debt  or  claim  belonging  to  the- 
party  executing  it,  it  will  have  effect  only  to  that  extent. 
The  demand  will  then  be  deemed  severed  with  the  debtor's 
consent,  and  a  separate  action  may  be  brought  for  the  residue 
by  the  creditors  entitled  thereto.^  And  such  is  the  effect  of  a 
general  release  by  one  of  two  plaintiffs  of  all  actions,  debts, 
claims  and  demands  which  the  plaintiff  has  against  the  de- 
fendant.^ A  release  by  the  nominal  creditor  is  not  good 
against,  but  a  fraud  on,  the  real  party  in  interest.  If  the 
party  taking  it  and  seeking  to  avail  himself  of  it  was  aware 
that  the  releasor  had  no  interest  in  the  demand  released,  the 
instrument  will  be  disresfarded.* 


1  Id.  In  Upjohn  v.  Ewing,  2  Ohio 
St.  13,  it  was  held  that  one  or  less 
than  all  of  several  joint  creditors, 
between  whom  no  partnership  ex- 
ists, cannot  release  the  common 
debtor,  so  as  to  conclude  the  co- 
creditors  who  do  not  assent  to  such 
release.  Tliough  they  may  thus  de- 
feat an  action  at  law,  in  which  all 
the  joint  creditors  must  join,  it  does 
not  follow  that  a  recovery  in  equity, 
where  no  such  jomder  is  necessary, 
may  not  be  had.  See  Emerson  v. 
Baylies,  19  Pick.  55;  3  Par.  on  Cont. 
617  and  note. 

2  In  Holland  v.  Weld,  4  Me.  255, 
there  was  a  contract  by  one  with 
four  persons  that  he  would  clear  cer- 
tain obstructions  from  a  river.  Af- 
terwards one  of  the  four  executed 
to  him  a  release  from  all  liability  to 
such  party,  making  the  release  for 
any  damage  sustained  in  conse- 
quence of  any  past  or  future  non- 
performance. Mellen,  C.  J.,  said: 
"This  release,  in  its  terms,  discharges 
Weld  from  his  liabilities  to  Austin 
only,  for  any  damage  sustained  by 
him.  To  give  it  any  more  broad  and 
extensive  operation  would  be  con- 
trary to  the  expressed  intention  of 
both  of  the  parties.  According  to 
Cole  V.  Knight,  3  Mod.  277,  and  Ly- 


man V.  Clark,  9  Mass.  235,  a  release 
should  be  confined  to  the  object 
which  was  in  view,  and  on  which  it 
was  plainly  the  intention  of  all  that 
it  should  operate.  The  contract  was 
originally  joint;  and  had  no  release 
been  given  by  Austin,  an  action 
must  necessarily  have  been  brought 
in  the  name  of  all  the  four  against 
the  defendant;  but  as  he  has  ac- 
cepted the  release,  and  availed  him- 
self of  it  so  far  as  he  was  once  liable 
to  Austin,  he  has  by  this  act  con- 
verted the  joint  contract  into  a  sev- 
eral one;  and  he  must  now  permit 
the  plaintiff  and  the  other  two  prom- 
isees to  consider  the  contract  in  that 
light,  and  assert  their  claims  against 
him  accordingly.  This  course  is 
manifestly  just  and  sanctioned  by 
settled  principles."  Baker  v.  Jewell, 
6  Mass.  460,  4  Am.  Dec.  162;  Carring- 
ton  V.  Crocker,  37  N.  Y.  336;  Farm- 
alee  v.  Lawrence,  44  111.  405. 

3  Crafts  V.  Sweeney,  18  R  1. 730,  30 
Atl.  Rep.  658;  Boston  &  M.  R  v. 
Portland,  etc.  R  Co.,  119  Mass.  498, 
20  Am.  Rep.  338. 

4  Gram  v.  Cadwell,  5  Cow.  489; 
Legh  V.  Legh,  1  Bos.  &  P.  447:  1  Par. 
ou  Cont.  27;  2  id.  617,  and  note;  Timan 
V.  Leland,  5  Hill,  237. 

A  surety  paying  the  debt  may  be 


§  257.] 


RELEASE. 


657 


A  release  of  one  of  several  joint  or  joint  and  several  debt- 
ors or  wrong-doers  discharges  all.  The  deed  is  taken  most 
strongly  against  the  releasor,  and  is  conclusive  evidence  that 
he  has  been  satisfied.'  This  rule  applies  to  wrong-doers 
though  there  was  no  concert  of  action  among  them,  if  the  in- 
jury was  single;^  and  the  effect  is  the  same  in  some  jurisdic- 
tions, though  a  claim  is  made  against  one  who  was  not  in 
fact  liable,  if  he  has  given  a  consideration  for  a  release.'    But 


subrogated  notwithstanding  a  legal 
release  of  it;  and  an  intention  to  be 
subrogated  will  be  presumed  from 
the  mere  act  of  paying.  Neilson  v. 
Fry.  16  Ohio  St.  552;  Dempsey  v. 
Bush,  18  id.  376. 
1  Hale  V.  Spaulding,  145  Mass.  483, 

1  Am.  St.  475,  14  N.  E.  Rep.  534  (the 
words  used  were  "  in  full  satisfaction 
for  his  liability");  McClung  v.  Mabry, 
8  Tenn.  Cas.  91 ;  O'Shea  v.  New  York, 
etc.  R  Co.,  44  C.  C.  A.  601,  105  Fed. 
Rep.  559;  Denver,  etc.  R.  Co.  v.  Sul- 
livan. 21  Colo.  302,  41  Pac.  Rep.  501; 
Hartigan  v.  Dickson,  81  Minn.  284, 
83  N.  W.  Rep.  1091;  Clark  v.  Mallory, 
185  111.  227,  56  N.  E.  Rep.  1099;  De- 
long  V.  Curtis,  35  Hun,  94;  Urton  v. 
Price,  57  Cal.  270;  Ellis  v.  Esson,  50 
Wis.  138,  6  N.  W.  Rep.  518,  36  Am. 
Rep.  830;  Lamb  v.  Gregory,  12  Neb. 
506,  11  N.  W.  Rep.  755  (joint  judg- 
ment debtors);  Chapin  v.  C,  &  E.  L 
R.  Co.,  18  111.  App.  47;  Gunther  v. 
Lee,  45  Md.  60,  24  Am.  Rep.  504; 
Coke  Litt.  232;  Bac.  Abr.,  Release,  9; 
Bronson  v.  Fitzhugh,  1  Hill,  185; 
Rowley  v.  Stoddard,  7  Johns.  207; 
Catskill  Bank  v.  Messenger,  9  Cow. 
37;  Hoffman  v.  Dunlop,  1  Barb.  185; 
Parsons  v.  Hughes,  9  Paige,  591; 
Ward  V.  Johnson,  13  Mass.  148;  Tuck- 
erman  v.  Newhall,  17  id.  581;  Wiggin 
V.  Tudor,  23  Pick.  434;  Houston  v. 
Darling.  16  Me.  413:  Ruble  v.  Turner, 

2  Hen.  &  M.  39;  Cornell  v.  Masten, 
35  Barb.  157;  Matthews  v.  Chicopee 
Manuf.  Co.,  3  Robert.  711  ;Mottram  v. 
Mills,  2  Sandf.  189;  Bloss  v.  Plyraale, 

Vol.  1  —  43 


3  W.  Va.  393,  100  Am.  Dec.  752; 
Brown  v.  Marsh,  7  Vt  320;  Arm- 
strong V.  Hayward,  6  Cal.  183;  Frink 
V.  Green,  5  Barb.  455;  Rice  v.  Web- 
ster, 18  111.  321;  Prmce  v.  Lynch,  38 
CaL  528;  Hunt  v.  Terril's  Heirs,  7 
Marsh.  68;  Dean  v.  Newhall,  8  T.  R. 
168;  Hutton  v.  Eyre,  6  Taunt.  289; 
Lacey  v.  Kinaston,  1  Ld.  Raym.  688, 
12  Mod.  551;  .Johnson  v.  Collins,  20 
Ala,  435;  McAllister  v.  Dennin.  27 
Mo.  40.  See  as  to  the  effect  of  a  re- 
lease to  one  of  two  joint  tort  feasors 
under  the  statute  of  Kansas,  Hager 
V.  McDonald,  65  Fed.  Rep.  200. 

2  Stone  v.  Dickinson,  5  Allen,  29,  81 
Am.  Dec.  727;  Brown  v.  Cambridge, 
3  Allen,  474;  Goss  v.  Ellison,  136 
Mass.  503;  Aldrich  v.  Parnell,  147  id. 
409,  18  N.  E.  Rep.  170;  Seither  v. 
Philadelphia  Traction  Co.,  125  Pa. 
397,  4  L.  R.  A.  54,  17  Atl.  Rep.  338; 
Tompkins  v.  Clay  Street  R.  Co.,  66 
Cal.  163,  4  Pac.  Rep.  1165. 

3Leddy  v.  Barney,  139  Masa  394; 
Seither  v.  Philadelphia  Traction  Co., 
Tompkins  v.  Clay  Street  R  Co., 
supra;  Hartigan  v.  Dickson,  81  Minn. 
284,  83  N.  W.  Rep.  1091;  Miller  v. 
Beck,  108  Iowa,  575,  79  N.  W.  Rep. 
344.  Contra,  Wardell  v.  McConnell, 
25  Neb.  558,  41  N.  W.  Rep.  548;  Mis- 
souri, etc.  R  Co.  V.  McWherter,  59 
Kan.  345,  53  Pac.  Rep.  135,  citing 
Bloss  V.  Ply  male,  3  W.  Va.  393:  Wil- 
son V.  Reed,  3  Johns.  175;  Snow  v. 
Chandler,  10  N.  H.  92:  Bell  v.  Perry, 
43  Iowa,  368;  Owen  v.  Brockschmidt, 
54  Mo.  285;  Pogel  v.  Meilke,  60  Wi& 


658  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  257. 

if  a  release  is  given  without  the  payment  of  any  part  of  the 
damages  sustained  to  one  who  is  not  a  joint  wrong-doer  it 
will  not  necessarily  release  another  who  may  have  had  some 
connection  with  the  wrong.^  A  release  is  to  be  construed  ac- 
cording to  the  intention  of  the  parties,  and  if  it  shows  that  no 
satisfaction  was  given  or  received  by  or  from  those  released; 
that  the  intention  was  simply  to  discharge  them  from  the  ac- 
tion because  they  were  not  liable,  it  will  not  affect  the  rights 
of  the  injured  party  against  him  who  was  in  fact  liable,  the 
fact  that  it  was  not  intended  to  release  him  being  shown 
on  the  face  of  the  release.-  The  general  rule  that  the  release 
of  one  of  several  joint  or  joint  and  several  debtors  or  wrong- 
doers discharges  all,  applies  where  one  is  discharged  by  law, 
as  in  bankruptcy,  at  the  instance  or  with  the  consent  of  the 
creditor  or  the  party  injured.*  The  release  of  one  of  several 
joint  debtors,  if  it  does  not  increase  the  original  responsibili- 
ties of  the  others,  will  not  work  a  dissolution  of  the  contract 
to  those  not  released.*  This  is  the  case  where  parties  are  only 
separately  liable;  there  the  discharge  of  one  does  not  discharge 
any  other.^  The  plaintiff,  however,  is  entitled  to  only  one 
satisfaction;  and  if  the  manner  of  releasing  one  involves  sat- 
isfaction in  whole  or  in  part  of  the  claim  it  will  inure  to  the 

248,  18  N.  "W.  Rep.  927;  Kentucky  &  of  a  note  after  he  has  repudiated  his 

Indiana  Bridge  Co.  v.  HalJ,  125  Ind.  liability  on  attaining  his   majority 

220,  25  N.  K  Rep.  219.  and  reconveyed  his  interest  in  the 

1  Miller  v.  Beck,  108  Iowa,  575,  582,  land  which  was  the  consideration  for 
79  N.  W.  Rep.  344;  Ellis  v.  Esson.  50  the  note  does  not  discharge  the  other 
Wis.  138,  6  N.  W.  Rep.  518,  36  Am.  maker.  Young  v.  Curridr.  63  N.  H. 
Rep.  830;  Chicago  v.  Babcock,  143  111.  419. 

358,  32  N.  E.  Rep.  271;  Long  v.  Long,  The  defense  of  a  release  by  opera- 

57  Iowa,   497,   10   N.   W.    Rep.    875;  tion  of  law  is  purely  personal  and 

Knapp  V.  Roche,  94  N.  Y.  729.  the  instrument  is  not  cause  for  set- 

2  Derosa  V.  Hamilton,  3  Pa.  Dist.  ting  aside,  at  the  instance  of  another 
Rep.  404  The  opinion  of  Simonton,  creditor,  a  confession  of  judgment 
P.  J.,  contains  the  result  of  a  careful  by  the  person  who  has  been  dis- 
examination  of  English  and  Ameri-  charged  for  the  amount  due  on  the 
can  cases  on  the  question  of  eflfectu-  obligation  covered  by  the  releasa 
atingthe  intentof  the  parties  giving  Thomas  v.  Mueller,  106  111.  36. 
releases.  ^  Bank  of  Pouglikeepsie  v.  Ibbot- 

3  Robertson  V.  Smith,  18  Johns.  459,  son,  5  Hill,  461;  Van  Rensselaer  v. 
9  Am.  Dec.  227;  1  Par.  onCont.  29.  Chadwick,  24  Barb.  333;  Mathewson 

^Mortland  v.  Hiraes,  8  Pa,  265.  v.  Lydiate.  Cro.  Eliz.  408,  470;  Bac. 

The  release  of  an  infant  co-signer    Abr.,  Release  (G.). 


§  257.] 


EELEASE. 


659 


discharge,  pro  tanto,  of  all  who  are  liable  therefor.'  Where 
two  are  separately  liable  for  the  same  debt,  and  stand  in  such 
relation  to  each  other  that  in  case  of  payment  by  one  there  is 
a  right  to  reimbursement  or  contribution  from  the  other,  then 
a  release  of  the  party  bound  to  reimburse  or  liable  to  con- 
tribute has  been  held  to  be  a  discharge  of  both.  The  reason 
the  release  of  one  joint  obligor  discharges  the  other  is  that 
if  either  pays  the  debt  the  other  is  liable  to  contribution, 
which  would  be  defeated  if  it  were  permitted  to  exonerate 
only  the  party  to  whom  it  is  made.  Thus,  where  by  the  con- 
stitution and  statutes  of  a  state  stockholders  are  personally 
liable,  jointly  and  severally,  for  the  debts  of  a  corporation,  the 
discharge,  by  release  under  seal,  of  one  stockholder  was  held 
a  discharge  not  only  of  all  the  others  but  also  of  the  corpora- 
tion.^ 


1  Ellis  V.  Esson,  50  Wis.  138,  36 
Am.  Rep.  830,  6  N.  W.  Rep.  518;  Lord 
V.  Tiffany,  98  N.  Y.  412,  50  Am.  Rep. 
689;  Kasson  v.  People,  44  Barb.  347. 

In  Babcook  &  W.  Co.  v.  Pioneer 
Iron  Works,  34  Fed.  Rep.  338,  the 
bill  charged  the  joint  infringement 
of  a  patent  by  P.  and  S.,  by  the  man- 
ufacture by  P.  for  sale  by  S.  of  the 
patented  article.  A  settlement  was 
made  between  complainant  and  P., 
the  money  paid  by  him  "  to  cover  the 
costs  of  complainant  in  this  suit 
against  P.  and  all  damages  for  the 
infringement  by  said  P.  of  the  letters 
patent  sued  on;  "  all  claims  and  de- 
mands against  S.  were  expressly  re- 
served. Held,  that  the  stipulation 
released  S.  from  liability  for  both 
costs  and  damages.  See  Gunther  v. 
Lee,  45  Md.  60,  24  Am.  Rep.  504. 

2  Prince  v.  Lynch,  38Cal.  528.  Saw- 
yer, C.  J.,  said:  "  If  not  jointly  liable 
in  the  strict  sense  of  that  term,  as  has 
been  suggested,  the  legal  incidents, 
as  between  the  corporation  and 
stockholders,  to  the  extent  of  their 
personal  liability,  are,  it  seems  to  us, 
precisely  the  same.  The  stockholder 
is  not  a  surety  in  any  sense  of  the 
term.     He  is  under  the  constitution 


and  statute  primarily  liable  in  the 
same  sense  as  the  corporation  is  pri- 
marily liable.  The  same  identical 
act  which  casts  the  liability  on  the 
corporation  also  casts  it  on  the  stock- 
holder. There  are  not  separate  con- 
tracts. The  stockholder  does  not 
stand  in  the  position  of  an  indorser 
or  guarantor.  An  indorser  or  guar- 
antor is  not  liable  on  the  same  con- 
tract. His  contract  is  a  separate  and 
distinct  one  of  his  own,  to  which  the 
principal  is  no  party.  It  is  founded 
upon  the  principal  contract,  and 
finds  its  consideration  only  in  that 
contract;  but  it  is  a  separate  and 
distinct  contract,  nevertheless,  and 
the  terras  are  different.  Each  is 
liable  on  his  own  particular  contract, 
but  there  is  no  joint  contract  or  joint 
obligation.  The  maker  and  indorser 
or  guarantor  of  a  note  may  be  sued 
jointly,  it  is  true,  but  this  does  not 
result  from  the  fact  that  there  is  a 
single  joint  contract. 

"It  is  suggested  that  the  reason 
the  release  of  one  joint  obligor  dis- 
charges the  other  is,  that  if  one 
pays  the  debt  the  other  is  liable  to 
contribution,  which  would  be  de- 
feated by  the  release  if  it  were  per- 


660 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  257. 


[43S]  A  simple  contract  cannot  operate  as  a  release  nor  be 
pleaded  as  such;  therefore  such  an  agreement  for  the  discharge 
of  one  of  several  parties  jointly  or  jointly  and  severally  liable 
must,  as  before  stated,  be  of  such  character  as  to  discharge  all 


mitted  to  exonerate  only  the  party 
to  whom  it  is  made.  On  this  ground 
it  is  said  to  be  held  to  extinguish  the 
debt.  Now  thisincident  attends  the 
relation  in  question,  and  this  princi- 
ple is  as  applicable  to  it  as  to  the  case 
of  two  joint  makers  of  a  note. 

"Suppose  the  corporation  is  sued 
and  a  recovery  had ;  the  stockholder 
released  must  contribute  his  share, 
for  the  corporation  can  levy  an  as- 
sessment on  all  the  stockholders,  ac- 
cording to  their  respective  shares,  to 
raise  funds  to  pay  the  judgment. 
The  corporation  must  pay  it,  unless 
it  too  is  discharged,  and  the  other 
shareholders  are  entitled  to  have  him 
contribute  his  share.  Or,  suppose 
the  corporation  is  in  funds,  and  pays 
without  an  assessment,  it  takes  from 
the  stockholder  released  his  pro  rata 
share  of  a  fund  which  would  other- 
wise go  to  him  in  dividends,  and  thus 
he  is  made  to  contribute  notwith- 
standing his  release.  So,  suppose 
McClelland  had  sued  other  stock- 
holders of  the  corporation  and  re- 
covered and  collected  from  them  the 
whole  amount  of  his  debt;  the  stock- 
holder or  stockholders  so  compelled 
to  pay  would  have  a  claim  for  con- 
tribution against  Lynch  for  his  share, 
and  thus  either  the  right  to  contribu- 
tion of  the  stockholder  who  has  been 
compelled  to  pay,  or  the  release  of 
Lynch,  must  be  defeated.  Suppose, 
again,  that  McClelland  should  dis- 
charge all  the  stockholders  from  per- 
sonal liability,  as  has  been  suggested, 
and  the  corporation  itself  should  still 
remain  liable,  each  stockholder  would 
still  be  liable  to  contribute  his  pro 
rata  share,  either  in  the  form  of  an 
assessment  levied  by  the  corporation 
to  pay  the  debt,  or  by  a  diminution 


of  dividends,  and  the  release  would 
be  defeated,  or  the  corporation  de- 
prived of  power  to  protect  its  prop- 
erty. One  of  two  results  must  inevi- 
tably be  reached.  Either  the  debt  is 
extinguished  as  to  all  by  the  release, 
or  the  release  is  wholly  inoperative  as 
to  all.  Thus  the  incidents  and  con- 
sequences are  the  .same  as  between 
joint  debtors  and  joint  obligors  in 
any  other  form.  We  think,  there- 
fore, that  the  case  is  within  the  rule, 
and  that  a  valid  release,  under  seal, 
discharges  the  corporation  and  other 
stockholders,  as  well  as  the  stock- 
holder relea-ed.  The  releases  to  the 
defendant.  Lynch,  referred  to  in  the 
findings,  were  in  due  form  and  under 
seal,  and  we  think,  to  the  extent  of 
the  amount  released,  discharged  the 
corporation  as  well  as  Lynch,  But 
we  think  the  court  erred  in  holding 
that  the  whole  $416.66.  due  McClel- 
land, was  released.  The  language  of 
the  release  is:  'I  hereby  release  and 
discharge  said  Francis  Lynch  from 
Ms  proportion  of  said  company's 
said  indebtedness  to  me.'  The  release 
by  its  express  terms,  then,  is  only 
'from  his  proportion  of  said  com- 
pany's said  indebtedness  to  me; '  not 
from  the  whole.  '  And  this  shall  he 
said  Lynch's  receipt  in  full,  to  date, 
for  his  proportion  and  share  of  all 
indebtedness  to  me  by  said  company, 
and  a  bar  to  any  and  all  suits  against 
said  Lynch  for  the  same; '  that  is  to 
say,  for  his  proportion  and  share.  It 
is  manifest  that  McClelland  did  not 
intend  to  release  his  whole  demand, 
but  only  Lynch's  share.  Although 
Lynch  might  be  liable  under  the  act 
to  pay  McClelland  the  whole  demand 
against  the  company,  as  held  in  Lar- 
rabee  v.  Baldwin,  35  Cal.  155,  if  the 


§  258.] 


RELEASE. 


GGl 


by  way  of  accord  and  satisfaction.  If  the  agreement  em- 
braces the  entire  cause  of  action,  and  purports,  upon  suf-  [4.*{9] 
ficient  consideration,  to  discharge  it,  it  will  have  that  effect 
as  to  all  the  parties  liable,  though  made  with  only  one.^  But 
a  simple  contract  to  discharge  one  of  several  who  are  liable 
will  not  have  that  effect  by  force  of  the  agreement,  as  a  release 
operates,  but  only  by  force  thereof  based  upon  a  sufficient 
consideration  for  satisfaction  of  the  entire  demand.^  Hence  a 
conventional  discharge  which  has  been  given  to  only  one  of 
several  who  are  bound,  in  order  to  have  the  effect  of  a  release 
as  to  all  and  to  be  pleadable  as  such,  must  be  a  technical  re- 
lease under  seal." 

§  258.  What  will  operate  as  a  release.    No  special  [440] 
form  of  words  is  necessary  if  the  intention  is  clear  to  discharge 


amount  of  the  aggregate  debts  of  the 
corporation  upon  which  he  was  per- 
sonally responsible  was  sufficient; 
yet,  tlie  whole  would  not  he  his  share 
of  the  indebtedness,  because  he 
would  be  entitled  to  recover  the 
excess  paid  by  him  over  his  share 
from  the  corporation,  and  to  call 
upon  his  co-stockholders,  who  were 
personally  liable,  to  contribute.  The 
fact  that  he  might  be  liable  person- 
ally, under  the  statute,  in  the  first 
instance,  to  pay  the  whole  to  the 
creditor,  does  not  increase  or  dimin- 
i.«h  or  in  any  way  affect  the  amount 
if  his  share  of  the  demand." 

1  Ellis  V.  Esson,  50  Wis.  188,  56  Am. 
Rep.  830,  6  N.  W.  Eep.  518;  East- 
•^nan  v.  Grant,  34  Vt.  390;  Matthews 
'.   Chicopee  Manuf.  Co.,   3  Robert. 

ni. 

2  Ellis  V.  Esson,  supra;  Walker  v. 
McCulloch,  4  Me.  421;  McAllester  v. 
Sprague,  34  id.  296;  Rowley  v.  Stod- 
dard, 7  Johns.  207;  Harrison  v.  Close, 
3  id.  449,  3  Am.  Dec.  444;  Farmers' 
Bank  v.  Blair,  44  Barb.  641;  Shaw  v. 
Pratt,  22  Pick.  305;  Smith  v.  Bar- 
tholomew, 1  Met.  276,  35  Am.  Dec. 
^65.  See  Honegger  v.  Wettstein,  47 
N.  Y.  Super.  Ct.  125. 

3  Bloss  V.  Ply  male,  3  V/.  Va.  393,  100 


Am.  Dec. 752;  Frink  v.  Green,  5 Barb. 
455;  De  Zeng  v.  Bailey,  9  Wend.  336; 
Rowley  V.  Stoddard,  7  Johns.  207; 
McAllester  v.  Sprague,  34  Me.  296; 
Bronson  v.  Fitzhugh,  1  Hill,  185; 
Shaw  V.  Pratt,  22  Pick.  305;  McAl- 
lister v.  Deunin,  27  Mo.  40;  Beriy  v. 
Gillis,  17  N.  H.  9,  43  Am.  Dec.  584. 

In  Mitchell  v.  Allen,  25  Hun,  543, 
an  unsealed  instrument  acknowl- 
edged the  payment  of  money  from 
one  of  several  persons  liable  for  the 
releasor's  injuries;  it  expressly  pro- 
vided that  it  was  not  to  affect  the 
other  defendants,and  that  the  claims 
against  them  were  retained.  It  was 
held  that  the  discharge  of  all  was  a 
necessary  legal  result  of  the  satisfac- 
tion and  discharge  of  one.  The  court 
approved  Ruble  v.  Turner,  2  Hen.  & 
Munf.  (Va.)  38,  where  three  persons 
were  sued  for  an  assault  and  battery; 
pending  suit  an  unsealed  stipulation 
acknowledged  satisfaction  from  one 
of  them  and  provided  that  it  was  not 
to  affect  the  liability  of  the  others. 
It  was  held  to  work  a  discharge  of 
all  See  Ellis  v.  Esson,  50  Wis.  138, 
56  Am.  Rep.  830,  6  N.  W.  Rep.  518, 
for  an  interesting  discussion  of  the 
subject. 


6G2  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAEGES.       [§  258. 

the  debt*  Various  acts  will  have  the  effect  of  a  release.  The 
act  of  surrendering  a  note  or  other  evidence  of  debt  will  work 
that  result.2  A  bequest  of  the  debt  to  the  debtor;  ^  the  inter- 
marriage of  the  debtor  and  creditor;^  appointment  of  the 
debtor  executor/  and  the  intentional  destruction  of  the  evidence 
of  indebtedness,®  will  produce  the  same  result.  So,  taking 
judgment  against  one  of  several  jointly  bound  without  issuing 
process  against  the  others  releases  those  not  sued ;  ^  and  so  does 
taking  the  body  of  the  debtor  or  one  of  several  on  execution  * 
and  discharging  him  or  them  from  custody.  Under  a  statute 
which  authorizes  any  surety  to  require  a  creditor  or  obligee 
forthwith  to  institute  an  action  upon  the  accrual  of  the  right 
to  do  so,  and  which  provides  that  if  it  is  not  done  within  a 
reasonable  time  the  surety  shall  be  discharged,  only  such  sure- 
ties as  have  given  the  notice  required  are  released  by  the  neglect 
to  sue,'  A  release  of  damages  by  a  widow  whose  husband  was 
killed  is  not  invalid  because  it  was  executed  in  order  that 
another  person,  who  was  named  by  him  as  the  beneficiary  in 
a  mutual  insurance  policy  on  his  life,  might  realize  the  amount 
due,  a  condition  of  it  being  that  any  employee  of  a  designated 
railway  company  who  was  a  member  of  the  society  should  re- 
lease the  company  from  all  liability  for  injuries  to  him.'^  An 
agreement  by  the  owner  of  property  which  has  been  seized 
under  a  writ  against  a  third  person  that  it  may  be  sold  and  the 
proceeds  retained  in  its  place  does  not  release  a  cause  of  ac- 
tion for  the  taking  and  selling."  A  contract  between  master 
and  servant  which  gives  the  latter,  when  physically  injured, 
whether  as  the  result  of  his  own  negligence  or  not,  or  when 
he  is  sick,  the  right  to  pecuniary  aid  and  other  valuable  benefits, 

»2  Par.  on  Cont.  713.  Anderson  v.  Levan,  1  W.  &  S.  334; 

2  Beach  v.  Endress,  51   Barb.  570;  Jones  v.  Johnson,  3  id.  276,  78  Am. 

Vanderbeck  v.  Vanderbeck,  30  N.  J.  Dec.  760;  Stewart's  Appeal,  'd  Watts, 

Eq.  265.  476. 

3Hobart  v.  Stone,  10  Pick.  215.  »  Gould  v.  Gould,  4  N.  H.  173;  Pale- 

♦  Curtis  V.  Brooks,   37  Barb.  476;  thorpe    v.    Lesher,    2    Rawle,    272; 

Smiley  v.  Smiley,  18  Ohio  St.  543.  Sharp  v.  Speckenagle,  3  S.  &  Pu  464. 

5  Thomas  v.   Thompson,   2  Johns.  9  Cochran  v.  Orr,  94  Ind.  433. 
470;  Eichelbergerv.  Morris,  6  Watts,  i"  State   v.  Baltimore  &  O.  R.  Co., 
42;  Fishel  v.  Fishel,  7  id.  44;  Raab's  36    Fed.  Rep.    655.     See     Fuller    v. 
Estate.  16  Ohio  St  271  Baltimore  &  O.  Relief  Ass'n,  67  Md. 

6  Booth  V.  Smith,  3  Woods,  19.  433,  10  AtL  Rep.  237. 
'Mitchell  V.   Brewster,  28  III  163;       n  Sartwell  v.  Moses,  62  N.  H.  355. 


§  259.] 


EELBASE. 


603 


and  which  make  the  acceptance  of  these  operate  as  a  release 
of  the  master,  is  not  contrary  to  public  policy.^ 

§  259.  Covenant  not  to  sue.  A  covenant  with  a  sole  debtor 
or  all  the  debtors  never  to  sue,  or  not  to  sue  without  any  lim- 
itation of  time,  will,  on  the  principle  of  avoiding  circuity  of 
action,  have  the  effect  of  a  release.^  For  the  same  reason  a 
covenant  by  the  creditor  to  indemnify  the  debtor  against  the 
particular  debt  is  a  release.'  But  a  covenant  not  to  sue  one  of 
several  joint  debtors  or  joint  obligors,  or  to  indemnify  him, 
is  not  a  release;  the  covenantee's  only  remedy  is  by  [-l-tlj 
action  on  the  covenant;*  because  it  cannot  be  inferred  from 


1  Petty  V.  Brunswick  &  W.  E.  Co., 

109  Ga.  666,  35  S.  E.  Rep.  82.     See  4^  6. 

2  McChesney  v.  Bell,   59  111.  App. 
84;  White  v.  Richmond  &  D.  R.  Co., 

110  N.  C.  456,  15  a  E.  Rep.  197;  Ken- 
nerty  v.  Etiwan  Phosphate  Co.,  17  S. 
C.  411,  43  Am.  Rep.  607;  Clopper  v. 
Union  Bank,  7  Har.  &  J.  92;  Parker 
V.  Holmes,  4  N.  H.  97;  Hodges  v. 
Smith,  Cro.  Eliz.  623;  Cuyler  v.  Cuy- 
ler,  3  Johns.  186;  Arnold  v.  Park,  8 
Bush,  3;  2  Saund.  47s,  note  (1);  Deux 
V.  Jefferies,  Cro.  Eliz.  353;  Ford  v. 
Beach,  11  Q.  B.  842;  Willis  v.  De 
Castro,  4  C.  B.  (N.  S.)  216;  Badeley  v. 
Vigurs,  4  El.  &  B.  71;  Giles  v.  Spen- 
cer, 3  C.  B.  (N.  S.)  244;  Phelps  v. 
Johnson,  8  Johns.  54;  Clark  v.  Bush, 
3  Cow.  151;  Brown  v.  Williams,  4 
Wend.  360;  Hosack  v.  Rogers,  8 
Paige,  229;  Hastings  v.  Dickinson,  7 
Mass.  155,  5  Am.  Dec.  34;  Shed  v. 
Pierce,  17  Mass.  623;  Williamson  v. 
McGinnis,  11  B.  Mon.  74,  52  Am.  Dec. 
561;  Lane  v.  Owings,  3  Bibb,  247; 
Harvey  v.  Harvey,  3  Ind.  473;  Reed 
V.  Shaw,  1  Blackf.  245;  Jackson  v. 
Stackhouse,  1  Cow.  122.  13  Am.  Dec. 
514;  Garnett  v.  Macon,  6  Call,  308; 
Lacy  V.  Kynaston,  2  Salk.  575,  13 
Mod.  548,  1  Ld.  Raym.  688;  Dean  v. 
Newhall,  8  T.  R.  168.  See  Kowing  v. 
Manly,  3  Abb.  Pr.  (N.  S.)  377. 

»  Con  nop  V.    Levy,   11   Q.   B.   769; 
Clark  V.  Bush,  3  Cow.  151. 
*  Chicago  V.  Babcock,  143  111.  358, 


32  N.  E.  Rep.  271 ;  Benton  v.  Mullen, 
61  N.  H.  125;  Tuckerman  v.  Newhall, 
17  Mass.  581;  Miller  v.  Fenton,  11 
Paige,  18;  Harrison  v.  Close,  2  Johns. 
448.  3  Am.  Dec.  444;  Catskill  Bank  v. 
Messenger,  9  Cow.  37;  Rowley  v. 
Stoddard,  7  Johns.  207;  Bank  of  Che- 
nango V.  Osgood,  4  Wend.  607;  Couch 
V.  Mills,  21  id.  424;  Shed  v.  Pierce,  17 
Mass.  633;  Goodnow  v.  Smith,  18 
Pick.  414,  29  Am.  Dec.  600;  Ayles- 
worth  V.  Brown,  31  Ind.  270;  Caron- 
delet  V.  Desnoyer,  27  Mo.  36;  Walker 
V.  McCulloch,  4  Me.  421;  Williamson 
V.  McGinnis,  11  B.  Mon.  74.  52  Am. 
Dec.  561;  Lane  v.  Owings,  3  Bibb, 
247;  Frink  v.  Green,  5  Barb.  455; 
Snow  V.  Chandler,  10  N.  H.  92,  34 
Am.  Dec.  140;  Mason  v.  Jouett,  2 
Dana,  107;  Berry  v.  Gillis.  17  N.  H.  9, 
43  Am.  Dec.  584;  Durell  v.  Wendell, 
8  N.  H.  369;  Parker  v.  Holmes,  4  id. 
97;  Smith  v.  Mapleback,  1  T.  R.  441; 
Hutton  v.  Eyre,  6  Taunt.  289;  Gib- 
son V.  Gibson,  15  Mass.  112;  Ward  v. 
Johnson,  6  Munf.  6,  8  Am.  Dec.  729; 
Thimbleby  v.  Barron,  3  M.  &  W.  210; 
Dow  v.  Tuttle.  4  Mass.  414,  3  Am. 
Dec.  226;  Aloff  v.  Scrimshaw,  3  Salk. 
573;  Hoffman  v.  Brown,  6  N.  J.  L. 
429;  Fullman  v.  Valentine,  11  Pick. 
159;  Garnett  v.  Macon,  6  Cal.  308; 
Lacy  V.  Kynaston,  3  Salk.  575,  12 
Mod.  548,  1  Ld.  Raym.  688;  Dean  v. 
Newhall,  8  T.  R  16a 


GG4 


CONVENTIONAL    LIQUIDATIONS    AND   DISCHARGES.       [§  259. 


such  a  covenant  that  it  was  the  intention  to  discharge  the 
debt.'  It  cannot  avail  as  an  estoppel  in  order  to  avoid  circuity 
of  action.  It  is  said  by  high  authority  that  a  covenant  con- 
tainino;  no  words  of  release  has  never  been  construed  as  a 
release  unless  it  gave  the  party  claiming  the  benefit  of  that 
construction  a  right  of  action  which  would  precisely  counter- 
vail that  to  which  he  was  liable;  and,  unless,  also,  it  was  the 
intention  of  the  parties  that  the  last  instrument  should  defeat 
the  first.^  And  where  two  are  jointly  and  severally  bound  a 
covenant  not  to  sue  one  does  not  amount  to  a  release  of  the 
other,'  unless,  perhaps,  the  covenant  be  given  after  a  suit  had 
been  brought  separately  against  one,  and  the  creditor  had  by 
that  action  chosen  to  consider  the  covenantee  the  sole  debtor.* 
The  amount  paid,  however,  upon  the  demand  by  way  of  par- 
tial discharge  as  a  consideration  for  such  a  covenant  will  be 
regarded  as  satisfaction  to  that  extent.-^  ISTor  will  a  covenant 
with  a  debtor  not  to  sue  for  a  limited  time  suspend  the  right 
of  action.* 

[44'2]  The  release  of  the  principal  debtor  will  absolve  the 
sureties,  and  the  release  of  a  primary  security  will  discharge 
collaterals.^     But  it  is  competent  to  provide  otherwise  and  to 


lid.:  Ruggles  v.  Patton,  8  Mass. 
480;  Sewall  v.  Sparrow,  16  id.  24; 
Shed  V.  Pierce,  17  id.  623;  Snow  v. 
Chandler,  10  N.  H.  92,  34  Am.  Dec. 
140;  Walker  v.  McCulloch,4  Me.  421; 
Durell  V.  Wendell,  8  N.  H.  369. 

^  Garnet  v.  Macon,  6  Call.  308.  See 
Berry  v.  Gillis,  17  N.  H.  9,  48  Am. 
Dec.  584 

3  Chicago  V.  Babcock,  143  111.  358, 
32  N.  E.  Rep.  271;  Bates  v.  Wills 
Point  Bank,  11  Tex.  Civ.  App.  73, 
32  S.  W.  Rep.  339;  Lacy  v.  Kynaston, 
12  Mod.  548,  551;  Ward  v.  Johnson, 
6  Munf.  6,  7  Am.  Dec.  729;  Tucker- 
man  V.  Newhall,  17  Mass.  581;  Hut- 
ton  V.  Eyre,  6  Taunt.  289. 

4  Shed  V.  Pierce,  17  Mass.  623. 

5  Snow  V.  Chandler,  10  N.  B.  92,  34 
Am.  Dec.  140. 

6  Id. ;  Guard  v.  Whiteside,  13  III.  7; 
Foster  v.  Purdy,  5  Met  442;  How- 
land  V.  Marvin,  5  Cal.  501;  Clark  v. 


Russel,  3  Watts,  213;  Hamaker  v. 
Eberley,  2  Bin.  510;  Berry  v.  Bates, 
2  Blackf.  118;  Reed  v.  Shaw,  1  id. 
245;  Thalman  v.  Barbour,  5  Ind.  178; 
Lowe  V.  Blair,  6  Blackf.  282;  Pearl  v. 
Wells,  6  Wend.  291 ;  Chandler  v.  Her- 
rick,  19  Johns.  129;  Winans  v.  Hus- 
ton, 6  Wend.  471:  Perkins  v.  Gilman, 
8  Pick.  229:  Couch  v.  Mills,  21  Wend. 
424.  But  see  Clopper  v.  Union  Bank, 
7  Har.  &  J.  92. 16  Am.  Dec.  294;  Blair 
V.  Reid,  20  Tex.  310;  Morgan  v.  But- 
terfield,  3  Mich.  615. 

''Jackson  v.  Stackhouse,  1  Cow. 
122,  13  Am.  Dec.  514;  Mottram  v. 
Mills,  2  Sandf.  189;  Newcomb  v.  Ray- 
nor,  21  Wend.  108,  34  Am.  Dec.  219; 
Brown  v.  Williams,  4  Wend.  360. 

A  release  by  an  acceptor  of  the 
drawer,  discharging  him  from  any 
claim  for  damages,  etc.,  as  drawer  of 
a  bill,  will  not  bar  an  action  by  the 
acceptor  for  money  paid  to  take  up 


^'  259.] 


BELEASE. 


6G5 


reserve  a  right  to  resort  to  securities.'  And  a  release  may,  by 
express  provision,  discharge  one  of  several  who  are  liable,  and 
exempt  others  from  its  operation.  In  such  case  the  action 
may  be  brouglit  against  all  for  the  purpose  of  recovery  against 
those  not  released. ^  Such  a  reservation  or  limitation  cannot 
be  made  by  paroL^*  When,  however,  the  debtor,  or  one  of 
several  debtors  jointly  bound,  stipulates  that  his  discharge 
shall  not  prevent  a  recovery  against  other  parties,  it  is  implied 
that  he  will  not  set  it  up  against  them  when  they  have  paid 
the  demand  and  call  on  him  for  reimbursement  or  contribu- 
tion.'' A  release  cannot  take  effect  infuturo  or  upon  a  future 
right  of  action;  but  only  upon  some  present  right  either  com- 
plete or  inchoate;  it  may  be  so  framed  as  to  cut  off  a  condi- 
tional or  contingent  liability,  as  for  example  that  of  an  indorser.^ 


the  bill  for  the  drawer's  accommoda- 
tion. Pearce  v.  Willdns,  2  N.  Y.  469, 
afifirming  Wilkins  v.  Pearce,  5  Denio, 
541. 

1  Pierce  v.  Sweet  33  Pa.  151;  Bruen 
V.  Marquand,  17  Johns.  58:  Stewart 
V.  Eden,  3  Cai.  181,  2  Am.  Dec.  233; 
Sohier  v.  Loring,  6  Cush.  537;  Hutch- 
ins  V.  Nichols,  10  id.  290;  Seymour 
V.  Minturn,  17  Johns.  169:  Keeler  v. 
Bartine.  13  Wend.  110:  Hubbell  v. 
Carpenter,  5  N.  Y.  171.  See  Matthews 
V.  Chicopee  Manuf.  Co.,  3  Robert.  711. 

2  Northern  Ins.  Co.  v.  Potter,  63 
Cal.  157;  Pettigrew  Machine  Co.  v. 
Harmon,  45  Ark.  290;  Twopenny  v. 
Young,  3  B.  &  C.  211;  Lancaster  v. 
Harrison,  4  M.  &  P.  561,  6  Bing.  726; 
Solly  V.  Forbes,  3  Brod.  &  Bing.  38; 
North  V.  Wakefield,  13  Q.  B.  538. 

SBronson  v.  Fitzhugh,  1  Hill,  185; 
Brooks  V.  Stuart,  9  A.  &  E.  854. 

4 1  Par.  on  Con.  285;  Hubbell  v.  Car- 
penter, 5  N.  Y.  171;  Pitman  on  Pr.  & 
Surety,  181-2,  189.  See  1  Brandt  on 
Suretyship  (2d  ed.),  §  147. 

5  Reed  v.  Tar  bell,  4  Met.  93;  Nich- 
ols V.  Tracy,  1  Sandf.  278;  Pierce  v. 
Parker,  4  Met  80;  Hastings  v.  Dick- 
inson, 7  Mass.  153,  5  Am.  Dec  34; 
tribson  V.  Gibson,  15  Mass.  110,  8  Am. 
Dec.  94. 


Parsons  says  (2  Par.  on  Cont  714): 
"A  release,  strictly  speaking,  can  op- 
erate only  on  a  present  right,  because 
one  can  give  only  what  he  has,  and 
can  only  promise  to  give  what  he 
may  have  in  future.  But  where  one 
is  possessed  of  a  distinct  right,  which 
is  to  come  into  effect  and  operation 
hereafter,  a  release  in  words  of  the 
present  may  discharge  this  right." 

In  Martin  v.  Baltimore  &  O.  K.  Co., 
41  Fed.  Rep.  125,  an  emploj-ee  of  de- 
fendant became  a  member  of  a  relief 
association,  and  as  a  condition  of 
membership  and  in  consideration  of 
funds  paid  by  defendant  to  said  asso- 
ciation and  its  guaranty  of  the  pay- 
ment of  the  benefits  promised  hy  the 
association  signed  a  contract  releas- 
ing defendant  from  any  liability  to 
him  by  reason  of  accident  while  in 
its  service.  Bond,  J.,  charged  the 
jury  that  if,  prior  to  the  plaintiff's 
employment,  he  signed  such  contract 
and  received  the  benefits  arising 
therefrom  before  and  after  suit 
brought,  and  gave  receipts  for  the 
money  paid,  which  receipts  released 
and  discharged  the  defendant,  he 
could  not  recover.    See  §  6. 


666      CONVENTIONAL  LIQUIDATIONS  AND  DISCHARGES.      [§§  260-262. 


Section  5. 

TENDEE. 

[443]  §  260.  Eight  to  make.  Though  a  fc'7?c?<?r,  not  accepted, 
does  not  go  to  the  extent  of  liquidation,  it  is  so  connected  with 
the  subject  of  payment  as  to  justify  some  consideration  of  it 
in  this  connection.  A  debtor  has  the  right  at  common  law,, 
before  suit,  to  tender  the  amount  due  to  his  creditor  upon  a 
certain  and  liquidated  demand,  and  thereby  save  himself  from 
the  payment  of  subsequent  interest  and  costs. 

§  261.  On  what  demands  it  may  be  made.  It  seems  that 
a  tender  may  be  made  on  a  quantum  meruit^  but  not  on  a 
claim  for  unliquidated  damages.^  It  may  be  pleaded  in  an  ac- 
tion on  a  bare  covenant  for  the  payment  of  money.'  In  an 
action  for  breach  of  contract  the  court  cannot  compel  the  ac- 
ceptance in  mitigation  of  damages  of  the  property  for  the  non- 
delivery of  which  the  action  is  brought  on  a  tender  of  it  being 
made  on  the  trial.* 

§  262.  When  it  maybe  made.  At  common  law  the  tender 
must  be  made  before  the  commencement  of  the  suit,^  but  this 

1  Johnson  v.  Lancaster,!  Str.  576.  folk  Bank  v.  Worcester  Bank,  5  Pick, 

See  Dearie  V.  Barrett,  2  A.  &  E.  83.  106:  Jackson   v.  Law,   5   Cow.   248; 

2 Id.;  Green  v.  Shurtliff,  19  Vt  592;  Retan  v.  Drew,  19  Wend.  304. 

Gregory  v.  Wells,  62  IIL  232;  Cilley  In  Sweetland  v.  Tuthill,  54  111.  215, 

V.  Hawkins,  48  111.  308;  McDowell  v.  Walker,  J.,  said:  "It  is  first  urged 

Keller,  4  Cold.  258;  Davys  v.  Rich-  that  our  practice  does  not  warrant 

ardson,  21  Q.  B.  Div.  202;  Kaw  Valley  the  payment  of  money  into  court. 

Fair  Ass'n  v.  Miller,  42  Kan.  20,  21  so  as  to  escape  the  payment  of  the 

Pac.  Rep.  794.  costs  of  the  suit.     This  may  be  true. 

If  a  tender  for  such  damages  is  but  we  deem  it  unnecessary  to  de- 
authorized  by  statute,  the  tender  termine  that  question  in  this  case, 
must  be  kept  good.  Dunbar  v.  De  The  law  does  clearly  authorize  a 
Boer,  44  111.  App.  615.  Contra,  Mc-  debtor  to  make  a  tender  of  the 
Pherson  v.  James,  69  id,  337.  amount  he  owes  his    creditor,  and 

3  Johnson  v.  Clay,  7  Taunt.  486,  1  thus  relieve  himself  from  costs  if  a 

Moore.   200.     See  Mitchell  v.  Greg-  suit   shall  afterwards   be    brought. 

cry,  1  Bibb,  449;  g  383.  And  no  reason  is  perceived  why  a 

"•Colby  V.  Reed,  99  U.  S.  560.  debtor  may  not,  even  after  a  suit  is 

SLevan  v.  Sternfeld,  55  N.  J.  L.41,  brought,  and  at  any  time  before  the 

25  Atl.  Rep.  854;  Colby  v.  Reed.  99  trial,  make  a  sufficient  tender  and 

U.  S.  560;  Bac.  Abr.,  Tender;  Fish-  relieve  himself  from  future  costs."' 

burne  v.  Sanders.  1  N.  &  McC.  242;  See  Thurston  v.  Marsh,  14  How.  Pr.. 

Reed  v.  Woodman,  17  Me.  43:  Knight  572. 
V.  Beach,  7  Abb.  Pr.  (N.  S.)  241;  Suf- 


§  2G2.]  TENDER.  067 

limitation  has  long  since  been  general!}'  abrogated  by  statute. 
It  is  no  answer  to  a  plea  of  tender,  before  the  commence-  [HI] 
ment  of  the  suit,  that  the  plaintiff  had,  before  such  tender,  re- 
tained an  attorney  and  instructed  him  to  sue  out  a  writ  against 
the  defendant,  and  the  attorney  had  accordingly  applied  for 
such  writ  before  the  tender,  and  it  was  afterwards  sued  out.* 
In  strictness  the  plea  of  tender  is  applicable  only  to  cases 
where  the  party  pleading  it  has  never  been  guilty  of  any  breach 
of  his  contract,  and  therefore  it  is  not  good  if  made  after  the 
day  fixed  for  payment.'-'  But  this  rigid  rule  is  not  adhered  to 
in  this  country,  and  in  many  of  the  states  the  right  of  tender 
at  any  time  after  the  debt  is  due  is  recognized.'  Tender  of  the 
sura  due  on  a  mortgage  any  time  before  foreclosure  discharges 
the  lien,*  and  under  a  statute  authorizing  the  redemption  of 
mortgaged  chattels  any  time  before  foreclosure  the  mortgagor 
may  so  make  a  tender  notwithstanding  the  mortgagee  has 
taken  possession  of  the  property  under  the  mortgage  after  con- 
dition broken.^  "Where  goods  have  been  sold  and  title  reserved 
as  security  for  the  unpaid  portion  of  the  ])rice  and  payments 
have  been  received  after  the  time  fixed  for  full  payment,  the 
vendor  cannot  retake  the  goods  without  notice  and  demand. 
A  tender  on  demand  is  sufficient  to  protect  the  vendee's  right 
of  possession.^  A  tender  by  the  defendant  to  the  plaintiff  pend- 
ing an  appeal  by  the  latter  from  a  judgment  in  his  favor,  if  re- 
fused, stops  interest.'^  If  payment  is  required  to  be  made  within 
a  certain  period  which  ends  on  Sunday,  a  tender  the  next  day 
is  in  time.^  It  may  be  made  on  an  interest-bearing  debt  before 
it  is  due,  tendering  the  amount  which  would  be  due  at  raa- 

1  Briggs  V.  Calverly,  8  T.  R.  629.  •*  Kortright  v.  Cady,  21  N.  Y.  343. 
See  Kirton  v.  Braithwaite,  1  M.  &  5  Davies  v.  Dow,  80  Minn.  223,  83 
W.  310;  Hull  V.  Peters,  7  Barb.  331.  N.  W.  Rep.  50. 

2  Hume  V.  Peploe,  8  East,  168;  •>  People's  Furniture  &  Carpet  Co. 
Poole  V.  Tumbridge,  3  M.  &  W.  223;  v.  Crosby,  57  Neb.  283,  77  N.  W.  Rep. 
Dobie  V.  Larkan,  10  Ex.  776;  City  658,  73  Am.  St.  504,  citing  O'Rourke 
Bank  v.  Cutter,  3  Pick.  414;  Suffolk  v.  Hadcock,  114  N.  Y.  541,  22  N.  E. 
Bank  v.  Worcester  Bank.  5  id.  106;  Rep.  33;  Taylor  v,  Einley,  48  Vt.  78; 
Dewey  V.  Humphrey,  id.  187;  Frazier  New  Home  Sewing  Machine  Co.  v. 
V.  Cushman,  13  Mass.  277;  Rose  v.  Bothane,  70  Mich.  443,  38  N.  W.  Rep. 
Brown.  Kirby,  293,  1  Am.  Dec.  23;  326. 

Tracy  v.  Strong,  2  Conn.  659;  Ash-  ^Ferrea  v.  Tubbs,  125  Cal.  687,  53 
burn  V.  Poulter,  35  id.  553.  Pac.  Rep.  308. 

»2  Par.  on  Cont.  642.  ssands  v.  Lyon,  18  Conn.  18. 


668 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.       [§  2G2. 


turity.^  Some  doubt  has  been  expressed  whether  a  tender  is 
good  of  a  debt  not  bearing  interest  before  it  is  due.^  A  vendor 
cannot  be  placed  in  default  by  a  tender  of  the  purchase-money 
before  the  stipulated  time  for  payment;*  nor  can  a  premature 
tender  affect  the  security  for  a  debt;^  nor  any  other  right  of 
the  creditor.'^  A  tender  on  a  past-due  obligation  is  good  though 
preliminar}'  notice  of  it  is  not  given.^  The  necessity  of  such 
notice  in  England  when  2ipost  diem  tender  of  the  money  due 
upon  a  mortgage  is  made  rests  entirely  on  custom.'' 

In  computing  the  time,  after  entry  for  condition  of  a  mort- 
gage broken,  within  which  a  mortgagor  ma}'^  redeem  the  day 
of  entry  is  to  be  excluded.^  And  where  payment  must  be 
made,  as  in  such  a  case  within  a  certain  period,  it  has  been 
made  a  question  at  what  time  of  the  last  day  the  right  of  ^nj- 
ment  or  tender  expires.  In  the  old  cases  it  is  held  that  pay- 
ment should  be  made  at  a  convenient  time  in  which  the 
money  may  be  counted  before  sunset.^     It  is  probable  that 


1  Eaton  V.  Emerson,  14  Me.  335; 
Tillou  V.  Britton,  9  N.  J.  L.  120; 
Saunders  v.  Frost,  5  Pick.  259;  Bacon 
V.  Hooker,  153  Mass,  554,  54  N.  E. 
Rep.  253. 

A  tender  of  the  amount  due  on  a 
promissory  note  is  good  if  made  at 
the  time  fixed  for  payment,  though 
before  the  expiration  of  the  days  of 
grace,  interest  for  such  days  being 
included.  Wyckoff  v.  Anthony,  9 
Daly,  417.  On  appeal  this  question 
was  not  passed  upon,  it  being  held 
that  the  r.ght  to  object  to  the  ten- 
der at  the  time  it  was  made  was 
waived.  Wyckoff  v.  Anthony,  90 
N.  Y.  443. 

2  2  Par.  on  Cont  642.  See  McHard 
V.  Whetcroft,  3  Har.  &  McH.  85. 

3  Rhorer  v.  Bila,  83  Cal.  51,  23  Pac. 
Rep.  274;  Reed  v.  Rudman,  5  Ind. 
409;  Cogan  v.  Cook,  23  Minn.  137. 

4Noyes  v.  Wyckoff,  114  N.  Y.  204, 
21  N.  E.  Rep.  158. 

5  Moore  v.  Kime,  43  Neb.  517,  61  N. 
W.  Rep.  736;  Burns  v.  True,  5  Tex. 
Civ.  App.  74,  24  S.  W.  Rep.  388;  Ab- 


shire  v.  Corey,  113  Ind.  484,  15  N.  E. 
Rep.  685. 

6  Sharp  V.  Wyckoff,  39  N.  J.  Eq. 
376. 

'>  Browne  v.  Lockhart,  10  Sim.  420, 
424. 

8  Wing  V.  Davis,  7  Me.  31. 

The  necessity  of  a  tender  for  such 
purpose  is  denied.  Quin  v.  Brittain, 
Hoff.  Ch.  353;  Beach  v.  Cooke.  14  N. 
Y.  508;  Casserly  v.  Witherbee,  119  N. 
Y.  523,  23  N.  E.  Rep.  1000;  especially 
if  the  person  seeking  to  redeem  does 
not  know,  because  of  the  mortgagee's 
fault,  the  sum  due.  Aust  v.  Rosen- 
baum,  14  Miss.  893,  21  So.  Rep.  555. 

9  In  Wade's  Case,  5  Coke,  114a,  it 
was  said:  "  Although  the  last  time 
of  payment  of  the  money  by  force 
of  the  condition  is  a  convenient 
time  in  which  the  money  may  be 
counted  before  sunset,  yet.  if  the 
tender  be  made  to  him  who  ought  to 
receive  it  at  the  place  specified  in 
the  condition,  at  any  time  of  the 
day,  and  he  refuse  it,  the  condition 
is  forever  saved,  and  the  mortgagor 


262.] 


TENDEE. 


GG9 


the  courts  would  not  now  recognize  the  rule  as  a  fixed  [l-to] 
and  arbitrary  requirement,  without  regard  to  circumstances 
necessitating  a  tender  while  the  daylight  lasts.  There  [l-iG] 
is  some  reason  for  holding  a  tender  unseasonable  which  is 


or  obligor  needs  not  make  a  tender 
of  it  again  before  the  last  instant." 
See  Coke  Litt.  203. 

In  Wing  V.  Davis,  7  Me.  31,  the 
validity  of  a  tender  made  late  in  the 
evening  of  the  last  day  to  redeem 
after  entry  for  condition  broken  was 
in  question.  Mellen,  C.  J.,  said:  "  In 
Hill  v.  Grange,  1  Plowd.  178,  the  con- 
dition was  to  pay  rent  within  ten 
days  after  certain  feasts,  in  which 
case  the  justices  unanimously  held 
that  the  lessee  had  liberty  within  the 
ten  days;  and,  therefore,  they  ob- 
serve '  the  lessee  is  in  no  danger  as 
long  as  he  has  time  to  come  and  pay 
it;  and  he  has  time  to  come  and  pay 
it  as  long  as  the  tenth  day  continues, 
and  the  tenth  day  continues  until 
the  night  comes;  and  when  the  night 
is  come,  then  his  time  elapses.  So 
that  his  time  to  pay  continues  until 
the  separation  of  day  and  night. 
And  in  arguing  this  point,  Robert 
Brook,  chief  justice,  and  Saunders, 
said  that  if  the  rent  reserved  was  a 
great  sum,  as  £500  or  £1.000,  the  les- 
see ought  to  be  ready  to  pay  it  in 
such  convenient  time  before  sunset 
in  which  the  money  might  be 
counted;  for  the  lessor  is  not  bound 
to  count  it  in  the  night,  after  sunset, 
for  if  so  he  might  be  deceived;  for 
Brook  said:  '  Qui  anibulat  in  tene- 
bris  nescit  qua  vadiV  The  language 
of  the  court  in  the  case  of  Greeley 
V,  Thurston  does  not  advance  a  dif- 
ferent principle.  The  question  is, 
what  is  the  whole  day  in  relation  to 
a  tender  in  contracts  of  this  charac- 
ter. We  are  not  aware  that  modern 
decisions  have  changed  the  law  as 
established  by  the  old  cases;  or  the 
facts  necessary  to  be  proved  to  sup- 
port a  plea  of  tender,  except  so  far 


as  the  conduct  of  the  creditor  may 
in  certain  cases  amount  to  a  waiver 
of  objections  against  the  formality 
of  the  tender,  or  in  case  of  his  art- 
ful avoidance  or  evasion.  In  the 
case  before  us  there  is  nothing  like 
a  waiver  as  to  the  unseasonableness 
of  the  hour;  in  fact,  this  was  the 
objection  made  by  the  defendants 
at  the  time  of  the  alleged  tender, 
which  was  attempted  to  be  made  not 
long  before  midnight,  when  tlie  de- 
fendants and  their  families  were 
asleep,  and  all  the  lights  extin- 
guished. No  reason  has  been  as- 
signed why  a  payment  or  a  tender 
was  delayed  to  so  unusual  an  hour; 
and  if  a  loss  to  the  plaintiff  is  the 
consequence  of  this  strange  delay, 
he  must  thank  his  own  imprudence. 
We  do  not  decide  that  a  tender  may 
not,  in  any  circumstances,  be  good, 
though  made  after  the  departure  of 
daylight;  it  is  not  necessary  to  inti- 
mate any  opinion  on  the  point.  Our 
decision  is  founded  on  the  facts  of 
this  case;  and  the  tender  not  having 
been  made  in  due  season,  we  need 
not  inquire  as  to  the  sufficiency  of 
the  sum  which  was  offered.'' 

In  Greeley  v.  Thurston,  4  Me.  479, 
16  Am.  Dec.  285,  the  question  was 
when  the  default  of  the  maker  of  a 
promissory  note  occurred,  he  claim- 
ing that  he  had  the  whole  of  the 
last  day  in  which  to  pay  it,  and  that 
until  that  day  is  passed  he  cannot 
be  said  to  have  broken  his  contract. 
Weston,  J.,  said:  "There  is  no  ques- 
tion that  with  regard  to  bonds,  mort- 
gages and  instruments  in  writing, 
other  than  notes  of  hand  or  bills  of  ex- 
change, the  party  who  engaged  to 
pay  money,  or  to  perform  any  other 
duty,  fulfills  his  contract,  if  he  does 


670 


CONVENTIONAL    LIQUIDATIONS    AND   DISCHARGES.       [§  2G2. 


made  late  at  night  if  the  creditor  has  gone  to  bed,  and  de- 
[447]  clines  to  consider  it  on  that  ground,  where  no  cause  for 
«o  delaying  it  exists.^  A  late  judicial  exposition  of  the  ques- 
tion is  to  the  effect  that,  where  no  place  is  named  in  the 


so  on  any  part  of  the  day  appointed. 
Unless  the  case  of  negotiable  paper 
forms  an  exception  to  the  general 
rule  which  attaches  to  other  written 
contracts,  the  maker  of  a  negotiable 
note  of  hand  and  the  acceptor  of  a 
bill  of  exchange  are  not  liable  to  be 
sued  until  the  day  after  these  instru- 
ments become  due  and  payable.  In 
the  case  of  Leftey  v.  Mills,  4  T.  R 
170,  we  have  the  opinion  of  Mr.  Jus- 
tice BuUer,  given  in  strong  terms, 
although  the  decision  was  finally 
placed  upon  another  ground,  that 
the  general  rule  before  intimated 
does  not  apply  to  bills  of  exchange. 
In  that  case  a  clerk  called  with  the 
bill,  upon  which  the  question  arose, 
at  the  house  of  the  defendant,  the 
acceptor,  on  the  day  it  became  due, 
and,  not  finding  him  at  home,  left 
word  where  the  bill  might  be  found, 
that  the  defendant  might  send  and 
take  it  up;  this  not  being  done  at 
six  o'clock  in  the  evening  it  was 
noted  for  non-payment.  Between 
seven  and  eight  o'clock  the  same 
clerk  called  again  on  the  defendant 
with  the  bill,  who  then  offered  to 
pay  the  amount  of  it,  but  refused  to 
pay  an  additional  half-crown  for  the 
notary.  Lord  Kenyon  was  of  opin- 
ion, at  the  trial,  that  the  tender  was 
sufficient,  and  directed  a  verdict  for 
the  defendant.  A  rule  was  obtained 
to  show  cause  why  the  verdict 
should  not  be  set  aside  and  a  new 
trial  granted.  The  court  said,  in 
granting  the  rule,  that  the  main 
question  was  whether  the  acceptor 
had  the  whole  day  to  pay  the  bill  in, 
or  whether  it  became  due  on  demand 
at  any  time  on  the  last  day.     After 


argument,  Lord  Kenyon  stated  in 
this,  as  in  other  contracts,  the  ac- 
ceptor had  the  whole  day;  but  said, 
if  there  were  any  difl'erence  between 
bills  of  exchange  and  other  contracts 
in  this  respect,  the  claim  of  the  no- 
tary could  not  be  supported,  this 
being  an  inland  bill  pa5'able  fourteen 
days  after  sight,  and  the  statute  of 
William,  which  first  authorized  a 
protest  upon  inland  bills,  givmg  it 
only  upon  such  bills  as  were  payable 
a  certain  number  of  days  after  date. 
Upon  this  last  ground  Duller,  J., 
concurred;  andheadded:  *I  cannot 
refrain  from  expressing  my  dissent 
to  what  has  fallen  from  my  lord  re- 
specting the  time  when  the  payment 
of  bills  of  exchange  may  be  enforced. 
One  of  the  plaintiff's  counsel  has  cor- 
rectly stated  the  nature  of  the  ac- 
ceptor's undeitaking,  which  is  to 
pay  the  bill  on  demand  on  any  part 
of  the  third  day  of  grace;  and  that 
rule  is  now  so  well  established  that 
it  will  be  extremely  dangerous  to 
depart  from  it.  With  regard  to 
foreign  bills  of  exchange,  all  the 
books  agree  that  the  protest  must  be 
made  on  the  last  day  of  grace;  now 
that  supposes  a  default  in  payment, 
for  a  protest  cannot  exist  unless  de- 
fault be  made.  But  if  the  party  has 
until  the  last  moment  of  the  day  to 
pay  the  bill,  the  protest  cannot  be 
made  on  that  day.  Therefore  the 
usage  on  bills  of  exchange  is  estab- 
lished; they  are  payable  any  time 
on  the  last  day  of  grace,  on  demand, 
provided  that  demand  be  made 
within  reasonable  hours.  A  demand 
at  a  very  early  hour  of  the  day,  at 
two  or  three  o'clock  in  the  morning. 


1  Wing  V.  Davis,  7  Me.  31. 


§  263.]  TENDER.  671 

-agreement  for  the  making  of  payment,  or  no  established 
usage  prevails  to  the  contrary,  as  in  the  case  of  notes  and 
bills,  the  payer  has  the  whole  of  the  day,  at  any  place  where  ho 
may  meet  the  payee,  and  both  may  have  the  proper  means  and 
opportunity  of  making  and  receiving  the  tender.  The  party 
bound  must  do  all  that,  without  the  concurrence  of  the  other, 
he  can  do  to  make  the  payment  or  perform  the  act,  and  that 
at  a  convenient  time  before  midnight,  such  time  varying  ac- 
cording to  the  quantum  of  payment  or  the  nature  of  the  act 
to  be  done.  If  he  is  to  pay  money  it  must  be  tendered  at  a 
sufficient  time  before  midnight  for  the  tenderee  to  receive  and 
count  it.^  This  rule  may  well  be  qualified  by  adding  a  con- 
dition that  the  tender  shall  be  made  at  such  time  as  will 
give  the  creditor  an  opportunity  to  ascertain  the  state  of  the 
account  between  him  and  his  debtor;  because  he  is  not  bound 
to  know  at  his  peril  at  all  times  the  exact  sum  due  hira;^  and 
besides  the  law  will  doubtless  take  account  of  the  fact  that 
business  men  are  not  at  all  times  prepared  to  surrender  the 
evidences  of  their  claims  against  their  debtors.  Commercial 
paper  being  payable  on  the  day  of  maturity  at  any  reasonable 
hour  when  demanded,  a  breach  of  the  contract  to  pay  may 
occur  whenever  such  demand  is  made.  In  the  absence,  how- 
ever, of  any  demand  the  debtor  upon  such  paper  undoubtedly 
has  the  same  time  on  the  last  day  to  fulfill  his  promise  as 
when  he  is  indebted  in  any  other  form.' 

§  263.  In  what  money.     The  offer  must  be  made  in  legal 
tender  money  of  the  country,  if  it  is  demanded.*     But  where 

would  be  an  unreasonable  hour;  but,  or  duly  forwarded."    Shed  v.  Brett, 

on  the  other  hand,  to  say  that  the  de-  1  Pick.  401;  City  Bank  v.  Cutter,  3 

mand  should  be  postponed  until  mid-  Pick.  414. 

night  would  be  to  establish  a  rule  i  Smith  v.  Walton,  5  Houst,   141, 

attended   with    mischievous    conse-  following  Startup  v.  Macdonald,  6  M. 

quences.'      Upon    consideration  we  «fc  G.  598,  624,  46  Eng.  C.  L.  623. 

adopt  the  views  of  Mr.  Justice  Bui-  2  Root  v.  Bradley,  49  Mich.  27,  13 

ler;  and  it  is  our  opinion  that  bills  N.  W.  Rep.  896;  Waldron  v.  Murphy, 

of  exchange  and    negotiable    notes  40    Mich.  668;    Chase    v.  Welsh,  45 

should  be  paid  on  demand,  if  made  Mich.  345,  7  N.  W.  Rep.  8'.)5. 

at  a  reasonable  hour,  on    the  day  ^  Sweet  t.  Harding,  19  Vt.  587. 

they  fall  due;  and  if  not  then  paid,  <  Wilson    v.  McVey,  83    Ind.    108; 

that  the  acceptor  or  maker  may  be  Collier  v.  White,  67  Miss.  133,  6  So. 

sued  on  that  day.  and  the  indorser  Rep.  618;  Wharton  v.  Morris,  1  Ball. 

and  drawer  also,  after  notice  given  124;  Moody  v.  Mahurin,  4  N.  H.  296; 


672 


CONVEKTIOXAL    LIQUIDATIONS    AND    DISCHARGES.       [§  263, 


bank  or  treasury  notes  which  circulate  as  money,  though  not 
made  a  legal  tender,  are  offered,  the  objection  that  they  are 
not  legal  tender  is  deemed  one  of  form,  and  waived  if  not 
specially  made,  or  if  objection  is  rested  on  some  other  ground;  * 
[44S]  for  to  invalidate  a  tender  or  to  divest  an  offer  to  pay  of 
the  legal  effect  of  a  tender,  if  the  objection  is  to  the  medium 
or  currency  and  not  to  the  sum  offered,  the  ground  of  it  must 
be  stated,  or  the  right  to  object  in  that  respect  will  be  waived, 
and  it  cannot  afterw^ards  be  taken  advantage  of  in  court  oa 
the  score  of  the  tender  not  being  legal;  in  other  words,  an 
objection  on  a  point  of  fact  works  a  waiver  of  an  objection  on 
points  of  law.-  It  is  a  general  rule  that  if  a  tender  is  refused 
on  a  specified  ground  of  objection  no  other  can  afterwards  be 
relied  upon.*  This  applies,  however,  only  to  such  objections 
as  could  be  obviated,  and  not  to  a  tender  made  before  a  debt 
is  due.*  An  offer  of  depreciated  bank  notes,  without  any  ex- 
planation, is  in  legal  effect  but  an  offer  of  compromise  or  of 


Lee  V.  Biddis,  1  Dall.  175:  Long  v. 
Waters,  47  Ala.  624;  Hallowell  &  A. 
Bank  v.  Howard.  I'd  Mass.  235;  Lange 
V.  Kohne,  1  McCord,  115;  Smith  v. 
Keels,  15  Rich.  818;  Magraw  v.  Mc- 
Glynn,  26  Cal.  420:  Martin  v.  Bott. 
17  Ind.  App.  444,  46  N.  K  Rep.  151  (a 
finding  that  a  tender  was  made  of 
the  "  lawful  .sum  in  money  "  is  not  a 
finding  that  it  was  made  in  legal 
tender).  See  Tate  v.  Smith,  70  N.  C. 
685;  Graves  v.  Hardesty,  19  La.  Ann. 
186;  Parker  v.  Broas.  20  id.  167;  Har- 
ris V.  Jex,  55  N.  Y.  421,  14  Am.  Rep. 
285. 

1  Koehler  v.  Buhl,  94  Mich.  496,  54 
N.  W.  Rep.  157;  Cooley  v.  Weeks,  10 
Yerg.  141;  Ball  v.  Stanley,  5  id.  199, 
26  Am.  Dec.  263;  Fosdick  v.  Van 
Husan,  21  Mich.  567;  Curtiss  v.  Green- 
banks,  24  Vt.  536;  Warren  v.  Mains, 
7  Johns.  476;  Holmes  v.  Holmes,  13 
Barb.  137;  Wheeler  v.  Knaggs,  8 
Ohio,  172:  Lockyer  v.  Jones,  Peake, 
180,  n.;  Wright  v.  Reed,  3  T.  R  554; 
Brown  v.  Saul,  4  Esp.  267;  Polglass 
V,  Oliver,  2  Cr.  &  J.  15;  Tiley  v.  Court- 
ier, id.  16,  n.;  Saunders  v.  Graham, 


Gow,  121;  Brown  v.  Dysinger,  1 
Rawle,  408;  Snow  v.  Perry,  9  Pick. 
539;  Towson  v.  Havre  de  Grace  Bank, 
6  H  &  J,  53;  Williams  v.  Rorer,  T 
Mo.  555;  Sea  well  v.  Henry,  6  Ala. 
226;  Noe  v.  Hodges,  3  Humph.  162; 
Cummings  v.  Putnam,  19  N.  H  569; 
Brown  v.  Simons,  44  id.  475;  Snow 
V.  Perry,  9  Pick.  539. 

2  Polglass  V.  Oliver,  2  Cr.  &  J.  15; 
Gradle  v.  Warner,  140  III  123,  29  N. 
K  Rep.  1118.  See  Waldron  v.  Murphy, 
40  Mich.  668,  and  §  270. 

SMcGrath  v.  Gegner,  77  Md.  331, 
26  Atl.  Rep.  502,  39  Am.  St.  415. 

In  Moynahan  v.  Moore,  9  Mich.  9, 
it  was  said  to  be  "a  well  established 
principle,  that  an  objection  made  at 
the  time  of  tender  precludes  all 
others,  and  if  that  be  not  well 
grounded  the  tender  will  be  held 
good."  See  Perkins  v.  Dunlap,  5  Me. 
268,  271;  Hull  v.  Peters,  7  Barb.  331; 
Carman  v.  Pultz,  21  N.  Y.  547;  Keller 
V.  Fisher,  7  Ind.  718:  Stokes  v.  Reck- 
nagle,  38  N.  Y.  Super.  Ct.  368;  §  27a 

*  Mitchell  V.  Cook,  29  Barb.  243. 


§  204.]  TENDER.  C73 

accord  and  satisfaction,  and  not  a  legal  tender,'  unless  thoy  are 
tendered  to  the  bank  which  issued  them.^  Even  a  ciieck  for 
money  handed  the  payee  or  sent  by  a  letter  is  a  good  tender, 
where  no  objection  is  made  on  that  ground,  but  only  to  the 
amount.^  But  when  the  party  entitled  to  payment  is  not  pres- 
ent and  has  no  opportunity  to  urge  the  objection,  he  cannot 
be  presumed  to  have  waived  it  by  his  silence.*  A  note  for  dol- 
lars payable  in  gold  and  silver  is  payable  in  money,  and  neither 
bullion,  nor  gold  and  silver  in  any  other  form  than  money,  is 
a  legal  tender.^  In  an  action  for  the  breach  of  a  covenant  of 
seizin  a  tender  of  the  amount  paid  by  the  grantee  and  of  the 
unpaid  notes  and  mortgage  executed  by  him  to  secure  the  bal- 
ance of  the  purchase  price  is  good." 

§  264.  By  wlioiii.  Of  course  it  may  be  made  by  an  author- 
ized agent.'^  Where  the  tender  is  made  in  behalf  of  the  debtor, 
strict  authority  at  the  time  does  not  seem  to  be  requisite;  it 
being  for  his  benefit  and  in  his  name,  it  may  be  effectual  with- 
out such  agency  as  would  enable  the  person  making  it  [WO] 
to  do  any  act  which  would  bind  the  debtor.  Thus,  a  tender 
made  for  an  infant  by  his  uncle  has  been  held  good,  though 
he  was  not  at  that  time  his  guardian.^  So  when  an  agent  was 
sent  to  tender  a  sum  less  than  that  demanded,  and  he  added 
of  his  own  funds  to  the  sum  furnished  by  his  principal  and 
tendered  the  full  amount  required,  it  was  held  good.®  A 
tender  made  by  an  inhabitant  of  a  school  district  to  one  hav- 
ing a  claim  against  it  was  held  good,  though  such  inhabitant 

1  Newberry  V.  Trowbridge,  13  Mich.  'Jennings  v.  Mendenhall,  7  Ohio 

263.  St.  258;  Jones  v.  Arthur,  8  Dowl.  P. 

A  certified  check  was  tendered  and  G  442;  Shipp  v.  Stacker.  8  Mo.  145; 
returned  for  insufficiency  in  amount;  Petrie  v.  Smith,  1  Bay,  115;  Wyckoff 
but  the  court  found  that  it  was  suf-  v.  Anthony,  9  Daly,  417;  Harriman 
ficient;  the  check  was  then  deposited  v.  Meyer,  45  Ark.  37. 
in  court.aud  while  there  deposited  the  ^  Sloan  v.  Petrie,  16  111.262;  Hub- 
bank  on  which  it  was  drawn  failed,  bard  v.  Chenango  Bank,  8  Cow.  88; 
It  washeldthatthecheck,if  accepted,  Ward  v.  Smith,  7  Wall.  447. 
wouM  have  been   only   conditional  ^Hart  v.  Flynn's  Ex'r,  8  Dana.  190. 
payment,  and  the  loss  resulting  from  6  Conrad    v.    Trustees    of    Grand 
its  non-payment  must  be  borne  by  Grove,  64  Wis.  258,  25  N.  W.  Kep.  24. 
the  drawer.      Larsen  v.  Breene,  12  '^  Eslow  v.  Mitchell,  26  Mich.  500. 
Colo.  480,  21  Pac.  Rep.  498.  8  Brown  v.  Dysinger,  1  Rawle,  408. 

-  Northampton  Bank  v.  Balliet,  8  See  Coke  Litt.  2066. 

W.  &  S.  311,  43  Am.  Dec.  297.  9  Read  v.  Goldring,  3  M.  &  S.  86. 
Vol.  I  — 43 


674:  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  264. 

was  not  regularly  authorized  to  do  so.^  A  corporation  ap- 
pointed three  agents  to  tender  a  sum  to  B,  and  obtain  from 
him  a  reconveyance  of  a  certain  estate  conveyed  to  him  by 
the  corporation  as  security  for  a  debt;  one  of  the  three  made 
the  tender  and  it  was  held  good.^  A  person  having  no  inter- 
est in  the  tender  has  no  right  to  make  it  in  his  own  behalf.' 
He  should  make  it  in  behalf  of  the  debtor  and  so  inform  the 
creditor.'*  The  creditor  must  object  on  the  ground  of  a  want 
of  authority  or  the  right  to  do  so  is  waived.^  If  a  tender  is 
made  by  the  debtor's  prior  authority,  or  is  subsequently  rati- 
fied, it  is  good.®  Any  person  may  make  a  tender  for  an  idiot.' 
A  tender  of  the  amount  due  one  who  has  purchased  land  at  a 
tax  sale  is  not  good  if  it  is  made  by  several  persons,  one  of 
whom  has  no  right  to  redeem.^  A  mortgagee  may  refuse  a 
tender  of  the  amount  due  him  made  by  one  who  is  a  stranger 
to  him  and  to  the  mortgagor,  and  who  is  not  acting  in  the 
interest  or  at  the  request  of  the  latter,  though  he  had  tax 
titles  on  the  mortgaged  property,  they  not  being  subject  to 
the  mortgage.^  One  who  has  purchased  mortgaged  premises 
and  mortgaged  chattels  thereon  from  the  mortgagor,  the  for- 
mer subject  to  existing  liens,  has  no  authority  to  make  a 
tender  of  the  amount  due  on  the  latter,  the  debt  accrued 
thereby  being  payable  on  demand  and  none  being  made.^"  But 
it  is  otherwise  where  a  tender  is  made  by  the  mortgagor's 
grantee  after  the  debt  is  due,  the  creditor  having  knowledge 
of  the  transfer.^^  A  tender  of  the  amount  of  a  mortgage  lien 
by  the  assignee  in  insolvency  of  the  mortgagor  has  the  same 
effect  as  if  made  by  the  latter ;  '^  and  so  of  a  tender  by  the 
vendee  of  chattels.^^     A  tender  by  a  subsequent  grantee  of  the 

iKincaidv.  School  District,  11  Me.  ^Coke  Litt.   2066;  Brown   v.  Dy- 

188.  singer,  1  Rawle,  468. 

2  St  Paul  Division  No.  1,  Sons  of  8  Bender  v.  Bean,  52  Ark.  132,  12 
Temperance  v.  Brown,  11  Minn,  356.  S.  W.  Rep.  180,  241. 

3  Mahler  v.  Newbaur,  32  CaL  168,  9 Sinclair  v.  Learned,  51  Mich.  335, 
91  Am.  Dec.  571.  16  N.  W.  Rep.  672. 

*  Id.;  McDougald  v.  Dougherty,  11  lONoyes  v.  Wyckoff,  114  N.  Y.  204^ 

Ga.  570.  21  N.  E.  Rep.  158,  30  Hun,  466. 

5  Lampley  v.  Weed,  27  Ala.  631.  n  Yeager  v.  Groves,  78  Ky.  278. 

e  Harding  v.  Davies,  2  C.  &  F.  77;  12  Davies  v.  Dow,  80  Minn.  223,    83 

McIniflEe  v.  Wheelock,  1  Gray,  600;  N.  W.  Rep.  50. 

Eslow  V.  Mitchell,  26  Mich.  500.  is  Flanigan  v.  Seelye,  53  Minn.  23, 

65  N.  W.  Rep.  115. 


§  205.]  TENDEE.  675 

equity  of  redemption  is  good.*  An  executor  lias  no  authority 
to  make  a  tender  to  a  legatee  in  a  jurisdiction  in  which  his 
foreign  letters  have  not  been  recognized  although  the  funds 
tendered  were  realized  from  the  personal  property  of  the  tes- 
tator situated  in  the  jurisdiction  in  which  the  tender  was  made. 
A  tender  so  made  is  not  validated  by  the  subsequent  issuance 
of  letters  from  a  court  in  the  jurisdiction  in  which  the  legatee 
was  at  the  time  it  was  made.- 

§  265.  To  whom.  A  tender  should,  in  general,  be  made 
direct  to  the  creditor.'  But  it  may  be  made  to  his  attorney* 
or  authorized  agent,'^  although  such  attorney  falsely  denies  his 
authority,^  or  such  agent  has  been  instructed  not  to  receive  it.^ 
A  tender  to  an  agent  is  good  though  it  was  made  on  the  sup- 
position that  he  continued  to  be  the  party  in  interest.^  An 
attorney,  having  a  demand  for  collection,  wrote  the  debtor  re- 
questing him  to  pay  it  at  the  attornej^'s  office;  the  debtor  sub- 
sequently made  a  tender  in  the  absence  of  the  attorney  [450] 
to  his  clerk  in  his  office,  and  it  was  held  good.^  Such  a  request 
of  payment  gives  the  debtor  a  right  to  treat  any  person  havino- 
charge  of  such  office  in  the  absence  of  the  attorney  as  author- 
ized to  receive  the  money.^"  But  a  letter  from  the  attorney, 
demanding  payment  to  him  instead  of  at  his  office,  will  not 
warrant  a  tender  to  a  writing  clerk  there  who  disclaims  and 
has  not  authority  to  receive  it." 

1  Kortright  v.  Cady,  21  N.  Y.  343.  «  Mclniffe  v.  Wheelock,  1  Gray,  600. 

2 "Welch  V.  Adams,  152  Mass.  74,  25  'Muffatt  v.  Parsons,  1  Marsh.  55,  5 

N.  E.  Rep.  34,  9  L.  R.  A.  244.  Taunt.  307. 

3  Hornby  v.  Cramer,  12  How.  Pr.  ^  Conrad    v.    Trustees    of    Grand 

490:  Smith  v.  Smith,  2  Hill,  351.  Grove,  64  Wis.  258,  25  N.  W.  Rep.  24. 

A  tender  pending  an  appeal  need  ^  Wilmot  v.  Smith,  3  C.  &  P.  453; 

not  be  made  to  the  attorney;  it  is  Kirton  v.  Braithwaite,  1  M.  &  \V.  310. 

good  if  made  to  the  opposite  party  '"Watson  v.  Hetherington,  1  C.  & 

in  person.     Ferrea  v.  Tubbs,  125  Cal.  K.  30;  Kirton  v.  Braithwaite,  1  M.  & 

687,  58  Pac.  Rep.  308.  W.  310. 

^ Salter  v.  Shove,  60  Minn.  483,  63  "Id.;  Bingham  v.  Allport,  1  N.  & 

N.  W.  Rep.  1126;  Brown  v.  Mead,  68  M.  398. 

Vt.  215,  34  AtL  Rep.  950;  Billiot  v.  A  tender  to  an  attorney  with  whom 

Robinson,  13  La.  Ann.  529;  Wilmot  V.  a  demand  is  lodged  for  collection, 

Smith,  3  C.  &  P.  453.  before  suit  is  brought,  is  unavailing; 

^Hargous  v.  Lahens,  3  Sandf.  213;  if  made  after  suit  is  commenced  the 

Goodland  v.  Blewith,  1  Camp.  477;  costs  must  be  tendered.    Thurston  v. 

Anonymous,  1  Esp.  349;  Continental  Blaisdall,  8  N.  H.  367. 

Ins.  Co.  V.  Miller,  4  Ind.  App.  553,  30  In  Finch  v.  Boning,  4  C.  P.  Div. 

N.  E.  Rep,  718.  143,  the  judges  disagreed  as  to  the 


676  CONVENTIONAL   LIQUIDATIONS   AND    DISCHAEGE8.       [§  265. 

"When  an  instrument  is  pa^^able  at  a  bank,  and  is  lodged 
there  for  collection,  the  bank  becomes  the  agent  of  the  payee 
to  receive  payment.  The  agency  extends  no  further,  and  with- 
out special  authority  such  agent  can  only  receive  payment  of 
the  debt  due  his  principal  in  the  legal  currency  of  the  country, 
or  in  bills  which  pass  as  money  at  their  par  value  by  the  con- 
sent of  the  community.^  A  tender  may  be  made  to  a  clerk  in 
a  store  for  goods  there  purchased,  and  it  will  be  equivalent  to 
a  tender  made  to  the  principal,  even  though  prior  thereto  the 
claim  has  been  lodged  with  an  attorney  for  suit.  Such  clerk 
can  also  waive,  either  by  implication  or  expressly,  any  objec- 
tion to  the  validity  of  the  tender  on  the  ground  of  its  being  in 
bank  bills  and  not  in  specie.^  Where  there  is  no  general  agency 
to  collect,  but  power  simply  to  receive  the  sum  demanded,  a 
tender  of  a  less  sum  to  such  special  agent  is  invalid ;  as  where 
the  plaintiff  sent  his  son  to  demand  a  specific  amount  for  an 
unliquidated  claim,  it  was  held  that  an  offer  to  him  of  a  less 
sum  could  not  be  considered  as  a  tender  to  the  plaintiff.^  Where 
an  agent  of  the  defendants  had  been  notified  not  to  receive  a 
tender,  but  to  refer  the  plaintiff  to  a  third  person  named,  of 
which  the  plaintiff  had  notice,  the  latter  was  at  liberty  to  seek 
the  person  to  whom  he  had  been  so  referred  or  the  defendants, 
at  his  election,  and  could  make  the  tender  to  either.*  A  tender 
made  to  the  holder  of  a  note  is  good  though  he  subsequently 
assigns  it;^  but  it  is  otherwise  as  to  a  tender  to  the  original 
payee  if  he  has  transferred  the  obligation.^  A  mortgagor  or 
his  assignee  must  make  tender  to  the  mortgagee  or  person 
claiming  under  him;  it  cannot  be  made  to  the  assignee  of  the 
[451]  contract  secured  by  the  mortgage.^  Money  due  to  a 
cestui  que  trust  should  be  tendered  to  the  trustee.®  But  a  tender 
to  an  executor  while  in  another  state,  before  he  had  acted  or 

effect  of  a  disclaimer  by  a  solicitor's  *  Abshire  v.  Corey,  113  Ind.  484,  15 

clerk  who  said  that  the  solicitor  was  N.  E.  Rep.  685. 

out  of  the  office,  and  he,  the  clerk,  ^  Burns  v.  True,  5  Tex.  Civ.  App.  74, 

had  no  instructions,  24  S.  W.  Rep.  338. 

1  Ward  V.  Smith,  7  Wall.  447.    See  ^  Smith  v.  Kelley,  27  Ma  237,  46 

§  231.  Am.  Dec.  595. 

2Hoyt  V.  Byrnes.  11  Me.  475.  sChahoon  v.  Hollenback,  16  S.  & 

» Chipman  V.  Bates,  5  Vt.  14a  R.  425,  16   Am.    Dec.   587;   Cook  v. 

*  Hoyt  V.  Hall,  3  Bosw.  42.  Kelley,   9   Bosw.   358;    Hay  ward  v. 

Munger,  14  Iowa,  516. 


\ 


§  2G6.] 


TENDER. 


G77 


qualified,  will  not  stop  interest.*  If  a  tender  is  made  to  a  clerk, 
agent,  or  other  representative  of  the  creditor,  it  must  be  shown 
that  he  had  authority  to  receive  the  money.'^  A  debt  duo 
jointly  to  several  persons  may  be  tendered  to  either,  but  should 
be  pleaded  as  tendered  to  all.=»  If  no  place  has  been  appointed 
for  payment,  a  tender  to  the  creditor  wherever  he  may  be  found 
is  good;  *  but  if  it  is  made  without  notice  at  an  unusual  or  un- 
fit place  it  may  be  declined  if  it  is  necessary  for  the  creditor 
to  examine  the  account  between  him  and  his  debtor.' 

§  266.  It  must  be  sufiicieiit  in  amount.  The  tender  must 
include  the  full  amount  due.  A  tender  of  part  of  a  debt  is  in- 
operative.^ The  creditor  is  not  obliged  to  receive  it.  The 
debtor  must,  at  his  peril,  tender  enough;  if  his  tender  is  less 
it  will  be  of  no  avail,  though  the  deficiency  is  small  and  oc- 


iTodd  V.  Parker,  1  N.  J.  L.  45. 

2Hargous  v.  Lahens,  3  Sandf.  213; 
Goodland  v.  Blewith,  1  Camp,  477; 
Anonymous,  1  Esp.  349;  Jevvett  v. 
Earle.  53  N.  Y.  Super.  Ct.  349. 

3  Wyckoflf  V.  Anthony,  9  Daly,  417; 
Douglas  V.  Patrick,  3  T.  R.  683; 
Southard  v.  Pope,  9  B.  Mon.  264; 
Beebe  v,  Knapp,  28  Mich,  53;  Flanigan 
V.  Seelye,  53  Minn,  23,  55  N.  W.  Rep. 
115.  See  Dawson  v.  Ewing,  16  S.  & 
R.  371. 

*Slingerland  v.  Morse,  8  Johns.  474; 
Hunter  v.  Le  Conte,  6  Cow.  728.  See 
^214. 

5  Waldron  v.  Murphy,  40  Mich.  668; 
Chase  v.  Welsh,  45  id.  345,  7  N.  W. 
Rep,  895;  Root  v.  Bradley,  49  Mich. 
27,  12  N.  W.  Rep.  896. 

6  San  Pedro  Lumber  Co,  v.  Rey- 
nolds, 111  Cal,  588,  44  Pac.  Rep.  309; 
Helphrey  v.  Chicago,  etc.  R,  Co.,  29 
Iowa,  480;  Louisiana  Molasses  Co.  v. 
Le  Sassier,  52  La.  Ann.  2070,  28  So. 
Rep.  217;  Hoppe  &  Strub  Bottling  Co. 
V.  Sacks,  11  Ohio  Ct.  Ct.  3;  Elderkin 
V.  Fellows,  60  Wis.  339,  19  N.  W.  Rep, 
101;  Dixon  v.  Clark,  5  C.  B.  365; 
Baker  v.  Gasque,  3  Strobh.  25:  Pat- 
note  V.  Sanders,  41  Vt.  66,  98  Am.  Dec. 
664;  Boyden  v.  Moore,  5  Mass.  365. 

In  the  last  case  Parsons,  C,  J.,  said: 


"  It  is  a  well-known  rule  that  the  de- 
fendant must  take  care  at  his  peril 
to  tender  enough;  and  if  he  does  not, 
and  if  the  plaintiff  replies  that  there 
is  more  due  than  is  tendered,  which 
is  traversed,  the  issue  will  be  against 
the  defendant,  and  it  will  be  the 
duty  of  the  jury  to  assess  for  the 
plaintiff  the  amount  due  on  the 
promise;  and  if  not  covered  by  the 
money  tendered,  he  will  have  judg- 
ment for  the  balance.  ...  In 
calculating,  there  may  be,  and  prob- 
ably must  arise,  fractions  not  to  be 
expressed  in  the  legal  money  of  ac- 
count; these  fractions  are  trilles,  and 
may  be  rejected,  .  .  .  If  any  sum 
large  enough  to  be  discharged  in  the 
current  coin  of  the  country  is  a  trifle 
which,  although  due,  the  jury  are 
not  obliged  to  award  to  the  plaintiff, 
the  creditor,  it  will  be  difficult  to 
draw  a  line  and  say  how  large  a  sum 
must  be  not  to  be  a  trifle.  The  law 
fixes  no  such  rule," 

Under  the  code  of  California  a 
tender  is  not  ineffectual  because  it  is 
insufficient  in  amount  unless  it  is  ob- 
jected to  for  that  reason  at  the  time 
it  is  made.  Oakland  Bank  v.  Apple- 
garth,  67  Cal.  80,  7  Pac,  Rep.  139,  476. 


6T8  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§   '206. 

curred  by  mistake.^  If  a  tender  is  made  after  suit  it  must 
cover  the  costs,^  including  the  fees  of  witnesses.  "  The  fact 
that  the  plaintiff  did  not  inform  the  defendant  that  he  had 
summoned  these  witnesses  was  of  no  importance.  If  the  de- 
fendant desired  any  information  astotheamountof  the  plaint- 
iff's costs  from  him,  he  should  have  inquired,  for  he  knew  a 
suit  had  been  brought  and  some  costs  had  accrued,  and  if  he 
chose  to  make  a  tender  without  inquiry,  the  plaintiff  certainl}'- 
was  not  in  fault.'  Tender  of  the  amount  due  on  a  note  must 
include  attorney's  fees  when  the  note  stipulates  for  their  pay- 
ment and  is  in  the  hands  of  an  attorney  for  collection,  and 
there  is  a  dispute  as  to  the  amount  due.  But  if  the  payee  re- 
fuses to  give  information  concerning  the  fees,  or  the  maker  be 
ignorant  of  the  employment  of  an  attorney,  or  the  tender  be 
refused  upon  other  grounds,  and  the  maker  be  thereby  misled, 
the  court  would  protect  him  in  making  the  tender.*  The  ne- 
cessity of  tendering  the  whole  sum  due  does  not  require  the 
[452]  debtor  to  tender  a  sum  to  cover  all  demands  his  creditor 
may  have  against  him.  He  may  tender  for  the  payment  of 
any  one  of  several  debts  which  is  distinct  and  separable.*  A 
tender  of  a  gross  sum  upon   several  demands,  without  des- 

1  Id.  2  Smith  V.  Wilbur,  35  Vt.  133. 

In  Harris  v.  Jex.  55  N.  Y.  421, 14  Am.  3  Rouyer  v.  Miller,  16  Ind.  App.  519, 

Rep.  285,  a  tender  was  made  upon  a  44  N.   K   Rep.   51,   45  id.   674.    See 

debt  contracted  prior  to  the  passage  Haskell  v.  Brewer,  11  Me.  258;  Nelson 

of  the  legal  tender  law  of  1862;  and  v.  Robson,  17  Minn.  284 

this  tender  was  made  in  legal  tender  <  Emerson  v.  White,  10  Gray,  351; 

notes  after  the  decision  in  Hepburn  People  v.  Banker,  8  How.  Pr.  258; 

V.  Griswold,  8  Wall.  603,  and  before  Collier  v.  White,  67  Miss.  133,  6  So. 

the  reversal  of  that  case  in  Knox  Rep.  618. 

V.  Lee,  12  Wall.  457;  it  was  refused  But  in  Connecticut  a  tender  made 

because  it  was  not  the  currency  pay-  before  the  defendant  has  been  served 

able.  And  it  was  held  that  the  plaint-  with  process  is  good  though  costs  are 

iff    was    justified    in    refusing    the  not  included.     Ashburn  v.  Poulter, 

tender;  he  had  a  right  to  refuse  on  25  Conn,  553. 

the  decision  of  the  highest  judicial  ^  Wright  v.  Robinson,  84  Hun,  172, 

tribunal  in  the  land;  that  decision,  82  N.  Y.  Supp.  463;  North  Chicago 

for  the  time  being,  was  the  law,  and  Street  R.  Co.  v.  Le  Grand  Co.,  95  111. 

not    merely    the    evidence    of    it;  App.  435;  Hurt  v.  Cook,  151  Mo.  417, 

but  it  was    intimated    that   if  the  52  S.  W.  Rep.  396;  East  Tennessee, 

tender  had  been  kept  good  it  would  etc.  R.  Co.  v.  Wright,  76  Ga.  532;  2 

have  been  a  defense  to  interest  and  Par.  on  Cont.  641. 
costs,  after  the  decision  of  Knox  v. 
Lee. 


§  266.] 


TENDER. 


079 


ignating  the  amount  tendered  upon  each,  is  sudicient.'  Where, 
however,  there  are  several  separate  demands  sued  for,  and 
there  has  been  a  tender  made  of  a  less  sum  than  the  amount 
demanded  for  the  whole,  but  not  specifically  applied  to  any 
separable  portion  of  it,  it  has  been  held  that  it  cannot  be  ap- 
plied in  pleading  to  either.^  A  tender  of  the  amount  justly 
due  by  the  condition  of  a  bond  is  good  although  less  than  the 
penalty.^  The  penalty  is  only  nominally  the  debt,  and  the 
tender  of  that  sum  which  if  paid  would  satisfy  the  bond  will 
be  effectual.*  A  tender  is  not  invalidated  by  being  of  a  larger 
sum  than  the  amount  it  is  offered  to  pay  or  is  demanded,  even 
though  change  is  requested,  unless  objection  is  made  to  it  on 
that  account.* 


1  Johnson  v.  Cranage,  45  Mich.  14, 
7  N.  W.  Rep.  188;  Thetford  v.  Hub- 
bard, 23  Vt.  440. 

2  Hardingliam  v.  Allen,  5  C.  B.  793. 
If  A..  B.  and  C.  have  a  joint  demand, 
and  C.  has  a  separate  demand 
against  D.,  and  D.  offers  A.  to  pay 
him  both  the  debts,  which  A.  re- 
fuses, without  objecting  to  the  form 
of  the  tender,  on  account  of  being 
entitled  only  to  the  joint  demand, 
D.  may  plead  this  tender  in  bar  of 
an  action  on  the  joint  demand,  and 
should  state  it  as  a  tender  to  A.,  B. 
and  C.  Douglas  v.  Patrick,  3  T.  R. 
688.  But  see  Strong  v.  Harvey,  3 
Biug.  304,  where  it  is  held  that  if  a 
party  has  separate  demands  for  un- 
equal sums  against  several  persons, 
an  offer  of  one  sum  for  the  debts  of  all 
will  not  support  a  plea  stating  that 
a  certain  portion  of  this  sum  was 
tendered  for  the  debt  of  one. 

It  was  held  in  Hampshire  Manuf. 
Bank  v.  Billings,  17  Pick.  89,  that  a 
tender  of  the  amount  due  on  a  joint 
and  several  promissory  note  by  a 
surety,  while  an  action  brought  by 
a  holder  against  the  principal  was 
pending,  will  not  discharge  the 
surety  from  his  liability  unless  he 
offers  to  indemnify  the  holder  against 
the  costs  of  such  action. 


8  Tracy  v.  Strong.  2  Conn.  659. 

4 See  Fraser  v.  Little,  13  Mich.  195; 
Spencer  v.  Perry,  18  Mich.  394. 

5  North  Chicago  Street  R.  Co.  v. 
Le  Grand  Co.,  95  III.  App.  435. 

In  Dean  v.  James,  4  B.  &  Ad.  546, 
it  was  held  that  a  tender  of  201.  9s. 
GcL  in  bank  notes  is  sufficient  to  sup- 
port a  plea  of  tender  of  20Z.  Taun- 
ton, J.,  referring  to  Watkins  v.  Robb, 
2  Esp.  710,  said:  "There  the  defend- 
ant tendered  a  57.  note  and  demand- 
ed 6c?.  change,  which  the  defendant 
was  not  bound  to  give."  Betterbee  v. 
Davis,  3  Camp.  71.  Littledale,  J.,  said: 
"This  case  falls  within  the  third  res- 
olution in  Wade's  Case,  5  Co.  115, 
that  if  a  man  tender  more  than  he 
ought  to  pay  it  is  good,  for  omne 
majus  continet  in  se  minus,  and  the 
other  is  bound  to  accept  so  much  of 
it  as  is  due  to  him."  The  argument 
against  the  tender  was  that  a  sub- 
sequent demand  must  be  of  the 
specific  sum  tendered,  and  if  that 
sum  is  more  than  the  plaintiff's  de- 
mand, it  would  be  inapplicable.  Re- 
ferring to  this  Littledale,  J.,  con- 
tinues: "  As  to  replying  a  demand  it 
is  not  the  plaintiff's  business  to  de- 
mand more  than  is  actually  due;  it  is 
enough  if  in  his  replication  he  admits 
that  the  sum  due  was  tendered,  but 


680 


CONVENTIONAL   LIQUIDATIONS    AND    DISCHAEGES.       [§  267. 


[453]  §  267.  Same  subject.  The  creditor  is  entitled  to 
payment  in  money  made  legal  tender  by  law,  and  the  debtor 
has  a  right  to  make  payment  in  that  currency.  Debts  made 
payable  in  the  denominations  of  the  legal  tender  currency 
are  solvable  in  that  currency  at  par,  without  regard  to  when 
or  where  they  were  contracted,  or  the  relative  value  of 
[454]  the  denominations  in  that  currency  at  and  after  the 


alleges  that  he  afterwards  demanded 
that  and  it  was  refused." 

Lord  Abinger  said  in  Bevans  v. 
Rees,  5  M.  &  W.  306:  "  I  am  prepared 
to  say  that  if  the  creditor  knows  the 
amount  due  to  him,  and  is  offered  a 
larger  sum,  and  without  any  objec- 
tion of  a  want  of  change  makes 
quite  a  collateral  objection,  that  will 
be  a  good  tender."  Black  v.  Smith, 
Peake.  88;  Cadman  v.  Lubbuck,  5  D. 
&  Ry.  289;  Hubbard  v.  Chenango 
Bank,  8  Cow.  89;  Patterson  v.  Cox, 
25  Ind.  261;  Douglas  v.  Patrick,  3  T. 
R.  6«3;  Dean  v.  James.  4  B.  &  Ad. 
546;  Astley  v.  Reynolds,  2  Str.  916; 
Strong  V.  Harvey,  3  Bing.  304;  Rob- 
inson V.  Cook,  6  Taunt.  336;  Blow  v. 
Russell,  1  C.  &  P.  365. 

Cadman  v.  Lubbuck,  5  D.  &  Ry. 
289.  Where  the  defendant,  who 
owed  the  plaintiff  108Z.  for  principal 
and  interest  on  two  promissory 
notes,  in  consequence  of  an  applica- 
tion from  the  plaintiff's  attorney  for 
the  amount  sent  a  person  to  the  at- 
torney, who  told  such  attorney  that 
he  came  to  settle  the  amount  due  on 
the  notes,  and  desired  to  be  in- 
formed what  was  due,  and  laid 
down  150  sovereigns  on  a  desk,  out 
of  which  he  desired  the  attorney  to 
take  what  was  due  for  such  princi- 
pal and  interest,  but  the  attorney  re- 
fused to  do  so,  unless  a  shop  account 
due  from  the  plaintiff  to  the  defend- 
ant was  fixed  at  a  certain  amount, 
held  to  be  a  good  tender.  Bevans  v. 
Rees,  5  M.  &  W.  306.  A  tender  has 
been   held  vitiated  by  delivering  a 


counter-claim  at  the  same  time. 
Thus,  where  a  defendant  tendered 
seven  sovereigns  in  payment  of  a  de- 
mand of  Ql.  17s.  6d.,  and  said  to  the 
plaintiff.  "There,  take  your  de- 
mand," and  at  the  same  time  deliv- 
ered a  counter-claim  upon  the  plaint- 
iff of  11.  5s.,  -who  said  you  must  go 
to  my  attorney:  Held,  not  a  good 
tender  to  an  action  for  the  61. 17s.  Qd. 
Brady  v.  Jones,  2  D.  &  R.  305;  and 
see  Holland  v.  Phillips,  6  Esp.  46. 
See,  also,  Laing  v.  Meader,  1  C.  &  P. 
257. 

In  Saunders  v.  Frost,  5  Pick.  259, 
269,  there  was  a  tender  of  a  mort- 
gage debt  which  was  not  due,  and 
bearing  interest,  and  of  which  only 
interest  was  due.  Objection  was 
made  by  counsel  that  the  tender 
was  made  of  a  debt  not  due.  The 
tender  was  of  a  sum  equal  to  the 
interest  and  the  principal.  Parker, 
C.  J.,  said:  "But  it  appears  to  U3 
that,  in  order  to  avail  himself 
of  this  objection,  the  defendant 
ought  to  have  shown  a  willingness 
to  take  what  was  due,  and  to  have 
stated  that  he  claimed  to  hold  pos- 
session only  for  the  non-payment  of 
interest."  Odom  v.  Carter,  86  Tex. 
281. 

A  tender  of  $5  by  a  street-car  pas- 
senger who  has  no  smaller  money  is 
reasonable,  and  his  ejection  from  the 
car  thereafter  is  unlawful.  Barrett 
V.  Market  Street  Cable  R.  Co.,  81  Cal. 
296,  22  Pac.  Rep.  859, 15  Am.  St.  61, 6 
L  R.  A.  336. 


§  267.]  TENDER.  081 

contract  was  made.  The  legal  tender  currency  for  the  time 
bsing,  when  the  contract  is  performed  or  enforced,  is  the  cur- 
rency applicable  to  it.'  If  money  be  payable  in  the  legal  cur- 
rency of  another  country,  the  legal  rather  than  the  market 
equivalent  is  the  amount  to  be  paid.  A  contract  to  pay  in 
"dolkirs"  may  require  payment  in  either  coin  or  legal  tender 
currency  provided  by  the  government,  according  to  the  inten- 
tion of  the  parties.  Treasury  notes,  commonly  called  "green- 
backs," are  the  currency  payable,  unless  the  contract  itself 
indicates  the  intention  that  the  debt  be  paid  in  coin.'^  A  con- 
tract to  pay  in  "  dollars"  in  gold  and  silver  is  a  contract  for 
the  direct  payment  of  money;  neither  bullion,  gold  dust,  gold 
and  silver  bars,  old  spoons  and  rings,  are  a  proper  tender  in 
satisfaction.^  But  current  bank  notes,  which  pass  as  money, 
offered  in  payment  and  not  objected  to  on  that  ground,  will 
constitute  a  good  tender.*  When  a  debtor  tenders  a  bank 
check  in  payment  of  a  debt,  and  the  creditor  expressly  waives 
all  objection  to  that  mode  of  payment  and  only  objects  to  the 
amount,  it  is  good;*  but  not,  as  a  rule,  otherwise.®     If  numer- 

1  Story  on  Prom.  Notes,  §  390  and  Williams  v.  Eorer,  7  Mo.  556;  Cooley 
note;  George  v.  Concord,  45  N.  H.  v.  Weeks,  10  Yerg.  141;  Snow  v. 
434;  Wood  v.  Bullens,  6  Allen,  516;  Perry,  9  Pick.  539;  Wheeler  v. 
Pong  V.  De  Lindsey,  1  Dyer,  82a;  Knaggs,  8  Ohio,  169;  Fosdick  v.  Van 
Dooley  v.  Smith,  13  Wall,  604;  Legal  Husan,  21  Mich.  567;  Curtiss  v.  Green- 
Tender  Cases,  13  id.  457;  Trebilcock  banks,  24  Vt.  536;  Petrie  v.  Smith,  1 
V.  Wilson,  id.  687;  Vorgesv.  Giboney,  Bay,  115;  Brown  v.  Dysinger,  1 
38  Mo.  458;  Warnibold  v.  Schlich-  Rawle,  408.  See  Ward  v.  Smith,  7 
ting,  16  Iowa,  243;  Murray  v.  Harri-  Wall,  447. 

son,  47  Barb.  484;  Wilson  V.  Morgan,  &  Dale  v.  Richards,  21  D.  C.  312; 

4  Robert.  58;  Strong  v.  Farmers',  etc.  Jennings  v.  Mendenhall,  7  Ohio  St. 

Bank,  4  Mich.  350;  Wills  v.  Allison,  258. 

4  Heisk.  385;  Bond  v.  Greenwald,  id.  The    court    say    in  the   last  case 

453;  Caldwell  v.  Craig,  22  Gratt.  340.  cited:  "On  a    somewhat  extensive 

2  Trebilcock  v.  Wilson,  12  Wall,  examination  of  the  cases,  it  seems 
687.  to  us  that  mere  silence  is  held  to  be 

3  Hart  V.  Flynn,  8  Dana,  190.  See  a  waiver  of  objection  in  the  case  of 
Lang  V.  Waters,  47  Ala.  624;  McCune  current  bank  notes,  for  the  reason 
V.  Erfort,  43  Mo.  134.  that  they  constitute    the  common 

*  Brown  v.  Simons,  44  N.  H.  475;  currency  of  the  country,  and  are  by 

Ball  V,  Stanley,  5  Yerg.  199,  26  Am.  all  classes  paid  out  and  received  as 

Dec.  263;  Noe  v.  Hodges,  3  Humph,  money,  which  is  a  reason  that  does 

162;  Seawell  v.  Henry,  6  Ala.  226;  not  fully  apply  to  bank  checks.    All 

'Cummings  v.  Putnam,  19  N.  H.  569;  the  cases,  however,  proceed  on  tlie 

6Te  Poel  V.  Shutt,  57  Neb.  592,  78  N.  VV.  Rep.  28& 


682 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  268 


ous  payments  have  been  made  by  the  debtor  to  the  creditor  by 
checks,  and  no  objection  to  them  has  been  raised,  a  tender  by 
check  is  sufficient,  though  it  would  be  otherwise  if  the  creditor 
informed  his  debtor  of  an  objection  to  continue  receiving 
them.*  If  a  check  is  objected  toon  any  other  ground  than  that 
it  is  not  money  the  effect  of  the  tender  can  only  be  got  rid  of  by 
a  personal  demand  and  a  refusal  to  pay.-  Where  a  note  is 
[455]  payable  to  a  bank  in  which  the  debtor  has  a  deposit,  his 
check  on  such  bank  is  a  good  tender;'  but  a  note  or  other  ob- 
ligation of  the  creditor  is  not  a  legal  tender.  A  tender  for 
part  of  an  entire  demand  and  set-off  for  the  residue  cannot 
be  pleaded.* 

§  268.  How  made.  As  a  general  rule  the  money  must  be 
actually  produced  and  placed  within  the  power  of  the  creditor 
to  receive  it,  unless  he  dispense  with  its  production  by  express 
declaration  or  other  equivalent  act.*    A  mere  verbal  offer  to 


principle  that  where  all  objection  to 
the  proposed  medium  of  payment  is 
waived,  the  tender  is  good,  though 
not  made  in  coin;  and  the  only  dif- 
ference between  them  is  on  the 
question  as  to  what  shall  be  held  to 
be  conclusive  of  such  waiver." 

1  Wright  V.  Robinson,  84  Hun,  173, 
33  N.  Y.  Supp.  4r33:  Mitchell  v.  Ver- 
mont Copper  Mining  Co.,  67  N.  Y. 
280;  McGrath  v.  Gegner,  77  Md.  331, 
26  Atl.  Rep.  502,  39  Am.  St.  415. 

2  Daly  V.  Egan,  13  Vict.  L.  R.  81. 
3Shipp  V.  Stacker,  8  Mo.  145. 
"Lawful    current    money"  of    a 

state  is  construed  to  mean  money  is- 
sued by  congress.  Wharton  v.  Morris, 
1  Ball."  124;  McChord  v.  Ford,  3  T.  B. 
Mon.  166.  "  Current  lawful  money  " 
is  the  same.  Lee  v.  Biddis,  1  Dall. 
175.  But  "currency,"  where  bank 
notes  are  the  only  currency,  does  not 
mean  money.  McChord  v.  Ford, 
supra;  Lange  v.  Kohne,  1  McCord, 
115. 

A  tender  in  confederate  money 
was  held  not  good,  although  it  was 
at  the  time  the  circulating  currency 
in  the  community.     Graves  v.  Hard- 


esty,  19  La.  Ann.  186.  See  Parker  v. 
Broas,  20  id.  167;  but  see,  also,  Phil- 
lips V.  Gaston,  37  Ga.  16;  Tate  v. 
Smith,  70  N.  C.  685. 

*Carj  V,  Bancroft,  14  Pick.  315,  25 
Am.  Dec.  393;  Hallowell  &  A.  Bank 
V.  Howard,  13  Mass.  235;  Searles  v. 
Sadgrove,  85  Eng.  0.  L.  639,  5  El.  & 
Bl.  639. 

5  Pinney  v.  Jorgenson,  27  Minn,  26, 
6  N.  W.  Rep.  376;  Deering  Harvester 
Co.  V.  Hamilton,  80  Minn.  163,  83 
N.  W.  Rep.  44;  Te  Poel  v.  Shutt,  57 
Neb.  592,  78  N.  W.  Rep.  288;  Brown 
V.  Gilmore,  8  Me.  107,  22  Am.  Dec. 
223;  Ladd  v.  Patten,  1  Cranch  C.  C. 
263;  Thomas  v.  Evans,  10  East,  101; 
Liebrandt  v.  Myron  Lodge,  61  111.  81; 
Dickinson  v.  Shee,  4  Esp.  68;  Walker 
V.  Brown,  12  La.  Ann.  266:  Sands  v. 
Lyon,  18  Conn.  18;  Strong  v.  Blake, 
46  Barb.  227;  Matheson  v.  Kelly,  24 
Up.  Can.  C.  P.  598;  Holmes  v.  Holmes, 
13  Barb.  137;  Bakeman  v.  Pooler.  15 
Wend.  637;  Breed  v.  Hurd,  6  Pick. 
356;  Gilmore  v.  Holt,  4  id.  258;  East- 
land V.  Longshom,  1  N.  &  McC.  194 
Southworth  v.  Smith,  7  Cush.  891 
Lohman    v.   Crouch,  19  Gratt.  331 


§  2GS.] 


TENDEK. 


6  S3 


pay  a  certain  sum  does  not  constitute  a  tender.^  The  cases 
concur  in  the  foregoing  rule,  but  differ  somewhat  in  its  appli- 
cation. Where  there  is  a  verbal  offer  of  a  particular  [450] 
sura,  and  the  creditor  insists  on  more  being  due  in  such  man- 
ner as  amounts  to  a  declaration  that  the  offered  sum  would 
not  be  received,  the  actual  production  of  the  money  is  not 
necessary.2  The  immediate  departure  of  the  creditor  on  such 
an  offer  being  made,  or  any  intentional  evasion  of  the  debtor, 
would  seem  to  be  equivalent  to  an  express  refusal  of  it,  and 
equally  to  excuse  the  production  of  the  money.'   So  on  a  verbal 


Dunham  v,  Jackson,  6  Wend.  22; 
Mclntire  v.  Clark,  7  id;  330;  Sargent 
V.  Graham.  5  N.  H.  440,  33  Am.  Dec. 
469.  See  Champion  v.  Joslyn,  44  N. 
Y.  653;  Hill  v.  Place,  5  Abb.  Pr.  (N. 
S.)  18,  7  Robert.  389;  Borden  v.  Bor- 
den, 5  Mass.  67,  4  Am.  Deo.  32;  Sliu- 
gerland  v.  Morse,  8  Johns.  474; 
Blight  V.  Ashley,  1  Pet.  C.  C.  15; 
Thayer  v.  Brackett,  13  Mass.  450; 
Gary  v.  Bancroft,  14  Pick.  315,  25 
Am.  Dec.  393. 

1  Shank  v.  Groflf,  45  W.  Va.  543,  33 
S.  E.  Rep.  248;  De  Wolfe  v.  Taylor, 
71  Iowa.  648,  33  N.  W.  Rep.  154; 
Eastman  v.  Rapids.  31  Iowa,  590; 
Camp  V.  Simon,  34  Ala.  126;  Steele  v. 
Biggs,  22  111.  643;  Hornby  v.  Cramer, 
12  How.Pr.  490;  Sheredine  v.  Gaul,  2 
Dall.  190;  Bacon  v.  Smith,  2  La.  Ann. 
441;  Hunter  v.  Wa,rner,  1  Wis.  141. 
See  Harris  v.  Mulock,  9  How.  Pr. 
402;  Hill  v.  Place,  7  Robert.  389. 

2  Smith  V.  Old  Dominion  Building 
&  Loan  Ass'n,  119  N.  C.  257,  26  S.  E. 
Rep.  40;  Bradford  v.  Foster,  87  Tenn. 
11,  9  S.  W.  Rep.  195;  Johnson  v. 
Garlichs,  63  Mo.  App.  578:  Graham 
V.  Frazier.  49  Neb.  90,  68  N.  W.  Rep. 
367;  Bender  v.  Bean,  52  Ark.  132,  13 
S.  W.  Rep.  180,  341;  Pinney  v.  Jor- 
genson,  27  Minn.  26,  6  N.  W.  Rep. 
376;  Black  v.  Smith,  Peake,  88;  Jack- 
son V.  Jacob,  3  Bing.  N.  C.  869;  Sands 
V.  Lyon,  18  Conn.  18;  Read  v.  Gold- 
ring,  2M.  &  S.  86;  Finch  v.  Brook,  1 
Scott,  70;  Dauks,  Ex  parte,  2  De  Gex, 


M.  &  G.  936;  Murray  v.  Roosevelt, 
Anth.  101;  Vaupell  v.  Woodward,  2 
Sandf.  Ch.  143;  Stone  v.  Sprague,  20 
Barb.  509;  Dana  v.  Fiedler,  IE.  D. 
Smith,  463;  Slingerland  v.  Morse,  8 
Johns.  474;  Everett  v.  Saltus,  15 
Wend.  474;  Warren  v.  Mains,  7  Johns. 
476;  State  v.  Spicer,  4  Houst.  100; 
Hazard  v.  Loring,  10  Gush.  207; 
Strong  V.  Blake,  46  Barb.  227;  Apple- 
ton  V.  Donaldson,  3  Pa.  381. 

In  Dunham  v.  Jackson,  6  Wend. 
23,  it  was  held  that  a  hesitating  re- 
fusal, based  on  a  claim  of  more  than 
is  due,  will  not  dispense  with  the 
actual  production  of  the  money. 
Sargent  v.  Graham,  5  N.  H.  440,  22 
Am.  Dec.  469;  Harding  v.  Davies,  2 
C.  &  P.  77. 

3  Continental  Ins.  Co.  v.  Miller,  4 
Ind.  App.553,  30  N.  E.Rep.  718:  Adams 
Exp.  Co.  V.  Harris,  120  Ind.  73,  21  N. 
E.  Rep.  340,  16  Am.  St  315,  7  L.  K. 
A.  214;  West  v.  Averill  Grocery  Co., 
109  Iowa,  488,  80  N.  W.  Rep.  555; 
Hurt  V.  Cook,  151  Mo.  417,  52  S.  W. 
Rep.  39G;  Schayer  v.  Commonwealth 
Loan  Co.,  163  Mass.  3J2,  39  N.  E.  Rep. 
1110;  Gilmore  v.  Holt,  4  Pick.  257; 
South  worth  v.  Smith,  7  Gush.  391; 
Judd  V.  Ensign,  6  Barb.  258;  Houbie 
V.  Volkening.  49  How.  Pr.  169;  Sands 
V.  Lyon,  18  Conn.  18;  Raines  v.  Jones, 
4  Humph.  490;  Littel  v.  Nichols, 
Hard.  60;  Holmes  v.  Homes,  12  Barb. 
137.  But  see  Leatherdale  v.  Sweep- 
stone,  3  C.  &  P.  342;  Knight  v.  Ab- 


684  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  268. 

offer  of  a  specified  sum  in  legal  tender  notes  in  which  the  debt 
might  be  paid,  a  declaration  by  the  creditor  that  he  would  re- 
ceive nothing  but  gold  or  silver  would  dispense  with  the  act- 
ual production  of  the  offered  money.'  An  absolute  refusal  to 
receive  the  amount,  or,  in  case  of  mutual  executory  contracts, 
to  do  the  act  in  consideration  of  which  it  is  to  be  paid,  is  a 
waiver  of  production.-  But  the  debtor  must  have  the  money 
to  immediately  comply  with  his  offer;  having  it  in  a  bag  is 
[457]  no  objection.'  In  some  cases  it  is  held  that  such  a  re- 
fusal will  not  dispense  with  the  actual  production  of  the  money; 
that  there  must  be  some  declaration  or  equivalent  act  to  the 
effect  that  the  debtor  need  not  offer  it.*  The  sight  of  the 
money  may  tempt  the  creditor  to  accept  it.*  The  question 
whether  the  production  has  been  dispensed  with  is  for  the 
jury,  and  if  they  find  the  facts  specially  and  do  not  find  the 
fact  of  dispensation,  the  court  will  not  infer  it.^  The  money 
must  be  actually  at  hand  and  ready  to  be  produced  immedi- 
ately if  it  should  be  accepted.  It  is  not  enough  that  a  third 
person  has  it  on  the  spot  and  is  willing  to  loan  it,  unless  he 
actually  consents  to  do  so  for  the  purpose  of  the  tender.^     At 

bott,  30  Vt.  577;  Thome  v.  Mosher,  Walk.  (Miss.)  369,  12  Am.  Dec.  570. 
20  N.  J.  Eq.  267,  36  Am.  Rep.  542.  Compare  Sharp  v.  Todd,  38  N.  J.  Eq. 

1  Chinn  v.  Bretches,  43  Kan.  316,  22     234. 

Pac.  Rep.  426;  Hanna  v,  Rateldn,  43  *  Thomas  v.  Evans,  10  East,  101; 
111.  462;  Hayward  v.  Hunger,  14  Douglas  v.  Patrick,  3  T.  R  683;  Dick- 
Iowa,  516;  Wynkoop  v.  Cowing,  21  inson  v.  Shee,  4  Esp.  68;  Finch  v. 
III.  570.  Brook,  1   Bing.  N.  C.  253;  Leather- 

2  Murray  v.  Roosevelt,  Anth.  101;  dale  v.  Sweepstone,  3  C.  &  P.  342; 
Hazard  v.  Loring,  10  Cush.  267;  Firth  v.  Purvis,  5  T.  R.  432;  Kraus 
Vaupell  v.  Woodward,  2  Sandf.  Ch.  v.  Arnold,  7  Moore,  59;  Brown  v. 
143;  Strong  v.  Blake.  46  Barb.  227;  Gilmore,  8  Me.  107,  22  Am.  Dec.  223; 
Stone  V.  Sprague,  20  id.  509;  Apple-  Bakeman  v.  Pooler,  15  Wend.  637. 
ton  V.  Donaldson,  3  Pa.  381;  Dana  v.  5  Finch  v.  Brook,  supra. 
Fiedler,  1  E.  D.  Smith,  463;  Slinger-  6  id.;  2  Greenlf.  Ev.,  ^  603. 

land  V.  Morse,  8  Johns.  474;  Everett  The  burden  of  proving  readiness 

V.  Saltus,  15  Wend.  474;  Warren  v.  andability  to  pay  is  upon  the  debtor. 

Mains,  7  Johns.  476;    Thompson    v.  Ladd  v.  Mason,  10  Ore.  308;  Park  v. 

Lyon,  40  W.  Va.  78,  20  S.  E.  Rep.  812.  Wiley,  67  Ala.  310. 

3  Con  way  V.  Case,  22  111.  127;  Breed  ''Sargent  v.  Graham,  5  N.  H.  440, 
V.  Hurd,  6  Pick.  356;  Davis  v.  Stone-  22  Am.  Dec.  469;  Bakeman  v.  Pooler, 
street,  4  Ind.  101;  Harding  v.Davies,  15  Wend.  637;  Breed  v.  Hurd,  6 
2  C.  &  P.  77;  Borden  v.  Borden,  5  Pick.  356;  Eastland  v.  Longshorn,  1 
Mass.  67,  4  Am.  Dec.   32;   Sucklinge  N.  &  McC.  194 

V.  Coney,  Noy,  74;  Behaly  v.  Hatch, 


§  208.] 


TENDEK. 


685 


an  interview  between  the  pLaintiff  and  the  defendant  the  latter 
was  willing  to  pay  £10,  and  a  third  person  otl'ered  to  go  up- 
stairs and  fetch  that  sum,  but  was  prevented  by  the  plaintiff 
saying  "  he  cannot  take  it."  Such  offer  was  held  a  good  tender.* 
A  tender  made  by  holding  an  unstated  sum  in  hand,  [-t.iS] 
peremptorily  rejected  without  inquiry  as  to  amount,  is  good.- 


1  Harding  v.  Davies,  2  C.  &  P.  77. 
But  in  Kraus  v.  Arnold,  7  Moore,  59, 
the  defendant  ordered  A.  to  pay  the 
plaintiff  £7  12s.,  and  the  clerk  of  the 
plaintiff  demanded  £8,  on  which  A. 
said  he  was  only  ordered  to  pay  £7 
13s.,  which  sum  was  in  the  hands  of 
B.,  and  B.  put  his  hand  to  his  pocket 
with  a  view  to  pulling  out  his  pocket- 
book  to  pay  £7  12s.,  but  did  not  do 
so,  by  the  desire  of  A. ;  but  B.  could 
not  say  whether  he  had  that  sum 
about  him,  but  swore  he  bad  it  in 
his  house,  at  the  door  of  which  he 
was  standing  at  the  time.  Held,  not 
a  legal  tender,  because  the  money 
was  not  produced. 

And  in  Glasscott  v.  Day,  5  Esp.  48, 
it  was  held  the  tender  was  not  good 
because  the  money  was  not  in  sight; 
the  witness  supposed  it  was  in  the 
desk,  but  never  saw  it  produced; 
and  it  did  not  appear  that  if  the 
creditor  had  been  willing  to  accept 
the  money  it  could  be  immediately 
paid;  the  money  should  be  at  hand 
and  capable  of  immediate  delivery. 

In  Breed  v.  Kurd,  6  Pick.  356,  a 
witness  told  the  plaintiff  that  the 
defendant  had  left  money  with  him 
to  pay  his  bill,  and  that  if  tlie  plaint- 
iff would  make  it  right  by  deducting 
a  certain  sum  he  would  pay  it,  at 
the  same  time  making  a  motion  with 
his  hand  towards  his  desk,  at  which 
he  was  then  standing;  he  swore  that 
he  believed,  but  did  not  know,  that 
there  was  money  enough  in  his  desk; 
but  if  there  was  not,  he  would  have 
obtained  it  in  five  minutes  if  the 
plaintiff  would  have  made  the  de- 
duction;   but   the   plaintiff    replied 


that  he  would  deduct  nothing.  Held, 
not  a  tender. 

2  State  v.  Spicer,  4  Houst.  100.  It 
appeared  in  this  case  that  the  par- 
ties met,  and  the  debtor,  in  his 
wagon,  which  stopped  on  meeting 
the  creditor,  said;  "I've  got  the 
money  to  pay  you,"  specifying  the 
claim,  and  put  his  hand  into  his 
pocket  to  take  out  the  bag  which 
contained  the  money;  while  he  was 
doing  this  the  creditor  said,  "I  want 
nothing  to  do  with  such  a  cut-throat 
as  you,"  and  walked  rapidly  away. 
The  jury  found  that  the  debtor  was 
thei'eby  prevented  from  producing 
the  money  and  offering  it  to  the 
creditor,  and  it  was  held  a  good  ten- 
der.    Sands  v.  Lyon,  18  Conn.  18. 

In  Knight  v,  Abbott,  30  Vt.  577, 
the  defendant,  desiring  to  make  a 
tender,  said  to  the  plaintiff  as  he 
was  passing  in  a  wagon,  "  I  want  to 
tender  you  this  money  for  labor  you 
have  done  for  me,"  at  the  same  time 
holding  a  sum  in  his  hand  equal  to 
his  indebtedness,  but  not  mention- 
ing any  amount;  the  plaintiff  did  not 
reply,  nor  stop  his  team.  Held,  not 
a  good  tender. 

In  Thorne  v.  Mosher,  20  N.  J.  Eq. 
257,  A.  offered  to  pay  money  to  B., 
holding  her  purse  in  her  hand  in 
sight  of  B.,  who  saw  the  purse,  but 
not  the  bills.  A.  opened  the  purse, 
and  was  in  the  act  of  taking  out  the 
bills,  but  stopped  on  account  of  the 
refusal  of  B.  to  receive  tlie  money. 
Held,  that  the  offer  was  neither  pay- 
ment nor  tender,  but  the  refusal  was 
an  excuse  for  not  making  a  tender. 


686  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  269. 

To  make  a  valid  tender  under  a  statute  providing  that  an  offer 
in  writing  to  pay  a  particular  sura  of  money  is,  if  not  accepted, 
equivalent  to  the  actual  production  and  tender  of  the  money, 
the  party  must  have  the  ability  to  produce  the  money,  and 
must  act  in  good  faith.  Such  an  offer  does  not  deprive  the 
creditor  of  the  right  to  a  reasonable  time  in  which  to  ascertain 
the  amount  due,  and  to  determine  whether  he  will  accept.^ 

§  269.  Where  to  be  made.  If  a  debt  is  payable  at  a  partic- 
ular place  the  creditor  has  a  right  to  receive  the  money  there.- 
When  payable  at  a  bank,  the  designation  of  place  imports  a 
stipulation  that  the  holder  will  have  the  instrument  on  which 
the  money  is  payable  at  the  bank  to  receive  payment,  and  that 
the  debtor  will  have  the  funds  there  to  pay  it;  and  it  is  the 
general  usage  in  such  cases  to  lodge  the  instrument  with  the 
bank  for  collection.  If  the  instrument  is  not  there  lodged, 
and  the  debtor  is  there  at  maturity  with  the  necessary  funds 
to  pay  it,  he  so  far  satisfies  the  contract  that  he  cannot  be 
made  responsible  for  any  future  damages,  either  in  costs  of 
suit  or  interest  for  the  delay.'  Having  money,  howev^er,  in  a 
bank  where  a  note  is  payable  is  not  a  tender  unless  it  is  in 
some  way  appropriated  to  the  note.*  A  tender  to  the  cashier 
[•459]  of  the  amount  of  a  note  payable  at  his  bank,  coupled 
with  a  demand  of  the  note,  is  not  good,  it  not  being  there  at 
the  time,  and  the  money  not  being  deposited  nor  afterwards 
offered.'^  Where  no  place  of  payment  is  appointed  the  debt  is 
payable  anywhere;  and  it  is  the  duty  of  the  debtor  to  seek  the 
creditor  if  within  the  state.®     If  the  creditor  is  without  the 


^  Hyams  v.  Bamberger,  10  Utah,  1,  Houbie  v.  Volkening,   49  How.  Pr. 

36  Paa  Rep.  202.  169;  Harris  v.  Mulock,  9  id.  402. 

2  United  States  v.  Gurney,  4  In  the  last  case  it  appeared  that  the 
Cranch,  338;  Adams  v.  Rutherford,  creditor  went  to  the  debtor's  office  to 
13  Ore.  78, 18  Pac.  Rep.  896.  See  §  214.  receive  payment.     While  in  the  act 

3  Ward  V.  Smith,  7  Wall.  447;  of  counting  one  of  several  packages 
Cheney  v.  Bilby,  20  C.  C.  A.  291,  74  of  bank  bills  delivered  to  him  by  the 
Fed.  Rep.  52.  debtor  as  payment,  he  suddenly  left 

*  Myers  v.  Byington,  34  Iowa,  205.  the    office    by    reason   of  insulting 

5  Balrae  v.  Wambaugh,  16  Minn,  language  addressed  to  him  by  the 
116;  Hill  V.  Place,  7  Robert.  389.  See  latter.  It  was  held  that  the  money 
Rowe  V.  Young,  2  Brod,  &  Bing.  165;  not  being  current  coin,  it  would  not 
Bacon  v.  Dyer,  12  Me.  19;  Wallace  v.  be  a  tender  if  the  creditor  objected 
McConnell,  13  Pet.  136.  to  it  for  that  reason;    therefore  to 

6  Littell    V.    Nichols.   Hardin,   66;  constitute  that  money  a  tender,  the 


.§  270.] 


TENDER. 


687 


state  the  tender  is  dispensed  with,  and  no  riglits  are  lost  by 
the  debtor's  inability  to  make  it.^  The  publication  of  a  notice 
of  a  change  in  the  place  designated  for  payment  of  the  princi- 
pal of  bonds  does  not  affect  their  holders  without  actual  notice 
of  such  change.^ 

§  270.  Must  be  unconditional.  A  tender  must  bo  uncondi- 
tional,' or  at  least  cannot  be  clogged  by  any  condition  to  which 
the  creditor  can  have  reasonable  objection;  ^  so  that  if  he  takes 
the  money  and  there  is  more  due,  he  may  still  bring  an  action 
for  the  residue.*  An  offer  of  a  certain  sum  in  full  of  a  [400] 
demand  is  not  a  good  tender.^  But  a  tender  is  not  vitiated  by 
being  an  offer  of  payment  under  protest.     If  the  debtor  abso- 


debtor  was  obliged  to  give  the  cred- 
itor time  sufficient  to  ascertain 
whether  the  money  was  such  as  lie 
would  be  willing  to  receive  instead 
of  coin;  and  the  creditor  having 
cause  to  leave  on  account  of  the  in- 
sulting language  before  such  exam- 
ination was  completed,  the  tender 
was  not  sufficient;  the  debtor  must 
seek  the  creditor  for  that  purpose. 
See  Mathis  v.  Thomas,  101  Ind.  119; 
g214. 

1  Buckner  v.  Finley,  2  Pet.  587; 
Smith  v.  Smith,  25  Wend.  405;  Hale 
V.  Patton,  60  N.  Y.  233,  19  Am.  Rep. 
168;  Allshouse  v.  Ramsay,  6  Whart. 
331,  37  Am.  Dec.  417;  Gill  v.  Bradley, 
21  Minn.  15;  Gage  v.  McSweeney,  74 
Vt.  370,  53  Atl.  Rep.  960. 

2Kelley  v.  Phenix  Nat.  Bank,  17 
App.  Div.  496,  45  N.  Y.  Supp.  533. 
See  Williamson  County  v.  Farson, 
101  111.  App.  328,  199  111.  71,  64  N.  K 
Rep.  1086. 

8  Rose  V.  Duncan,  49  Ind.  269;  Jen- 
nings V.  Major,  8  C.  &  P.  61;  Holton 
V.  Brown,  18  Vt.  224, 46  Am.  Dec.  148; 
Wagenblast  v.  McKean,  3  Grant's 
Cas.  393;  Cothren  v.  Scanlan,  34  Ga. 
555;  Pulsifer  v.  Shepard,  36  III.  513; 
Shaw  V.  Sears,  3  Kan,  242;  Hunter 
V.  Warner,  1  Wis.  141;  Gibson  v. 
Lyon,  115U.  S.  439, 6  Sup.  Ct.  Rep.  129. 

*  Connecticut  Mut.   L.   Ins.    Co.  v. 


Stinson,  86  111.  App.  668;  Be  vans  v. 
Rees,  5  M.  &  W.  306;  Richardson  v. 
Jackson,  8  id.  298;  Wheelock  v.  Tan- 
ner, 39  N.  Y.  481;  Foster  v.  Drew,  39 
Vt.  51;  Dedekam  v.  Vose,  3  Blatchf. 
44.  See  Moynahan  v.  Moore,  9  Mich. 
9;  Hepburn  v.  Auld,  1  Cranch,  321. 

5  Moore  v.  Norman,  52  Minn.  83,  53 
N.  W.  Rep.  809,  38  Am.  St.  526,  18  L. 
R.  A.  359;  Beckman  v.  Birchard,  48 
Neb.  805,  67  N.  W.  Rep.  784;  Te  Poel 
V.  Shutt,  57  Neb.  592,  78  N.  W.  Rep. 
288;  Mitchell  v.  King,  6  C.  &  P.  237; 
Hartings  v.  Thorley,  8  id.  573;  Jen- 
nings V.  Major,  id.  61;  Peacock  v. 
Dickerson,  2  id.  51,  n. ;  Benkard  v. 
Babcock,  27  How.  Pr.  391;  Hen  wood 
V.  Oliver,  1  G.  &  D.  25,  1  Q.  B.  409; 
Bowen  v.  Owen,  11  id.  130;  Wood  v. 
Hitchcock,  20  Wend.  47;  Loring  v. 
Cooke.  3  Pick.  48;  Roosevelt  v.  Bull's 
Head  Bank,  45  Barb.  579. 

*>  Shiland  v.  Loeb,  58  App.  Div.  565, 
69  N.  Y.  Supp.  11;  L'Hommedieu  v. 
The  H.  L.  Dayton,  38  Fed.  Rep.  926; 
Noyes  v.  Wyckoflf,  114  N.  Y.  204,  21 
N.  K  Rep.  158;  Tompkins  v.  Batie,  11 
Neb.  147,  7  N.  W.  Rep.  747,  38  Am. 
Rep.  361 ;  Boulton  v.  Moore,  14  Fed. 
Rep.  922;  Shuck  v.  Chicago,  etc.  R. 
Co.,  73  Iowa,  333,  35  N.  W.  Rep.  429; 
Griffith  V.  Hodges,  1  C.  &  P.  419; 
Strong  V.  Harvey.  3  Bing.  304;  Che- 
minant  v.  Thornton,  2  C.  &  P.  50; 


688 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  270. 


lutely  oflPers  to  pay  he  does  not  vitiate  the  offer  by  protesting.* 
There  have  been  some  intimations  that  even  asking  a  receipt 
[461]   would  vitiate  a  tender;  and  it  is  probable  the  require- 


Thayer  v.  Braokett,  13  Mass.  450; 
Mitchell  V.  King.  6  C.  &  P.  237;  Wood 
V,  Hitchcock,  20  Wend.  47. 

In  the  last  case  Cowen,  J.,  said: 
"It  was  clearly  a  tender  to  be  ac- 
cepted as  the  whole  amount  due, 
which  is  holden  to  be  bad  by  all  the 
books.  The  tender  was  also  bad  be- 
cause the  defendant  would  not  allow 
that  he  was  ever  liable  for  the  full 
amount  of  what  ho  tendered.  His 
act  was  within  the  rule  which  says 
he  shall  not  make  a  protest  against 
his  liability.  He  must  also  avoid  all 
counter-claim,  as  of  set-oflf  against 
part  of  the  debt  due.  That  this  de- 
fendant intended  to  impose  the 
terms,  or  raise  the  inference  that  the 
acceptance  of  the  money  should  be 
in  full  and  thus  conclude  the  plaint- 
iff against  litigating  all  further  or 
other  claim,  the  referees  were  cer- 
tainly entitled  to  say.  That  the  de- 
fendant intended  to  question  his 
liability  to  part  of  the  amount  tend- 
ered is  equally  obvious,  and  his  ob- 
ject was  at  the  same  time  to  adjust 
his  counter-claim.  It  is  not  of  the 
nature  of  a  tender  to  make  condi- 
tions, but  simply  to  pay  the  sum 
tendered  as  for  an  admitted  debt. 
Interlarding  any  other  object  will 
always  defeat  the  effect  of  the  act 
as  a  tender.  Even  demanding  a  re- 
ceipt or  an  intimation  that  it  is  ex- 
pected, as  by  asking,  'Have  you  got 
a  receipt?'  will  vitiate.  The  demand 
of  a  receipt  in  full  would  of  course 
be  inadmissible." 

The  reason  of  this  rule  is  obvious 
where  the  debtor  does  not  in  fact 
tender  all  that  is  due;  for  if  a  debtor 
tenders  a  certain  sum  as  all  that  is 
due,  and  the  creditor  receives  it, 
under  these  circumstances  it  might 
compromise  his  rights  in  seeking  to 


recover  more;  but  if  the  same  sum 
was  tendered  unconditionally,  no 
such  effect  would  follow.  Sutton  v. 
Hawkins,  8  C,  &  P.  259.  The  reason 
why  a  tender  has  so  often  been  held 
invalid  when  a  receipt  in  full  has 
been  demanded  seems  not  to  have 
been  merely  because  a  receipt  was 
asked  for,  but  rather  because  a  part 
was  offered  in  full  payment.  See 
Sanford  v.  Bulkley,  30  Conn.  344. 

In  Holton  v.  Brown,  18  Vt.  224,  46 
Am.  Dec.  148,  it  was  held  that  a  tender 
to  pay  a  note  is  vitiated  by  demand  of 
it,  and  refusing  to  accept  a  discharge 
of  the  mortgage  and  a  receipt  for  the 
payment,  the  holder  not  being  able 
at  the  time  to  find  the  note.  See 
Wilder  v,  Seelye,  8  Barb.  408;  Story 
on  Prom.  Notes,  §  106  et  seq. ;  §§  243, 
244;  Balme  v.  Wambaugh,  16  Minn. 
116. 

In  Robinson  v.  Ferreday,  8  C.  &  P. 
753,  it  was  held  that  a  tender  was 
not  vitiated  by  the  person  making  it 
saying,  at  the  time,  that  it  was  all 
that  the  debtor  considered  was  due; 
but  if  he  offers  the  sum  "  as  all  that 
is  due,"  it  is  diflferent.  Sutton  v. 
Hawkins,  8  C.  &  P.  259;  Field  v. 
Newport,  etc.  R  Co.,  3  H.  &  N.  409; 
Thorpe  v.  Burgess,  8  Dowl.  P.  C.  603. 
And  in  Bowen  v.  Owen,  11  Q.  B.  130, 
a  tenant  sent  to  his  landlord  26Z., 
with  a  letter  in  these  words:  "I 
have  sent  with  the  bearer  26Z.  to  set- 
tle one  year's  rent  of  Nant-y-pair." 
The  landlord  refused  to  take  it,  say- 
ing that  more  was  due.  Held,  a  good 
tender. 

1  Manning  v.  Lunn,  2  C.  &  K.  13; 
Scott  V.  Uxbridge  &  R.  R.  Co.,  L.  R. 
1  C.  P.  596:  Sweny  V.  Smith,  L.  R.  7 
Eq.  324.  But  see  Wood  v.  Hitchcock, 
20  Wend.  47,  quoted  from  in  the  pre- 
ceding nota 


§  270.] 


TENDER. 


G89 


raent  to  give  one  stamped  would  have  that  effect;^  but  it  is  be- 
lieved that  the  tenderer  may  ask  a  simple  receipt  for  what  is  paid." 
At  all  events,  if  the  creditor  refuse  the  tender  wholly  on  the 
ground  of  more  being  due  he  cannot  afterwards  object  thereto 
because  the  debtor  required  a  receipt.'  A  tender,  however, 
which  is  accompanied  by  a  demand  for  a  receipt  in  full  is  con- 
ditional, and  of  course  invalid.*    A  tender  of  money  in  [462] 


An  offer  to  the  effect  that  "  I  am 
willing  to  pay  you  the  named  sum  to 
avoid  litigation;  it  is  not  due  you, 
but  I  am  willing  to  pay,"  if  accom- 
panied by  the  money  (which  is  not 
necessary  in  Iowa)  is  not  a  good 
tender.  Kulins  v.  Chicago,  etc.  R. 
Co.,  65  Iowa,  528,  22  N.  W.  Rep.  661. 

1  Laing  v.  Header,  1  C.  &  P.  257. 
See  Ryder  V.  Townsend,  7  D.  &  R.  119. 

2  See  2  Par.  on  Cont.  645,  note  m; 
Jones  V.  Arthur,  8  Dowl.  P.  G  442; 
Bowen  v.  Owen,  11  Q.  B.  130. 

Under  the  code  of  California  the 
debtor  may  demand  a  receipt.  Fer- 
rea  v.  Tubbs,  125  Cal.  687,  58  Pac. 
Rep.  308.  And  so  in  Georgia;  but 
nothing  more  than  a  receipt  can  be 
demanded.  De  Graffenreid  v.  Menard, 
103  Ga.  651,  30  S.  E.  Rep.  560. 

A  tender  of  taxes  may  be  condi- 
tioned upon  the  giving  of  a  receipt, 
the  statute  requiring  that  the  officer 
do  that.  State  v.  Central  Pacifio'  R. 
Co.,  21  Nev.  247,  22  Pac.  Rep.  237. 

*  Richardson  v.  Jackson,  8  M.  & 
W.  298;  Cole  v.  Blake,  Peake,  179. 

^Halpin  v.  Phenix  Ins.  Co.,  118 
N.  Y.  105,  23  N.  E.  Rep.  482;  Noyes  v. 
Wyckoff,  114  N.  Y.  204,  21  N.  E.  Rep. 
158;  Frost  v.  Yonkers  Savings  Bank, 
70  N.  Y.  558,  26  Am.  Rep.  627;  Bowen 
V.  Owen,  11  Q.  B.  130;  Griffith  v. 
Hodges,  1  C.  &  P.  419;  Glasscott  v. 
Day,  5  Esp.  48;  Higham  v.  Baddely, 
Gow,  213;  Foord  v.  Noll,  2  Dowl.  (N. 
S.)  617;  Finch  v.  Miller,  5  C.  B.  428; 
Sanford  v.  Bulkley,  30  Conn.  344; 
Richardson  v.  Boston  Chemical  Lab- 
oratory, 9  Met.  42;  Perkins  v.  Beck, 
4  Crauch  C.  C.  68;  Hart  v.  Flynn,  8 
Vou  1  —  44 


Dana.  190;  Holton  v.  Brown.  18  Vt. 
224,  40  Am.  Dec.  148;  Siter  v.  Robin- 
son, 2  Bailey,  274;  Brooklyn  Bank  v. 
DeGrauw,  23  Wend.  342,  35  Am.  Dec. 
569:  Wood  v.  Hitchcock,  20  Wend.  47; 
Eddy  V.  O'Hara.  14  id.  221;  Clark  v. 
Mayor.  1  Keyes,  9;  Thayer  v.  Brack- 
ett,  12  Mass.  450;  Wagenblast  v.  Mc- 
Kean,  2  Grant's  Cas.  393;  Pulsifer  v. 
Shepard,  36  111.  513;  Cothran  v.  Scan- 
Ian,  34  Ga.  555;  Shaw  v.  Sears,  3  Kan. 
242;  Hunter  v.  Warner,  1  Wis.  141; 
Rose  V.  Duncan,  49  Ind.  269. 

Where  a  tender  was  made  in 
"greenbacks,"  and  refused  ber-ause 
payment  in  coin  was  demanded,  it 
was  considered  a  valid  tender,  if  the 
court  should  be  of  opinion  that  the 
debtor  was  entitled  to  pay  in  such 
money.  The  money  was  paid  into 
court,  to  be  drawn  only  on  its  order 
"or  by  the  plaintiff,  if  he  shall  accept 
the  same  as  tendered."  The  plaint- 
iff obtained  an  order  of  the  court 
and  drew  the  money,  and  the  order 
recited  that  he  should  not  be  preju- 
diced by  his  acceptance  and  appro- 
priation of  the  amount.  Lindsay.  J., 
said:  "So  long  as  the  legal  tender 
notes  remained  in  the  hands  of  the 
court,  or  its  agent,  the  Fanners' 
Bank,  they  constituted  a  standing 
and  continuous  offer  to  Robb,  which 
he  had  the  option  at  any  time  to  ac- 
cept '  as  tendered.'  But  he  could  not 
of  his  own  volition  take  out  and  ap- 
propriate such  notes  upon  any  other 
conditions  than  those  upon  which 
the  tender  was  made.  Nor  had  the 
court  tlie  power  to  change  or  modify 
these  conditions.     If  it  should  finally 


690 


CONVENTIONAL   LIQUIDATIONS    AND    DISCHARGES.       [§  270. 


payment  of  a  debt,  to  be  available,  must  be  without  qualifica- 
tion; that  is,  there  must  not  be  anything  raising  an  implication 
that  the  debtor  intends  to  cut  off  or  bar  a  claim  for  any  amount 
beyond  the  sum  offered.^  A  tender  of  money  to  pay  negoti- 
able paper  may  be  so  far  conditional  as  to  be  accompanied  by 
a  demand  for  its  surrender,^  unless  the  creditor  asserts  in  good 


be  adjudged  that  the  tender  was  suf- 
ficient in  law,  the  appellant  would 
be  entitled  to  his  costs,  and  the  title 
to  the  money  on  deposit  would  be 
vested  in  Robb.  Upon  the  other 
Jiand,  if  the  court  should  adjudge 
that  Robb  was  entitled  to  have  his 
note  paid  in  gold  coin,  a  judgment 
specifically  enforcing  his  contract 
would  be  rendered,  and  Wells  would 
have  the  right  to  withdraw  from  the 
hands  of  the  court  the  legal  tender 
notes  on  deposit.  Theruleis  diflFerent 
■where  there  is  no  controversy  as  to 
the  character  of  the  money  tendered : 
but  where  the  plaintiff  claims  a 
larger  amount  than  the  defendant 
concedes  to  be  due,  in  such  cases 
the  tender  establishes  the  liability  of 
the  party  sued  for  the  amount  ten- 
dered, and  the  plaintiif  has  a  right 
to  accept  that  amount  as  a  payment 
pro  tanto,  and  continue  the  litiga- 
tion for  the  balance  claimed,  he  being 
responsible  for  costs  subsequently 
accruing,  in  case  lie  fails  to  recover 
judgment  for  such  balance  or  some 
part  thereof.  Here  it  was  all  the 
time  in  the  power  of  Robb  to  waive 
his  objection  to  the  character  of  the 
money  tendered  and  accept  it  in 
satisfaction  of  his  debt;  but  as  it 
was  lawful  money,  as  held  recently 
by  the  supreme  court  of  the  United 
States  (Knox  v.  Lee  and  Parker  v. 
Davis),  it  was  not  within  the  power 
of  the  circuit  court  to  permit  him  to 
take  possession  of  it  as  property,  and 
account  to  appellant  for  its  value  in 
coin,  nor  to  compel  the  latter  to  pay 
it  out  upon  any  debt  for  less  than  its 
face    value.     As   the    unauthorized 


order  of  the  court  under  which  Robb 
obtained  possession  of  the  money 
tendered  was  made  at  his  instance, 
and  contrary  to  the  objections  of 
his  debtor,  he  occupies  no  better  at- 
titude than  he  would  have  done  had 
he  withdrawn  the  money  from  the 
bank,  as  he  had  a  right  to  do,  under 
the  order  directing  the  deposit  to  be 
mada  He  must  be  held  to  have 
waived  objection  to  the  character  of 
the  money  tendered,  and  to  have  ac- 
cepted it  as  a  payment  of  his  debt." 
Wells'  Adm'r  v.  Robb,  9  Bush,  26. 

iWood  V.  Hitchcock,  20  Wend.  47; 
Roosevelt  v.  Bull's  Head  Bank,  45 
Barb.  579;  Wilder  v.  Seelye,  8  id.  408 
Sanford  v.  Bulkley,  30  Conn.  344 
Perkins  v.  Beck,  4  Cranch  C.  C.  68 
Brooklyn  Bank  v.  De  Grauw,  23 
Wend.  342,  35  Am.  Dec.  569;  Holton 
v.  Brown,  18  Vt.  224,  46  Am.  Dec.  148; 
Hart  V.  Flynn,  8  Dana,  190;  Eddy 
V.  O'Hara,  14  Wend.  221;  Clark  v. 
Mayor.  1  Keyes,  9;  Cheminant  v. 
Thornton,  2  C.  &  P.  50:  Strong  v. 
Harvey,  3  Bing.  304;  Mitchell  v. 
King,  6  C.  &  P.  237;  Brady  v.  Jones, 
2  Dow.  &  Ry.  305;  Benkard  v.  Bab- 
cock,  27  How.  Pr.  391;  Rose  v.  Dun- 
can, 49  Ind.  269;  Finch  v.  Miller,  5 
C.  B.  428;  Sutton  v.  Hawkins,  8  C.  «& 
P.  259. 

2  Bailey  v.  Buchanan  County,  115 
N.  Y.  297,  6  L.  R  A.  562,  22  N.  E.  Rep. 
155;  Strafford  v.  Welch,  59  N.  H.  46; 
Cutler  V.  Goold,  43  Hun,  516;  Wilder 
V.  Seelye,  8  Barb.  408;  Rowley  v 
Ball,  3  Cow.  303,  15  Am.  Dec.  266; 
Smith  V.  Rockwell,  2  Hill,  482;  Han- 
sard V.  Robinson,  7  B.  &  C.  90.  See 
Story  on  Bills,  §§  448-9;  Chitty  oa 


§  270.] 


TENDER. 


691 


faith  that  the  sutn  tendered  is  insufficient.^  The  debtor  may- 
require  that  a  pledge  be  surrendered.^  The  rule  as  to  such 
paper  is  exceptional,  to  withdraw  it  from  circulation  and  for 
recourse  to  other  parties. 

The  general  doctrine  in  respect  to  tender  is  that  no  condition 
can  be  annexed  which,  by  acceptance,  would  preclude  any  ques- 
tion which  would  otherwise  be  open  to  the  creditor.  He  should 
be  at  liberty  to  accept  the  tender,  and  to  say  he  does  not  take 
it  in  full  satisfaction  of  his  demand;  or  that  he  does  not  [403] 
forego  any  right  by  its  acceptance  except  to  deny  that  so  much 
was  paid,  and  such  benefits  to  the  tenderer  as  are  consequent 
by  legal  intendment.  The  party  making  the  tender  should  be 
content  to  allow  the  creditor  to  take  the  money,  and  get  more 
if  the  jury  find  him  entitled  to  it;  or  to  assert  any  other  right 
consistent  with  the  mere  acceptance  of  the  money,  and  applying 
it  to  the  subject.'    If,  however,  there  is  no  dispute  as  to  the 


Bills,  438;  Story  oa  Prom.  Notes, 
?§  106,  112,  143.  244;  Storey  v.  Krew- 
son.  55  Ind.  397,  23  Am.  Rep.  668; 
Dooley  v.  Smith,  13  Wall.  604. 

1  Moore  v.  Norman,  52  Minn.  83, 
53  N.  W.  Rep.  809,  38  Am.  St.  526,  18 
L.  R.  A.  359. 

2  Cass  V.  Higenbotam,  100  N.  Y. 
253,  3  N.  E.  Rep.  189;  Loughborough 
V.  McNevin,  74  Cal.  250,  5  Am.  St. 
435,  14  Pac.  Rep.  369,  15  id.  773;  John- 
son V.  Cranage,  45  Mich.  14,  7  N.  W. 
Rep.  188;  Johnson  v.  Garlichs,  63  Mo. 
App.  578. 

•''Beardsley  v.  Beardsiey,  29  C.  C. 
A.  538,  86  Fed.  Rep.  16.  See  Jennings 
V.  Major,  8  C.  &  P.  61;  Thayer  v. 
Brackett,  12  Mass.  450. 

A  party  qualifies  his  tender  when 
he  demands  in  return  what,  accord- 
ing to  his  own  theory  of  his  rights, 
he  is  strictly  entitled  to  for  the 
money  he  pays,  and  even  though 
such  theory  is  legally  correct,  if  that 
theory  is  questioned.  This  is  illus- 
trated by  Loring  v.  Cooke,  3  Pick. 
48.  A  tender  was  made  to  redeem 
from  an  execution  sale.  The  amount 
tendered  was  not  the  subject  of  dis- 


pute; but  the  debtor  demanded  a  re- 
lease which  was  not  necessary  to 
cancel  the  sale,  and  the  purchaser's 
inchoate  title;  and  a  release  had 
been  prepared  by  the  tenderer  ready 
for  execution.  The  purchaser  re- 
fused to  execute  it,  and  claimed  to 
hold  his  purchase  to  secure  other 
debts.  This  right  was  held  not  to 
exist,  as  the  English  doctrine  of 
tacking  was  not  recognized;  but  the 
tender  was  invalidated  by  the  de- 
mand of  a  release,  though  if  exe- 
cuted it  would  have  extinguished 
no  right  which  the  purchaser  could 
have  asserted.  In  the  subsequent 
case  of  Saunders  v.  Frost,  5  Pick. 
259,  275,  a  tender  was  made  on  a 
mortgage  debt  after  the  mortgagee 
had  taken  possession  to  foreclose  for 
interest  in  arrear,  the  principal  not 
being  due.  The  tender  was  of  the 
whole  mortgage  debt,  including  in- 
terest computed  to  the  date  of  the 
tender,  and  not  to  the  maturity  of 
the  debt.  The  court  held  that  as  to 
the  principal  the  tender  was  not 
good ;  for  the  creditor  had  a  right  to 
keep  his  debt  at  interest   until  the 


692 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  270. 


amount  of  the  debt  a  tender  may  always  be  restricted  by  such 
conditions  as  by  the  terms  of  the  contract  are  precedent  to  or 
simultaneous  with  the  payment  of  the  debt  or  proper  to  be 
performed  by  the  tenderee;  ^  as  that  he  shall  discharge  amort- 


time  appointed  for  payment.  But 
it  was  no  objection  to  the  tender  in 
respect  to  interest  due  that  a  larger 
sum  was  tendered;  nor  that  a  dis- 
charge of  the  mortgage  was  de- 
manded; for  since  the  statute  enti- 
tled the  mortgagor  to  a  discharge 
on  payment  of  the  mortgage  debt 
the  demand  of  such  discharge  was 
only  of  the  performance  of  a  duty 
imposed  by  law.  So  it  seems  that 
the  tender,  as  to  interest,  was  not 
rendered  nugatory  by  being  accom- 
panied by  a  condition  which  was 
only  admissible  when  a  tender 
could  rightfully  be  made  of  the 
mortgage  debt.  It  was  sustained 
because  it  was  the  duty  of  the  mort- 
gagee to  inform  the  mortgagor  that 
possession  was  held  only  for  the  in- 
terest due;  and  the  mortgagee  should 
have  shown  a  willingness  to  accept 
payment  of  such  interest. 

In  Storey  v.  Krewson,  55  Ind.  397, 
23  Am.  Rep.  668.  the  court  held  that 
under  a  statute  which  requires  a  mort- 
gagee of  lands  to  discharge  a  mort- 
gage of  record,  after  having  received 
full  payment,  a  mortgagor  is  not  en- 
titled to  demand  such  discharge 
when  tendering  such  full  payment; 
that  the  mortgagee  could  not  be  re- 
quired to  do  so  merely  upon  a  ten- 
der of  the  amount  as  a  condition  to 
his  right  to  receive  the  amount. 
Biddle,  J.,  said:  "When  one  party  is 
to  perform  an  act,  whose  right  does 
not  depend  upon  any  act  to  be  per- 
formed by  the  other  party,  the  ten- 
der must  be  without  condition,  as 
where  money  is  to  be  paid  without 
condition.  The  current  of  author- 
ities—  indeed  we  believe  it  to  be 
quite  uniform  —  holds  that  the  party 
bound  to  pay   the    money    cannot 


make  a  good  tender  upon  the  condi- 
tion that  the  party  to  whom  the 
money  is  to  be  paid  shall  give  him  a 
written  receipt  therefor;  and  in  the 
case  of  a  non-commercial  promissory 
note  the  authorities  are  in  conflict 
whether  a  good  tender  can  be  made 
upon  the  condition  that  the  note 
shall  be  surrendered;  but  in  the  case 
of  commercial  paper  the  authorities 
seem  to  be  uniform  that  a  tender 
upon  condition  that  the  paper  shall 
be  surrendered  is  good,  because  such 
paper  might  be  put  in  circulation 
after  payment,  and  innocent  parties 
become  liable;  not  so,  however,  with 
non-commercial  paper;  after  pay- 
ment by  the  maker  it  becomes  harm- 
less against  him,  wherever  it  may 
go." 

A  tender  to  be  good  must  not  be 
upon  any  condition  prejudicial  to 
the  party  to  whom  it  was  made.  See 
Wheelock  v.  Tanner,  39  N.  Y.  481; 
Hepburn  v.  Auld,  1  Cranch,  831.  D. 
purchased  some  oats  of  F.,  who  took 
goods  worth  S^l-78  in  part  payment. 
D.  tendered  $170  to  F.,  telling  him 
that  if  he  took  $130  of  the  amount  it 
closed  the  whole  business;  and  if  he 
took  the  $170  it  settled  the  oat  busi- 
ness and  left  the  account  for  the 
goods  standing;  held  not  conditional; 
D.  merely  explained  his  tender.  Fos- 
ter V.  Drew,  39  Vt.  51. 

A  tender  of  the  amount  due  on 
a  judgment,  accompanied  by  a  de- 
mand for  the  assignment  of  the  se- 
curity or  writ,  will  not  entitle  the 
person  making  it  to  be  subrogated  to 
the  plaintiff's  rights  therein.  Forest 
Oil  Co.'s  Appeals,  118  Pa.  138, 12  Atl. 
Rep.  442. 

iHalpin  v.  Phenix  Ins.  Co.,  118  N. 
Y.  165,  23  N.  E.  Rep.  482;  Johnson  v. 


270.] 


TENDER. 


C93 


gao-e;^  return  collateral  security ;2  give  a  release;'  or  surrea- 
der  mortgaged  chattels,  if  a  reasonable  time  be  given.*  If  the 
holder  of  a  note  secured  by  mortgage  claims  them  under  an 
oral  assignment  from  the  payee  and  the  latter  has  warned  the 
maker  not  to  pay  the  holder,  the  maker  may  require  a  written 
assignment  or  release  from  the  payee  as  a  condition  of  a  ten- 
der.-^ A  tender  in  payment  of  a  mortgage  is  not  conditional.' 
But  if  a  tender  is  made  upon  condition  its  acceptance  is  an  ac- 
ceptance of  the  condition."^  Thus  a  creditor  who  accepts  money 
offered  on  condition  that  it  be  received  in  full  satisfaction  of 
a  demand  does  so  subject  to  the  condition,  notwithstanding  he 
may  then  or  subsequently  protest.^     In  some  of  these  cases 


Cranage,  45  Mich.  14,  7  N.  W.  Rep. 
188;  Lamb  v.  Jeffrey,  41  Mich.  719,  3 
N.  W.  Rep.  204;  Brink  v.  Freoff,  40 
Mich.  614. 

1  Halpin  v.  Phenix  Ins.  Co.,  supra; 
Wheelockv.  Tanner,  39  N.  Y.  481; 
Salinas  v.  Ellis,  26  S.  C.  337,  2  S.  K 
Rep.  121.  See  Jewett  v.  Earle,  53  N. 
Y.  Super.  Ct.  349;  Werner  v.  Tuch, 
52  Hun,  269.  5  N.  Y.  Supp.  219. 

2  Cass  V.  Higgenbotam,  100  N.  Y. 
253,  3  N.  E.  Rep.  189;  Ocean  Nat. 
Bank  v.  Fant,  50  N.  Y.  474;  Lough- 
borough V.  McNevin,  74  Cal.  250,  5 
Am.  St.  435,  14  Pao.  Rep.  369,  15  id. 
773. 

3  Saunders  v.  Frost,  5  Pick.  259. 
*  Brink  v.  Freoff,  40  Mich.  610. 

5  Kennedy  V.  Moore,  91  Iowa,  39,58 
N.  W.  Rep.  1066. 

8  Davis  V.  Dow,  80  Blinn.  223,  83  N. 
W.  Rep.  50. 

'^  St.  Joseph  School  Board  v.  Hull, 
73  Mo.  App.  403;  Rosema  v.  Porter, 
112  Mich.  13,  70  N.  W.  Rep.  316;  Pot- 
ter V.  Douglass,  44  Conn.  546;  Wal- 
ston  V.  Denny,  84  111.  App.  417; 
Adams  v.  Helm,  55  Mo.  468;  Kronen- 
berger  v.  Binz,  56  id.  121;  Lee  v. 
Dodd.  20  Mo.  App.  284;  Kofoed  v. 
Gordon,  122  CaL  315.  54  Pac.  Rep. 
1115. 

8  Treat  v.  Price.  47  Neb.  875,  66  N. 
W.  Rep.  834,  citing  Fuller  v.  Kemp, 
138  N.  Y.  231,  33  N.  E.   Rep.  1034,  20 


L.  R  A.  785;  Reynolds  v.  Empire 
Lumber  Co.,  85  Hun,  470,  33  N.  Y. 
Supp.  Ill;  Donohue  v.  Woodbury,  6 
Gush.  150,  52  Am.  Dec.  777;  Mc- 
Daniels  v.  Lipham,  21  Vt.  222,  To 
the  same  effect  are  Nassoiy  v.  Tom- 
linson,  148  N.  Y.  326,  51  Am.  St.  695, 
42  N.  E.  Rep.  715;  Bull  v.  Bull,  43 
Conn.  455;  Hilliard  v.  Noyes,  58  N. 
H.  312;  Brick  v.  Plymouth  County, 
63  Iowa,  462,  19  N.  W.  Kep.  304; 
Hinkle  v.  Minneapolis,  etc.  R.  Co.,  31 
Minn.  434,  18  N.  W.  Rep.  275;  Frei- 
berg V.  Moffett,  91  Hun,  17.  36  N.  Y. 
Supp.  95;  Anderson  v.  Standard 
Granite  Co.,  92  Me.  429,  43  Atl.  Rep. 
21,  69  Am.  St.  522;  Ennis  v.  Pullman 
Palace  Car  Co.,  165  111.  161,  46  N,  E. 
Rep.  439;  Lang  v.  Lane,  83  111.  App. 
543;  Pollman  Coal  &  Sprinkling 
Co.  V.  St.  Louis,  145  Mo.  651, 47  S.  W. 
Rep.  563;  Logan  v.  Davidson,  18  App. 
Div.  353,  45  N.  Y.  Supp.  961,  affirmed 
without  opinion  162  N.  Y.  624;  Con- 
necticut River  Lumber  Co.  v.  Brown, 
68  Vt  239,  35  Atl.  Rep.  56;  Murphy 
V.  Little,  69  Vt.  261,  37  Atl.  Rep.  968; 
Ostrander  v.  Scott,  161  111.  339,  43  N. 
E.  Rep.  1089;  Vorhis  v.  Elias,  54  App. 
Div.  412,  56  N.  Y.  Supp.  134,  67  id. 
1149;  Lewinson  v.  Montauk  Theatre 
Co.,  60  App.  Div.  572,  69  N.  Y.  Supp. 
1050;  Hamilton  v.  Stewart,  105  Ga. 
300,  31  S.  E.  Rep.  184. 


694  COiSrVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  270. 

checks  or  drafts  sent  by  mail  to  the  creditor  "  in  full  satisfac- 
tion "  or  as  "  payment  in  full  "  were  retained,  and  in  some 
of  them  the  claims  were  disputed.  But  ordinarily  the  reten- 
tion of  a  check  inclosed  in  a  letter  which  refers  to  the  amount 
as  the  balance  due  on  accounts  between  the  parties  will  not  be 
an  accord  and  satisfaction  so  as  to  bar  an  action  for  the  bal- 
ance due.^  "  It  is  only  in  cases  where  a  dispute  has  arisen  be- 
tween the  parties  as  to  the  amount  due  and  a  check  is  tendered 
on  one  side  in  full  satisfaction  of  the  matter  in  controversy 
that  the  other  party  will  be  deemed  to  have  acquiesced  in  the 
amount  offered  fey  an  acceptance  and  retention  of  the  check."  ^ 
If  the  amount  of  the  claim  is  in  dispute  and  the  creditor  ad- 
vises his  debtor  that  the  amount  for  which  his  check  was  sriven 
has  been  credited  to  his  account,  and  has  not  been  accepted  in 
full,  the  debtor  will  be  deemed  to  have  acquiesced  in  that  ap- 
plication unless  he  expresses  to  the  creditor  his  dissent.*  To 
constitute  the  acceptance  of  less  than  is  due  an  accord  and 
satisfaction  of  a  disputed  and  unliquidated  claim  the  money 
must  be  tendered  in  satisfaction  and  the  tender  accompanied 
witii  such  acts  and  declarations  as  make  its  acceptance  a  con- 
dition to  that  end.* 

[464]  When  mutual  acts  are  to  be  done  by  two  parties  at  the 
same  time  and  the  right  of  each  depends  upon  the  performance 
of  the  other,  either  may  tender  his  part  of  the  performance 
upon  the  condition  that  the  other  discharges  his  duty;  and 
neither  is  compelled  to  perform  unless  the  other  does  so  also; 
as  when  land  is  bargained  and  sold  to  be  conveyed  upon  pay- 
ment of  the  purchase-money.  In  such  a  case  neither  can  b© 
compelled  to  perform  his  part  of  the  agreement  except  on  the 
performance  by  the  other  of  his  part;  that  is,  the  vendee  can- 
not demand  the  conveyance  without  tendering  the  purchase- 
money;  and  the  vendor  cannot  demand  the  purchase-money 

1  Eames  Vacuum  Brake  Co.  v.  Pros-  3  Strock  v.  Brigantine  Transporta- 

ser,  157  N,  Y.  289.  51  N.  E.  Rep.  986;  tion  Co.,  23  N.  Y.  Misc.  358,  51  N.  Y. 

McKay  v.  Myers,  168  Mass.  312,  47  N.  Supp.  327;  McKeea  v.  Morse,  1  C.  C. 

E.  Rep.  98;  Day  v.  Lea,  22  Q.  B.  Div.  A.  237,  49  Fed.  Rep.  253. 

610.  *Kingsville     Preserving     Co.     v. 

^  Eames  Vacuum  Brake  Co.  v.  Pros-  Frank,  81  III.  App.  586;  Lang  v.  Lane, 

ser,  supra;  Hodges  v.  Truax,  19  Ind.  83  id.  543. 
App.  651,  49  N.  E.  Rep.  1079  (review- 
ing many  cases). 


271.] 


TENDER. 


095 


without  tendering  the  conveyance;  and  either  may  make  a 
good  tender  to  the  other  upon  the  condition  that  he  will  per- 
form his  part  of  the  agreement.^  If  the  performance  of  prece- 
dent or  contemporaneous  conditions  is  refused  the  person  whose 
duty  it  is  to  pay  has  done  all  that  is  required  of  him  when  he 
has  made  a  tender;  he  is  thereby  excused  from  keeping  it  good.* 
But  where  it  is  provided  by  statute  that  a  tender  shall  be  un- 
conditional except  for  a  receipt  in  full  or  delivery  of  the  obliga- 
tion, one  who  has  completed  the  payment  of  the  purchase- 
money  of  land  and  is  entitled  to  evidence  of  the  title  condi- 
tions a  tender  by  making  it  dependent  upon  the  execution  of  a 
conveyance.^ 

§  271.  Effect  of  accepting.  Acceptance  of  a  tender,  when 
made  as  full  payment,  has  the  effect  of  entire  satisfaction  in 
case  of  a  disputed  claim.*  But  the  acceptance  of  a  proper 
tender,  accompanied  by  no  such  condition,  does  not  pre-  [-lOo] 
elude  the  creditor  from  proceeding  for  more,^     An  appeal  is 


1  Scott  V.  Beach,  172  111.  273,  50  N. 
E.  Rep.  196;  Comstock  v.  Lager,  78 
Mo.  App.  390;  Clark  v.  Weis.  87  111. 
438,  29  Am.  Rep.  60;  Englebach  v. 
Simpson,  33  S.  W.  Rep.  506,  12  Tex. 
Civ.  App.  188;  Wheelock  v.  Tanner, 
39  N.  Y.  486;  Mankel  v.  Belscamper, 
84  Wis.  218,  54  N.  W.  Rep.  500;  Hal- 
pin  V.  Phenix  Ins.  Co.,  118  N.  Y.  165, 
23  N.  E.  Rep.  482;  Englander  v.  Rog- 
ers, 41  Cal.  420;  Heine  v.  Tread  well, 
72  id.  217, 13  Pac.  Rep.  503;  Storey  v. 
Krevvson,  55  Ind.  397,  23  Am.  Rep. 
668. 

2  Cannon  v.  Handley,  72  Cal.  133, 
13  Pac.  Rep.  315;  Washburn  v.  Dewey, 
17  Vt.  92;  White  v.  Dobson,  17Gratt 
262;  McDaneld  v.  Kimbrell,  3  G. 
Greene,  335. 

3  De  Graffenreid  v.  Menard.  103  Ga. 
651,  30  S.  E.  Rep.  560;  Elder  v.  John- 
son, 115  Ga.  691,  42  S.  E.  Rep.  51. 

*St.  Joseph  School  Board  v.  Hull, 
72  Mo.  App.  403:  Towslee  v.  Healy, 
89  Vt.  522;  Springfield  &  N.  R,  Co.  v. 
Allen,  46  Ark,  217;  United  States  v. 
Adams,  7  WalL  463;  Jenks  v.  Burr, 


56  111.  450;  Draper  v.  Pierce,  29  Vt. 
250;  Cole  v.  Champlain  Transport;^ 
tion  Co.,  26  Vt.  87;  McDaniels  v.  Bank 
of  Rutland,  29  Vt.  230.  70  Am.  Dec. 
406;  Adams  v.  Helm,  55  Mo.  468. 

It  is  held  in  some  cases  that  an  un- 
accepted tender  is  an  admission  that 
there  is  a  sum  due  the  tenderee  equal 
to  it,  and  this  although  it  be  defect- 
ive or  be  made  in  a  case  where  it  is 
not  binding  and  cannot  be  pleaded. 
Denver,  eta  R  Co.  v.  Harp,  6  Colo. 
420;  CiUey  v.  Hawkins,  48  111.  309. 
These  cases  are  of  doubtful  authority, 
because  the  legal  effect  of  such  a 
tender  is  no  more  than  a  mere  offer  of 
compromise.  No  doubt  is  entertained 
that  where  a  tender  is  made  under  a 
mistaken  belief  by  tlie  party  who 
made  it  that  the  sum  tendered  was 
due  evidence  is  admissible  to  rebut 
the  inference  that  a  debt  was  thereby 
admitted.  Ashuelot  R.  Co.  v.  Chesii- 
ire  R  Co.,  60  N.  H.  356. 

sHiggins  v.  Halligan,  46  111.  173; 
Ryal  v.  Rich,  10  East,  47;  Sleght  v. 
Rhinelander,  1  Johns.  192. 


696 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHAEGES.       [§  272. 


not  waived  by  the  receipt  of  a  pa3'^merit.  The  acceptance  of  a 
sura  tendered  on  account  of  a  claim  only  extinguishes  it  when 
it  is  all  that  the  creditor  is  entitled  to,  or  when  it  is  received 
as  being  so.^ 

§  272.  Must  be  kept  good.  Unless  the  conduct  of  the  party 
who  is  entitled  to  payment  excuses  the  other  from  so  doing^ 
he  must  keep  his  tender  good;  that  is,  the  debtor  must  at  all 
times  be  prepared  to  meet  a  demand  for  money  tendered ;  if 
he  fails  to  do  so  he  places  himself  in  default  and  loses  the  ben- 
efit of  his  tender.^  And  the  rule  applies  in  chancery  and  at 
law.*  It  is  not  necessary  to  keep  for  the  creditor  the  identical 
money  tendered.  The  tenderer  is  at  liberty  to  use  it  as  his 
own;  all  he  is  under  obligation  to  do  is  to  be  read}'^  at  all  times 
to  pay  the  debt  in  current  money  when  requested.® 


iBenkard  v,  Babcock,  2  Robert. 
175. 

2  See  g  268. 

3  Middle  States  Loan,  Building  & 
Construction  Co.  v.  Hagerstown 
Mattress  &  Upholstery  Co.,  82  Md. 
506,  33  Atl.  Rep.  886;  Parker  v.  Beas- 
ley,  116  N.  C.  1,  21  S.  E.  Rep.  955.  33 
L.  R.  A.  231;  Shank  v.  Groff,  45  W. 
Va.  543,  33  a  E.  Rep.  248;  McDaniel 
V.  Upton,  45  111.  A  pp.  151;  Beardsley 
V.  Beardsley,  29  C.  C.  A.  538,  86  Fed. 
Rep.  16;  Crain  v.  McGoon,  86  111.  431; 
Sanders  v.  Peck,  131  id.  407,  25  N.  E. 
Rep.  508;  Aulger  v.  Clay,  109  111. 
487;  Wyckoflf  v.  Anthony,  9  Daly, 
417;  Rainwater  v.  Hummell,  79  Iowa, 
571,  44  N.  W.  Rep.  814;  Wilson  v. 
McVey,  83  Ind.  108;  Park  v.  Wiley, 
67  Ala.  310;  Wilder  v.  Seelye,  8  Barb. 
408;  State  v.  Briggs.  65  N.  C.  159; 
Bronson  v.  Rock  Island,  etc.  R  Co., 
40  How.  Pr.  48;  Mohn  v.  Stoner,  14 
Iowa,  115,  11  id.  30;  Warrington  v. 
Pollard,  24  id.  281,  95  Am.  Dec.  727; 
Kortright  v.  Cady,  23  Barb.  490,  5 
Abb.  Pr.  358:  Brooklyn  Bank  v.  De- 
Grauw,  23  Wend.  342,  35  Am.  Dec, 
569;  Pulsifer  v.  Shepard,  36  111.  513; 
Nelson  v.  Oren,  41  111.  18;  Cullen  v. 
Green,  5  Harr.  17;  Clark  v.  Mullenix, 
11  Ind.  532;  Jarboe  v.  McAtee,  7  B. 


Mon.  279;  Livingston  v.  Harrison,  3 
E.  D.  Smith,  197;  Call  v.  Scott,  4 
Call,  402;  Mason  v.  Croom,  24  Ga. 
211;  Brock  v.  Jones,  16  Tex.  461; 
Webster  v.  Pierce,  35  111.  158;  Wood 
V.  Merchants',  etc.  Co..  41  III.  267; 
Suver  V.  O'Riley,  80  111.  104;  Haynes 
V.  Thorn,  28  N.  H.  380;  Nantz  v. 
Lober,  1  Duv.  304;  Hay  ward  v. 
Hague,  4  Esp.  93;  Pierse  v.  Bowles,  1 
Stark.  323;  Spybey  v.  Hide,  1  Camp. 
181;  Rivers  v.  Griffiths,  1  D.  &  Ry. 
215;  Coles  v.  Bell,  1  Camp.  478,  note; 
Coore  v.  Callaway,  1  Esp.  115. 

4  De  Wolf  V.  Long,  7  111.  679;  Doyle 
V.  Teas,  5  111.  202;  Brooklyn  Bank  v. 
De  Grauw,  23  Wend.  342,  35  Am,  Dec. 
569;  Stow  v.  Russell,  36  111.  18;  Mo- 
Daniel  v.  Upton,  45  111.  App.  151, 
(holding  that  the  rule  applies  to  jus- 
tices' courts). 

A  plaintiff  failing  in  his  suit  in 
equity  after  tender  and  deposit  of 
money  in  court  brought  error,  and 
pending  the  proceedings  in  error 
withdrew  the  deposit;  held,  not  a 
waiver  of  error.  Vail  v.  McMillan, 
17  Ohio  St.  617. 

6  Cheney  v.  Bilby,  20  C.  C.  A,  291, 
74  Fed.  Rep.  52;  Thompson  v,  Lyon, 
40  W,  Va,  87,  20  S,  E.  Rep.  812;  Cur- 
tiss  V.  Greenbanks,  24  Vt.  536.     But 


§  272.]  TENDER.  697 

A  refusal  by  the  debtor,  after  a  tender,  to  pay  the  money 
tendered  on  demand  of  the  creditor  deprives  the  offer  [460] 
of  all  legal  availability  and  effect.^  For  this  purpose  the 
debtor  should  keep  the  money  in  his  own  possession.  A  de- 
posit of  it  with  a  third  person  for  the  creditor,  with  or  with- 
out giving  him  notice  thereof,  will  not  exempt  him  from  this 
necessity ;  for  the  creditor  will  be  under  no  obligation  to  apply 
to  the  depositary  for  it.  If  he  thinks  proper  to  accept  the  ten- 
der, he  may  call  on  the  debtor  himself  for  it.  In  that  case, 
unless  the  debtor  pays  or  tenders  the  sum,  he  will  lose  the 
benefit  of  the  previous  tender.^  Hence  the  debtor  is  entitled 
to  the  benefit  of  his  tender  if  he  is  ready  with  the  money  on  a 
demand  made  to  himself  personally,  although  he  may  have 
made  the  tender  by  his  attorney.' 

The  demand  for  the  money  after  a  tender  and  refusal  must 
be  of  the  precise  sum  tendered,*  and  must  be  made  by  some 
one  authorized  to  receive  it  and  give  the  debtor  a  discharge.* 
Where  the  tender  had  been  made  by  two  persons,  demand  on 
one  was  sufficient.^  If  money  is  tendered  with  which  the 
debtor  has  a  right  then  to  discharge  the  debt,  and  sufficient  to 
satisfy  it,  he  is  not  to  bear  the  loss  of  its  subsequent  depreci- 
ation.'' 


see  Quynn  v.  Whetcroft,  3  Harr.  &  ^Coles  v.  Bell,  1  Camp.  478,  note; 

McH.  353;  Roosevelt  v.  Bull's  Head  Coore  v,  Calloway,  1  Esp.  115. 

Bank,  45  Barb.  579.  «Peirse  v.  Bowles,  1  Stark.  52a 

1  Nantz  V.  Lobar,  1  Duval,  304;  A  letter,  demanding  payment  of  a 
Rose  V.  Brown,  Kirby,  293,  1  Am.  debt,  sent'to  the  debtor's  house,  to 
Dec.  22.  which  an   answer  is  returned  that 

2  Rainwater  v.  Hummell,  79  Iowa,  the  demand  should  be  settled,  was 
571,  44  N.  W.  Rep.  814;  Town  v.  held  to  be  sufficient  evidence  of  a 
Trow,  24  Pick.  168.  demand  on  an  issue  of  a  subsequent 

3  Berthold  v.  Reyburn,  37  Ma  586.  demand  and  refusal  to  a  plea  of 
A  defendant's  attorney  having  made  tender.  Hay  ward  v.  Hague,  4  Esp.  93. 
a  tender  the  plaintiff's  attorney  sub-  A  tender  may  lose  its  effect  by 
sequently  agreed  to  take  it,  but  it  mutual  waiver,  as  where  afterward 
was  held  this  assent  was  not  such  a  the  debtor,  at  the  suggestion  of  the 
demand  as  would  avoid  the  tender,  creditor,  consents  to  retain  the 
The  demand  for  such  a  purpose  money.  He  cannot  afterwards  set 
must  be  made  upon  the  debtor  per-  it  up  as  a  defense.  Terrell  v.  Walker, 
sonally.  65  N.  C.  91. 

*Spybey  v.   Hide,   1    Camp.    181;  'Anonymous,  1   Hayw.   183.     See 

Rivers  v.  Griffiths,  1  Dow.  &  Ry.  215.  Jeter  v.  Littlejohn,  3  Murph.  18G. 


698 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  273. 


[467]  §273.  Waiver  and  omission  of  tender  on  sufficient 
excuse.  There  is  probably  no  difference  in  respect  to  the  effect 
of  stopping  interest  as  damages,  based  on  default,  between  an 
actual  tender  or  tender  with  some  punctilio  waived  and  a 
readiness  to  pay,  and  a  tender  altogether  prevented  by  the 
conduct  of  the  creditor;  as,  for  example,  by  his  absence  or 
concealment.  For  this  effect  it  is  only  needful  to  negative 
default.^  Where,  however,  the  debt  bears  interest  by  agree- 
ment of  the  parties  after  it  is  payable,  an  actual  tender  is 
doubtless  essential  to  stop  interest  unless  the  creditor  pre- 
vents it  by  some  fraudulent  evasion.^  Where  a  tender  is  made 
to  the  creditor,  not  in  currency  which  he  is  bound  to  receive, 
but  in  bank  bills  current  at  par  as  money,  and  not  objected  to 
on  that  account;  or  is  made  by  a  check  on  a  bank,  assented  to 
as  a  mode  of  payment,  the  offer  is  a  sufficient  tender.  And 
where  there  is  a  verbal  offer  to  pay  and  the  debtor  is  prepared 
to  make  his  offer  good,  but  omits  to  produce  the  money  to 
the  view  of  the  creditor  because  the  latter  says  it  need  not 
be  produced  as  he  will  not  receive  it,  the  proffer  is  in  sub- 
stance and  legal  effect  a  tender.^  The  law  interprets  the  con- 
duct of  the  parties  in  the  ceremony  of  tender  according  to  their 
apparent  intentions,  and  determines  its  sufficiency  upon  the 
objections  then  stated.  We  have  seen  that  certain  incidents, 
such  as  demanding  a  receipt  for  what  is  paid,  or  change  where 
there  is  an  offer  of  a  larger  amount,  or  bank  bills  instead  of 
money  which  is  legal  tender,  must  be  specially  objected  to  at 
the  time.  Silence  is  a  tacit  waiver  of  such  objections.  Other 
objections  may  also  be  waived  by  implication  on  the  maxim 
of  expressio  unius  est  exclusio  alterius.  A  general  rule  on  this 
subject  is  that  if  a  tender  is  refused  on  a  specific  ground  the 


1  Thompson  v.  Lyon,  40  W.  Va.  87, 
20  S.  E.  Rep.  813;  Thorne  v.  Mosher, 
20  N.  J.  Eq.  257. 

2  Gil  more  v.  Holt,  4  Pick.  258; 
South  worth  v.  Smith,  7  Gush.  391; 
Cheney  v.  Bilby,  20  G.  C.  A.  291,  74 
Fed.  Rep.  52. 

3  Stephenson  v.  Kilpatrick,  166  Mo. 
262,  267,  65  S.  W,  Rep.  773:  Holmes 
V.  Holmes,  9  N.  Y.  525;  Hall  v.  Nor- 
walk   F.  In&  Co.,  57   Conn.    105,    17 


Atl.  Rep.  356;  Roe  v.  State,  83  Ala. 
68,  3  So.  Rep.  2;  McDaneld  v.  Kim- 
brell,  3  G.  Greene,  335;  Manhattan 
L.  Ins.  Co.  V.  Smith,  44  Ohio  St.  156, 
58  Am.  Rep.  806,  5  N.  E.  Rep.  417; 
Mathisv.  Thomas,  101  Ind.  119;  Hoff- 
man V.  Van  Diem  en,  63  Wis.  362,  21 
N.  W.  Rep.  542;  Sharp  v.  Todd,  38  N. 
J.  Eq.  324;  Duffy  v.  Patten,  74  Me. 
396;  Koon  v.  Snodgrass,  18  W.  Va.. 
32a    See  §268. 


§  2T4.] 


TENDEK. 


G'JO 


creditor  will  not  be  permitted  afterwards  to  raise  any  otlier 
objection  which,  if  stated  at  the  time  it  was  made,  could  have 
been  obviated.^ 
§  27i.  Tender  must  be  pleaded  and  money  paid  into  court. 

If  the  money  tendered  is  not  demanded  by  the  creditor,  [468] 
and  he  brings  suit,  the  defendant  must  plead  the  tender,  and 
his  plea  must  be  accompanied  by  payment  of  the  money  into 
court  for  the  creditor,-  unless  the  effect  of  the  tender  is  merely 
the  extinguishment  of  a  lien  without  discharging  the  debt,  in 
Avhich  case  payment  into  court  is  not  necessary.'  It  is  also  un- 
necessary if  it  is  merely  desired  to  stop  interest;*  and  so  where 
there  has  been  a  breach  of  the  vendor's  contract  to  put  the 


1  Hull  V.  Peters,  7  Barb.  331 ;  Car- 
man V.  Pultz,  21  N.  Y.  547;  Keller  v. 
Fisher.  7  Ind.  718;  Mitchell  v.  Cook, 
29  Barb.  243;  Haskell  v.  Brewer,  11 
Me.  258;  Hay  ward  v.  Munger,  14 
Iowa,  516;  Graves  v,  McFariane,  2 
Cold.  167;  Bradshawv.  Davis,  12  Tex. 
386;  Nelson  v.  Robson,  17  Minn.  284; 
Rudulph  V.  Wagner,  36  Ala.  698; 
Stokes  V.  Recknagel,  38  N.  Y.  Super. 
Ct.  368;  Rlck-er  v.  Blanchard,  45  N. 
H.  39;  Abbot  v.  Banfield,  43  id.  152; 
Schroeder  v.  Pissis,  128  Cal.  209,  60 
Pac.  Rep.  758;  Rickettsv.  Buckstaff, 
_  Neb. ,  90  N.  W.  Rep.  915. 

If  a  tender  of  money  which  the 
creditor  refused  is  left  with  him 
against  his  wish,  and  he  declines  to 
give  it  up  when  called  for,  it  will  be 
sufficient.  Rogers  v.  Rutter,  11  Gray, 
410. 

2  Colby  V.  Reed,  99  U.  S.  560;  Mat- 
thews v.  Lindsay,  20  Fla.  962;  Allen 
V.  Cheever,  61  N.  H.  32;  Halpin  v. 
Pheuix  Ins.  Co.,  118  N.  Y.  165,  23  N. 
E.  Rep.  482;  Coghlen  v.  South  Caro- 
lina R.  Co.,  32  Fed.  Rep.  316;  Morri- 
son V.  Jacoby,  114  Ind.  84,  14  N.  E. 
Rep.  546, 15  id.  806;  Roberts  v.  White, 
146  Mass.  256,  15  N.  E.  Rep.  568; 
Park  V.  Wiley,  87  Ala.  310;  Frank  v. 
Pickens,  69  id.  369;  Goss  v.  Bo  wen, 
104  Ind.  207,  2  N.  E.  Rep.  704;  Fer- 
oald  V.  Young,  76   Me.  356;  Jenkins 


V.  Briggs,  65  N.  C.  159;  Ciaflin  v. 
Hawes,  8  Mass.  261;  Harvey  v.  Hack- 
ley,  6  Watts,  264;  Nelson  v,  Oren,  41 
111.  18;  Brown  v.  Ferguson,  2  Denio, 
196;  Sheriden  v.  Smith,  2  Hill,  538; 
Livingston  v.  Harrison,  2  E.  D.  Smith, 
197;  Robinson  v.  Gaines,  3  Call,  243; 
Hume  V.  Pepioe,  8  East,  168;  Giles 
V.  Hartis,  1  Ld.  Raym.  254;  Becker 
V.  Boon,  61  N.  Y.  317:  Karthaus  v. 
Owings.  6  Har.  &  J.  134:  Griffin  v. 
Tyson.  17  Vt.  35;  Cullen  v.  Green,  5 
Harr.  17;  Mason  v.  Croom,  24  Ga,  2l  1 ; 
Brock  V.  Jones,  16  Tex.  461:  Clark  v. 
Mullenix,  11  Ind.  532;  Marine  Bank 
V.  Rushmore,  28  III.  463;  Webster  v. 
Pierce,  35  111.  158;  Warrington  v.  Pol- 
lard, 24  Iowa,  281,  95  Am.  Dec.  727; 
Jarboe  v.  McAtee,  7  B.  Mon.  279;  De 
Goer  v.  Kellar.  2  La.  Ann.  496;  Alex- 
andrie  v.  Saloy,  14  id.  327;  Call  v. 
Scott,  4  Call,  402;  State  v.  Briggs,  65 
N.  C.  159;  National  Machine  &  Tool 
Co.  v.  Standard  Shoe  Machinery  Co., 
181  Mass.  275,  63  N.  E.  Rep.  900.  See 
Terrell  v.  Walker,  65  N.  C.  91 ;  and  for  a 
construction  of  the  code  of  Oregon, 
see  Holladay  v.  HoUaday,  13  Ora  523, 
536,  U  Pac.  Rep.  260,  12  id.  821. 

3  Cass  v.  Higenbotam.  100  N.  Y.  248, 
3  N.  E.  Rep.  189.     See  §  277. 

*  Ferrea  v.  Tubbs,  125  Cal.  687,  58 
Pac  Rep.  308. 


700  CONVENTIONAL   LIQUIDATIONS    AND   DISCHARGES.       [§  275. 

vendee  of  land  into  possession,  the  former  having  told  the  ven- 
dee that  he  would  not  comply  with  the  contract.^  And  if  the 
vendor  puts  himself  in  a  position  to  make  it  appear  that  a 
tender  of  the  purchase  price  would  be  refused  if  made,  the  ven- 
dee may  plead  an  offer  to  bring  the  money  into  court,  and 
may  have  specific  performance.^  If  there  is  uncertainty  as  to 
the  amount  due  the  plaintiff  may  have  specific  performance 
by  pleading  readiness  to  bring  the  money  into  court  whenever 
the  sum  is  liquidated.^  The  payment  made  before  trial  is  final ; 
the  debtor  cannot  speculate  on  the  effect  of  the  evidence  and 
add  to  the  sum  paid  after  the  trial  has  begun.*  If  the  plead- 
ings do  not  object  to  the  failure  to  allege  payment  into  court 
the  money  may  be  paid  in  during  the  trial,  and, in  the  absence 
of  an  objection  in  the  record,  the  appellate  court  will  assume 
that  it  was  so  paid.^ 

§  275.  Effect  of  plea  of  tender.  The  plea  of  tender  is  a 
conclusive  admission  that  the  sum  tendered  is  due;**  and  if 
the  money  is  not  paid  into  court  the  plaintiff  may  sign  judg- 
ment." But  the  tender  and  plea  go  no  further  than  to  admit 
the  contract  or  duty  sued  upon,  and  the  right  of  the  plaintiff  to 
the  sum  paid  in.  The  defendant  may  contest  the  plaintiff's 
right  to  anything  beyond  that  sum  upon  any  ground  consist- 
ent with  an  admission  of  the  original  contract  or  transaction. 

1  Irwin  V.  Askew,  74  Ga.  581.  T.  561,  23  N.  R  Rep.  1106;  Voss  v. 

2  Kerr  v.  Hammond,  97  Ga.  567,  25  McGuire,  26  Mo.  App.  452;  Kansas 
S.  E.  Rep.  d'67.  City  Transfer  Co.  v.  Neiswanger,  27 

3  Id.;  Irvin  v,  Gregory,  13  Gray,  id.  356;  Schnur  v.  Hickox,  45  Wis. 
215.  200;  Monroe  v.  Chaldeck,  78  111.  429; 

4  Frank  v.  Pickens,  69  Ala.  369.  Roosevelt  v.  New  York  &  H.  R.  Co., 
A  payment  at  the  time  of  filing  the    30  How.  Pr.  226;  Currier  v.  Jordan, 

answer  will  not  affect  the  costs  un-  117  Mass.  260;  Ruble  v.   Murray,   4 

less  there  is  a  specification  of  the  Hayw.  27;  Huntington  v.  American 

amount  paid  on  the  claim  and  for  Bank,  6  Pick.  340;  2  Pars,  on  Cont. 

costs.    The  Good  Hope,  40  Fed.  Rep.  638,  note.    But  see  Clarke  v.  Lyon 

60a  County,  7  Nev.  75. 

6  Halpin  v.  Phenix  Ins.  Co.,  118  N.        '  Chapman  v.  Hicks,  2  Dowl.  P.  C. 

Y.  165,  23  N.  E.  Rep.  482.  641;  Monroe  v.  Chaldeck,  78  IlL  429. 

6  McDaniel  v.  Upton,  45  111.  App.  See  Knox  v.  Light,  12  111.  86;  Sloan 

151;  Illinois  Central  Co.  v.  Cole,  62  v.  Petrie,  16111.  262;  Marine  Bank  v. 

id.  480;  Noble  v.  Fagnant,  162  Mass.  Rush  more,  28  111.  463;    Webster  v. 

275,  286.  38  N.  E.  Rep.  507;  Giboney  Pierce,  85111. 158;  Stow  v.  Russell,  36 

V.  German  Ina  Co.,  48  Mo.  App.  185;  IlL  35;  Reed  v.  Woodman,  17  Me.  4a 
Taylor  v.  Brooklyn  E.  R.  Co..  119  N. 


§  275.] 


TENDER. 


701 


He  may  insist  upon  the  statute  of  limitations,  payment  beyond 
the  sum  tendered  or  other  defense.^  He  cannot  claim  in  a 
motion  for  arrest  of  judgment  that  the  complaint  is  so  defect- 
ive as  not  to  authorize  the  recovery  of  any  sum.-  It  has  been 
held  that  an  answer  under  the  code  must  allefre  that  the 
money  has  been  brought  into  court;  and  if  it  omits  this  alle- 
gation it  does  not  state  facts  sufficient  to  constitute  a  defense 
and  the  plaintiff  may  avail  himself  of  the  objection  on  the 
trial;'  it  must  also  be  alleged  that  the  money  is  brought  into 
court  for  the  other  party's  use  and  benefit;  it  is  not  enough  to 
say  for  his  use.^  And  if  issue  be  joined  on  the  plea  of  ten- 
der, where  the  money  has  not  been  brought  into  court,  [469] 
it  has  been  held  that  judgment  should  be  given  for  the  plaint- 
'iff,  notwithstanding  a  verdict  in  favor  of  the  defendant  on  that 
issue.^  But  in  other  cases  the  omission  to  pay  the  money  into 
court  has  been  treated  as  an  irregularity;  and  if  the  plaintiff 
accept  the  plea  and  reply  thereto  without  receiving  notice  that 
the  money  has  been  paid  in  he  waives  the  irregularity.^     The 


1  Cox  V.  Parry,  1  T.  R.  464;  Reid  v. 
Dickons,  5  B.  &  Ad.  499;  Meager  v. 
Smith,  4  id.  673;  Spalding  v.  Vander- 
cook,  2  Wend.  431;  Wilson  v,  Doran, 
110  N.  Y.  101,  17  N.  E.  Eep.  688; 
Griffin  v.  Harriman,  74  Iowa,  436,  38 
N.  W.  Rep.  139;  Young  v.  Borzone, 
26  Wash.  4,  20,  65  Pac.  Rep.  13.5. 

2  Wilson  V.  Chicago,  etc.  R,  Co.,  68 
Iowa,  673,  27  N.  W.  Rep.  916. 

3  Becker  v.  Boon,  61  N.  Y.  417.  See 
last  section. 

The  notice  of  payment  into  court 
after  suit  which  is  required  by  the 
New  York  code  is  not  waived  by  fail- 
ing to  return  an  answer  pleading 
tender  before  suit  or  to  otherwise 
raise  the  question  before  trial  Wil- 
son V.  Doran,  110  N.  Y.  101,  17  N.  E, 
Rep.  688. 

*  Phoenix  Ins.  Co.  v.  Overman,  21 
Ind,  App.  516,  52  N.  E.  Rep.  771. 

*Claflin  V.  Hawes,  8  Mass.  261. 
■    «  Woodruff  V.  Trapnall,  12  Ark.  640; 
Sheriden  v.  Smith,  2  Hill,  5,3S-,  Shep- 
herd V.  Wysong,  3  W.  Va.  46;  Roose- 


velt V.  New  York  &  H,   R  Co.,  30 
How.  Pr.  226. 

In  the  last  case  the  defendant  set 
up  in  the  answer  a  tender  without 
paying  the  money  into  court.  This 
answer  was  accepted,  and  the  plaint- 
iff afterwards  applied  to  the  court 
for  an  order  requiring  the  defendant 
to  pay  to  the  plamtiff  the  sum  ten- 
dered, under  a  provision  of  the  code 
that  •'  when  the  answer  of  the  de- 
fendant express!}'-,  or  by  not  deny- 
ing, admits  part  of  the  plaintiff's 
claim  to  be  just,  the  court,  on  mo- 
tion, may  order  defendant  to  satisfy 
that  part  of  the  claim,  and  may  en- 
force the  order  as  it  enforces  a  judg- 
ment or  provisional  remedy.''  The 
tender  was  held  to  be  such  an  ad- 
mission. The  court  say:  "The 
money  tendered  in  this  case  was 
not  paid  into  court,  and  it  is  to  be 
inferred  from  the  fact  that  the  an- 
swer is  treated  as  part  of  the  plead- 
ings that  it  is  accepted  witiiout  the 
money  being  paid  in.    On  the  facts 


702  CONVENTIONAL    LIQUIDATIONS    AND   DISCHARGES.        [§  275. 

technical  rules  governing  pleas  of  tender  in  actions  at  law  do 
not  apply  in  equity.  Upon  a  bill  to  enforce  specific  perform- 
ance of  an  agreement  to  accept  a  named  sum  of  money  in  sat- 
isfaction of  a  debt  secured  by  pledged  property  a  tender  is 
well  pleaded  by  alleging  readiness,  willingness  and  ability  to 
pay  the  amount  due  or  to  bring  it  into  court  to  be  paid  ujDon 
transfer  of  the  collateral.* 

The  plaintiff  is  entitled  to  the  money  paid  into  a  court  of 
law,  with  a  plea  of  tender,  in  any  event.^  He  may  take  it  out, 
though  he  replies  that  the  tender  was  not  made  before  action 
brought.'  The  fact  that  more  is  paid  than  is  due,  or  that  no 
payment  was  necessary  for  the  protection  of  the  rights  of  the 
party  who  paid,  does  not  give  him  the  right  to  withdraw  the 
money  or  any  part  of  it.*  But  the  rule  that  the  plaintiff  is  en- 
titled absolutely  to  the  amount  tendered  and  paid  into  court 
has  been  held  not  to  apply  to  an  action  brought  to  recover  a 
penalty  or  other  fixed  amount,  where,  unless  the  plaintiff  re- 
covers the  amount  of  the  penalty  or  fixed  sum,  he  is  not  en- 
titled to  judgment.^  Nor  is  it  applicable  to  money  paid  into 
court  by  the  plaintiff  on  a  bill  in  equity  to  redeem,  where  the 
defendant  for  whom  such  money  is  paid  successfully  contests 
the  right  to  redeem.^    In  such  an  action  the  plaintiff  paid  in, 

before  me  I  must  treat  the  plea  of  15  Pac.  Rep.  691;  Sweetland  v.  Tut- 

tender  as   sufficient,    although  the  hill,  54  111.  215;  Munk  v.  Kanzler,  26 

money  has  not  been  paid  into  court.  Ind.  App.  105    58  N.   E.   Rep.   543; 

But  if  the  tender  was  irregular  for  Martin  v.  Bott,  17  Ind.  App.  444,  46 

thereasonstated,  the  admission  of  the  N.   E.  Rep.    151;     Beil  v.    Supreme 

justice  of  the  plaintiff's  claim  would  Council  American  Legion  of  Honor, 

be  none  the  less  distinct  and  une-  42  App.  Div.  168,  58  N.  Y.  Supp.  1049. 

qui  vocal."      See     also     Merritt     v.  See  Ruble  v.  Murray,  4  Hayw.  27. 

Thompson,  10  How.  Pr.  428;  Thurston  If  money  paid  into  court  in  a  suit 

V.  Marsh,  5  Abb.  Pr.  389.  for  unliquidated  damages  is  taken 

1  Chicora  Fertilizer  Co.  v.  Dunan,  out  in  good  faith  by  the  plaintiff's 
91  Md.  144,  46  Atl.  Rep,  347,  50  L.  R.  solicitor  and  paid  to  his  client  the  so- 
A.  401;  Zebley  v.  Farmers'  Loan  &  licitor  cannot  be  compelled  to  repay 
Trust  Co.,  139  N.  Y.  461,  34  N.  E.  Rep.  it  after  his  client's  death.  Davys  v, 
1067.  Richardson,  21  Q.  B.  Div.  208. 

2  Foster  v.  Napier,  74  Ala.  393;  Tay-  3  Le  Grew  v.  Cooke,  1  Bos.  &  PuL 
lor  V.  Brooklyn  E.  K  Co.,  119  N.  Y.  332. 

561,  23  N.  E.  Rep  1106;  Kansas  City  ^Fox  v.  Williams,  92  Wis.  320,  66 

Transfer  Co.  v.  Neiswanger,  27  Mo.  N.  W.  Rep.  357. 

App.    356;    Dillenback  v.  The  Ross-  •"' Canastota  &  M.   Plank  R.  Co.  v. 

end  Castle.  30  Fed.   Rep.  462;    Sup-  Parkill,  50  Barb.  601. 

ply  Ditch  Co.  v.  Elliott,  10  Colo.  327,  «  Putnam  v.  Putnam,  13  Pick.  129. 


275.] 


TENDER. 


ro3 


under  order  of  the  court,  a  sum  previously  tendered;  in  the 
meantime  he  had  failed  to  keep  his  tender  good,  and  judgment 
was  given  for  the  defendant  for  that  reason.  The  plaintiff 
was  then  entitled  to  withdraw  the  raone}'  except  so  much  as 
might  pay  the  defendant's  costs.^  By  withdrawing  money 
paid  into  court  the  plaintiff  accepts  it  for  the  purposes  for 
which  it  was  paid ;  he  cannot  claim  that  it  was  merely  pay- 
ment on  account.^ 


In  this  case  Shaw,  C.  J.,  said:  "There 
is  no  analogy  between  the  payment 
of  money  into  court  in  a  common- 
law  action  of  debt  or  assumpsit  and 
a  like  payment  upon  a  bill  in  equity 
to  redeem  under  our  statute,  and 
hence  the  authorities  applicable  to 
the  former  case  afford  no  rule  gov- 
erning the  present.  By  payment 
into  court,  in  an  action  claiming 
debt  or  damages,  the  defendant  ad- 
mits, in  the  most  formal  manner,  his 
absolute  liability  to  that  sum,  and  by 
the  form  of  the  rule  or  plea  oflfei's  it 
in  satisfaction  and  discharge  of  such 
admitted  liability.  If  not  accepted 
it  is  paid  into  court  for  the  plaintiflf's 
use,  and  the  defendant  derives  the 
full  benefit  of  it  as  if  paid  to  and  ac- 
cepted by  the  plaintiff  himself,  be- 
cause it  operates  as  a  bar  pro  tanto 
to  all  claims  in  respect  to  such  sum. 
It  is  therefore  upon  the  strongest 
reason  held  that  such  payment  shall 
be  deemed  absolute,  and  the  party 
shall  not  be  permitted  to  draw  it  in 
question  on  the  ground  of  equity  or 
mistake,  or  any  ground  except  fraud 
or  imposition. 

"  But  the  character  of  a  payment 
of  money  into  court  on  a  bill  in 
«quity  to  redeem  a  mortgage  is  en- 
tirely different.  It  is  in  its  nature 
•entirely  provisional;  it  is  an  offer  to 
pay  in  discharge  of  a  debt  secured 
by  mortgage  on  real  estate,  the  pur- 
pose of  which  is  to  release  such  real 
estate  from  the  incumbrance.  But 
the  defendant  contests  the  right  to 


redeem;  alleges  that,  by  force  of  law 
and  the  lapse  of  time,  the  mortgage 
is  foreclosed,  that  she  has  become 
the  absolute  owner  of  the  estate,  and 
of  course  that  there  is  no  longer  any 
debt  secured  bj'  mortgage,  and,  con- 
sequently, that  she  has  no  claim  to 
the  money  offered  in  satisfaction  of 
such  debt  This  defense  prevails, 
and  the  conclusion  of  law  is  that  the 
defendant  was  right  in  rejecting  the 
money  tendered  and  not  releasing 
the  estate.  She  cannot  now  be  al- 
lowed to  claim  this  money  against 
her  own  formal  actshowing  that  she 
has  no  title  to  it.  Nor  ought  the 
plaintiffs  to  be  bound  by  a  provis- 
ional offer  of  money  to  redeem  an 
estate,  where  it  appears  that  they 
cannot  redeem,  and  the  paj^ment 
cannot  avail  them  for  the  only  pur- 
pose for  wliich  the  money  was  of- 
fered." 

1  Dunn  V.  Hunt,  76  Minn.  196,  78 
N.  W.  Rep.  1100. 

2  Haeussler  v.  Duross,  14  Mo.  App. 
103;  Turner  v.  Lee  Gin  &  Machine 
Co.,  98  Tenn.  604,  41  S.  W.  Rep.  57; 
Gardner  v.  Black.  98  Ala.  638,  12  So. 
Rep.  813;  Hanson  v.  Todd,  95  Ala. 
328,  10  So.  Rep.  354;  Chne  v.  Rude- 
sill,  126  N.  C.  523,  36  S.  E.  Rep.  36. 
Compare  Spaulding  v.  Vandercook, 
2  Wend.  431;  Sleght  v.  Rhinelander, 
1  Johns.  192;  Johnston  v,  Columbian 
Ins.  Co.,  7  Johns.  315.  The  opinion 
in  the  Tennessee  case  cited  contains 
a  summary  of  the  practice  under  the 
old  procedura 


Y04     CONVENTIONAL    LIQUIDATIONS    AND   DISCHAKGE8.    [§§  276,  277. 

[470]     §  276.  Effect  of  tender  when  money  paid  into  court. 

A  mere  tender  of  a  sufBcient  sura  only  has  the  effect  to  stop 
interest  and  protect  the  debtor  against  subsequent  costs.  It 
does  not  discharge  the  debt.^  But  when  the  debtor  has  kept 
the  tender  good,  and,  on  being  sued,  regularly  pleads  it  and 
brings  the  money  into  court,  it  accomplishes  such  discharge 
[471]  whether  the  action  proceeds  to  judgment  or  not.  If  the 
action  abate  or  be  withdrawn,  the  defendant  in  a  subsequent 
action  may  plead  the  tender  and  payment  into  court  in  the 
first  action;  and  if  these  facts  are  established  he  will  be  en- 
titled to  judgment.^ 

§277.  Effect  of  tender  on  collateral  securities.  A  suffi- 
cient tender,  however,  will  discharge  all  liens  and  collateral 
securities;  and  for  this  effect  it  need  not  be  kept  good,  nor  be 
brought  into  court.'  Thus,  where  a  mortgage  of  real  estate  is 
a  mere  security  for  the  debt  and  the  legal  title  remains  in  the 
mortgagor  precisely  the  same  after  as  before  the  debt  is  due, 


1  Ferrea  v.  Tubbs,  125  Cal.  687,  58 
Pac.  Rep.  308;  Ruppel  v.  Missouri 
Guarantee  Savings  &  Building  Ass'n, 
158  Mo.  618,  59  S.  W.  Rep.  1000; 
Wright  V.  Robinson,  84  Hun,  173,  32 
N.  Y.  Supp.  463;  Law  v.  Jackson.  9 
Cow.  641 ;  Carley  v,  Vance,  17  Mass. 
389;  Haynes  v.  Thorn,  28  N.  H.  386, 
400;  Barnard  v.  Cushman,  35  IlL  451; 
Raymond  v.  Bearnard,  12  Johns.  274, 
7  Am.  Dea  317;  Coit  v.  Houston,  3 
Johns.  Cas.  243;  Jackson  v.  Law,  5 
Cow.  248;  Cornell  v.  Green,  10  S.  & 
R  14.  See  Jeter  v.  Littlejohn,  3 
Murph.  186:  Staat  v.  Evans,  35  111. 
455;  Teass'  Adm'r  v.  Boyd,  29  Mo. 
131;  Wheeler  v.  Woodward,  66  Pa. 
158;  Pennsylvania  Co.  v.  Dovey,  64 
id.  260;  Dixon  v.  Clark,  5  C.  B.  365 
Waistell  v.  Atkinson,  3  Bing.  289 
Johnson  v.  Triggs.  4  G.  Greene,  97 
Freeman  v.  Fleming,  5  Iowa,  460 
Shant  v.  Southern,  10  id.  415;  Mohn 
V.  Stoner,  11  id.  30;  Hayward  v.  Hun- 
ger, 14  id.  516. 

2  Robinson  v.  Gaines,  3  Call,  24a 
See  Warder  v.  Arell,  2  Wash.  (Va.) 
282,  1  Aiii.  Dec.  48a 


Keys  V.  Roder,  1  Head,  19,  was  an 
action  of  debt  commenced  in  a  jus- 
tice's court.  It  was  held  that  a  mere 
offer  by  the  defendant  to  the  plaint- 
iff of  the  sum  claimed  before  the 
issuance  of  the  warrant  could  not  be 
pleaded  as  a  valid  tender  in  bar  of 
the  action.  The  money  should  have 
been  produced  and  offered  also  at  the 
time  of  the  trial  before  the  justice; 
and  upon  appeal  to  the  circuit  court, 
it  should  have  been  brought  into 
that  court  at  the  time  of  filing  the 
papers,  and  still  held  ready  and  pro- 
duced as  a  continuous  offer.  A  mere 
offer  of  the  amount  to  the  plaintiff 
by  the  defendant's  counsel,  in  the 
progress  of  the  argument  in  the  cir- 
cuit court,  was  not  sufficient. 

^Schayer  v.  Commonwealth  Loan 
Co.,  163  Mass.  332,  39  N.  E.  Rep.  1110; 
Mitchell  V.  Roberts,  17  Fed.  Rep.  776; 
Wright  V.  Robinson,  84  Hun,  172,  32 
N.  Y.  Supp.  463;  Willard  v.  Harvey, 
5  N.  H.  253;  Swett  v.  Horn,  1  id.  332; 
Maynard  v.  Hunt,  5  Pick.  240. 


•] 


TENDER. 


7U5 


and  until  there  is  a  foreclosure,  the  tender  of  the  amount  due 
after  the  law  day  and  before  foreclosure  will  discharge  tLe 
mortgage;  and  if  the  mortgagee  is  in  possession  the  mortgagor 
may  recover  in  ejectment.^  But  to  establish  a  tender  and  re- 
fusal, such  as  will  discharge  the  lien  of  a  mortgage  without  the 
tender  being  kept  good,  the  proof  must  be  clear  that  the  ten- 
der was  fairly  made  and  deliberately  and  intentionally  refused 
by  the  owner  of  the  mortgage,  and  that  sufficient  opportunity 
was  afforded  to  ascertain  the  amount  due;  at  least  it  should  ap- 
pear that  a  sum  was  absolutely  and  unconditionally  tendered 
sufficient  to  cover  the  whole  amount  due.-  Though  the  tender 
be  sufficient,  yet  if  the  mortgagor  asks  for  affirmative  relief, 
even  for  extinguishment  of  the  lien,  he  must  do  equity;  this 
obliges  him  to  keep  the  tender  good;  he  must  pay  the  amount 
equitably  due  the  mortgagee.'  Where  the  incidents  attached 
to  a  mortgage  of  real  estate  are  those  w^hich  prevailed  at  the 
common  law^,  the  mortgagee  having  an  estate  on  condition 
which  becomes  absolute  by  reason  of  non-payment  on  the  day 
named,  a  tender  will  not  discharge  the  lien  unless  it  is  made 
punctually   and   is  kept  good.*    A  tender  will   discharge  a 


1  Kortright  v.  Cady,  21  N.  Y.  343, 
5  Abb.  Pr.  358;  Jackson  v.  Crafts.  18 
Johns.  110;  Edwards  v.  Farmers'  F. 
Ins.  &  L,  Co.,  21  Wend.  467;  Farmers' 
F.  Ins.  &  L.  Co.  V.  Edwards,  26  id.  541; 
Arnot  V.  Post,6  Hill,65;  Post  v.  Arnot, 
2  Denio,  344;  Tiffany  v.  St.  John,  5 
Lans.  153,  65  N.  Y.  314;  Hartley  v. 
Tatham,  1  Robert.  246,  1  Keyes,  222; 
Trimm  v.  Marsh,  54  N.  Y.  599, 13  Am. 
Rep.  623:  McDaniels  v.  Reed,  17  Vt. 
674;  Eslow  v.  Mitchell,  26  Mich.  500; 
Caruthers  v.  Humphrey,  12  id.  270; 
Van  Husan  v.  Kanouse,  13  id.  303; 
Saltus  V.  Everett,  20  Wend.  267;  Sa- 
linas V.  Ellis,  26  S.  C.  337,  2  S.  E.  Rep. 
121;  Thornton  v.  National  Exchange 
Bank,  71  Mo.  221.  See  Harris  v.  Jex, 
66  Barb.  232;  Merritt  v.  Lambert,  7 
Paige,  344;  Ketchum  v.  Crippen,  37 
Cal.  223;  Bryan  v.  Maume,  28  Cal.  238; 
Wilson  V.  Keeling,  1  Wash.  (Va.)  194; 
Werner  v.  Tuch,  52  Hun,  269, 5  N.  Y. 
Supp.  219. 

Vol.  1  —  45 


2Tuthill  V.  Morris,  81  N.  Y.  94; 
Parks  V.  Allen.  42  Mich.  82,  4  N.  W. 
Rep.  227;  Jewett  v.  Earle,  53  N.  Y. 
Super.  Ct.  349;  Waldron  v.  Murphy, 
40  Mich.  668. 

3Tuthill  V.  Morris,  81  N.  Y.  94; 
Landis  v.  Saxton,  89  Mo.  375,  1  S.  W. 
Rep.  359.  See  Salinas  v.  Ellis,  26  S.  C. 
337,  2  S.  E.  Rep.  121. 

4  Grain  v.  McGoon.  86  111.  431;  Mat- 
thews V.  Lindsay, 20  Fla.962;  Schearff 
V.  Dodge,  33  Ark.  340;  Alexander  v. 
Caldwell,  61  Ala.  543;  Greer  v.  Tur- 
ner, 36  Ark.  17;  Currier  v.  Gale,  9 
Allen,  522;  Holman  v.  Bayley,  3  Met. 
55;  Phelps  V.  Sage,  2  Day,  151;  Shields 
V.  Lozear,  34  N.  J.  L.  496,  3  Am.  Rep. 
256;  Rowell  v.  Mitchell.  68  Me.  21; 
Store}'  V.  Krewson,  55  Ind.  397, 23  Am. 
Rep.  608;  Collins  v.  Robinson,  33  Ala. 
91;  Slaughter  v.  Swift,  67  id.  494; 
Frank  v.  Pickens.  69  id.  369;  Tomp- 
kins V.  Batie,  11  Neb.  147,  38  Am.  Rep. 
361,  7  N.  W.  Rep.  747;    Hudson   v. 


706 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHAEGES.        [§  277. 


mechanic's  lien  for  the  repair  of  personal  propert}'';^  an  attor- 
ney's lien; 2  a  pledge  or  mortgage  of  personal  property;'  the 
[472]  right  to  distrain  for  rent;*  and  will  release  a  surety.' 
But  a  tender  of  the  sum  due  on  a  contract  for  the  purchase  of 
land,  the  legal  title  being  in  the  vendor,  does  not  discharge  his 
lien;  he  can  be  divested  of  his  title  only  by  payment  of  the 
purchase-money.®  A  landlord's  statutory  lien  for  rent  is  not 
discharged  by  a  tender  of  the  rent  due.'^ 

Whether  a  judgment  which  is  a  lien  on  land,  or  under  which 
an  execution  has  been  levied,  will  be  discharged  by  a  tender  is 
not  very  clearly  settled.  It  has  been  held  that  to  make  a  ten- 
der effectual  for  this  purpose  the  money  should  be  brought 
into  court  and  the  judgment  satisfied  of  record.  Being  a  debt 
of  record,  and  a  tender  not  discharging  it,  the  lien,  beino-  a 
legal  consequence,  must  subsist  while  the  debt  continues  in 
that  form,^     But  the  weight  of  reason,  if  not  authority,  is  in 


Glencoe  Sand  &  Gravel  Co.,  140  Mo. 
103,  41  S.  W.  Rep,  450,  63  Am.  St.  722; 
Himmelmann  v.  Fitzpatrick,  50  Cal. 
€50:  Mitchell  v.  Roberts,  17  Fed.  Rep. 
776. 

iMoynahan  v.  Moore,  9  Mich.  9; 
Ball  V.  Stanley,  5  Yerg.  199,  26  Am. 
Dec.  263. 

2  Stokes  on  Lien  of  Att'ys,  81, 172; 
Jones  V.  Tarleton,  9  IVL  &  W.  675; 
Scarf 6  V.  Morgan,  4  id.  280;  Irving  v. 
Viana,  2  Y.  &  Jer.  71. 

^Hyams  v.  Bamberger,  10  Utah,  3, 
36  Pac.  Rep.  202,  citmg  the  text; 
Norton  v.  Baxter,  41  Minn.  146,  42 
N.  W.  Rep.  865,  4  L.  R.  A.  305;  Lough- 
borough V.  McNevin,  74  Cal.  250,  5 
Am.St.  435. 14  Pac.  Rep.  369, 15  id.  773; 
McCalla  v.  Clark,  55  Ga.  53:  Wild- 
man  V.  Radenaker,  20  Cal.  615;  Ball 
V.  Stanley,  supra;  Cooley  v.  Weeks, 
10  Yerg.  141;  Coggs  v.  Bernard.  2  Ld. 
Raym.  909;  Comyn's  Dig.,  tit.  Mort- 
gage, A.  But  not  after  the  day  it  is 
due.  Tompkins  v.  Batie,  supra. 
Contra,  Hyams  v  Bamberger,  10 
Utah,  3,  36  Pac.  Rep.  202.  See  Frank 
V.  Pickens,  69  Ala.  369. 

*  Hunter  v.  Le  Conte,  6  Cow.  728; 
Davis  V.  Henry,  63  Miss.  110. 


s  Smith  V.  Old  Dominion  Building 
&  Loan  Assn,  119  N.  C.  257,  26  S.  E. 
Rep.  40;  Mitchell  v.  Roberts,  17  Fed. 
Rep.  776;  Brandt  on  Suretyship,  §§  21» 
22;  Appleton  v.  Donaldson,  3  Pa.  381; 
Spurgeon  v.  Smitha,  114  Ind.  453,  17 
N.  E.  Rep.  105;  Joslyn  v.  Eastman,  46 
Vt.  258;  White  v.  Life  Assn  of 
America,  63  Ala.  419,  35  Am.  Rep. 
45;  McQuesten  v.  Noyes,  6  N.  H.  19; 
Sailly  V.  Elmore,  2  Paige,  497;  Fisher 
V.  Stockebrand,  26  Kan.  565;  Hayes 
V.  Josephi,  26  Cal.  535;  Solomon  v. 
Reese,  34  id.  28.  Compare  Clark  v. 
Sickler,  64  N.  Y.  231,  21  Am.  Rep. 
606;  Second  Nat.  Bank  v.  Boucher, 
56  N.  Y.  348. 

«  Schearflf  v.  Dodge,  33  Ark.  346. 

7  Hamlett  v.  Tallman,  30  Ark.  505; 
Bloom  V.  McGehee,  38  Ark.  329. 

8  Jackson  v.  Law,  5  Cow.  248;  Law 
V.  Jackson,  9  id.  641;  Halsey  v.  Flint, 
15  Abb.  Pr.  367.  See  Shumaker  v. 
Nichols,  6  Gratt.  592;  Flower  v.  EI- 
wood,  66  111.  447,  449;  Redington  v. 
Chase,  34  Cat  666.  But  see  also 
Mason  v.  Sudam,  2  Johns.  Ch.  172; 
Tiffany  v.  St.  John,  5  Lans.  153,  65 
N.  Y.  314,  23  Am.  Rep.  55. 


§  277.] 


TENDEE. 


707 


favor  of  holdinj^  an  execution  lien  discbarged  by  a  tender  the 
same  as  a  conventional  lion  would  be.  In  each  case  the  lien 
exists  as  a  collateral  advantage  to  the  creditor.  It  is  inciden- 
tal to  the  debt.  In  each  case,  if  the  lien  is  not  satisfied,  there 
is  a  power  to  sell.  Payment  will  extinguish  one  as  well  as  the 
other.'     But  it  will  not  discharge  a  lien  to  secure  the  payment 


1  Tiffany  v.  St.  John.  65  N.  Y.  314, 
23  Am.  Rep.  55.  In  this  case  Dwight, 
C,  said:  "There  is,  undoubtedly,  a 
stage  in  a  proceeding  in  an  action 
where  property  is  in  the  custody  of 
the  law,  that  a  tender  will  not  de- 
stroy tlie  lien,  as  that  might  inter- 
fere with  the  proper  disposition  of 
the  case.  After  the  action  is  over, 
and  judgment  obtained,  and  execu- 
tion levied,  the  case  becomes  clearly 
assimilated  to  that  of  an  ordinary 
lien;  and  if  tender  is  made  and  not 
accepted  the  lien  will  be  extin- 
guished. This  distinction  was  set- 
tled as  far  back  as  the  time  of  Lord 
Coke,  and  is  clearly  stated  in  the  Six 
Carpenters'  Case  (8  Coke,  146a).  The 
point  there  discussed  was  the  effect 
of  a  tender  in  the  case  of  a  distress 
tor  rent,  or  of  cattle  doing  dam- 
age —  an  instance  of  a  lien  created 
by  the  act  of  the  law.  Coke  con- 
siders the  distinction  between  a 
tender  made  upon  the  land  before 
distress,  after  the  distress  and  before 
impounding,  after  impounding  and 
before  the  determination  of  the  liti- 
gation, and  contrasts  these  with  a 
tender  made  after  the  law  has  deter- 
mined the  rights  of  the  parties.  He 
says:  'Note,  reader,  this  difference: 
that  tender  upon  the  land  before  the 
distress  makes  the  distress  tortious; 
tender  after  the  distress  and  before 
the  impounding  makes  the  detainer, 
and  not  the  taking,  wrongful;  ten- 
der after  the  impounding  makes 
neither  one  nor  the  other  wrongful, 
for  then  it  comes  too  late,  because 
then  the  cause  is  put  to  the  trial  of 
the  law,  to  be  there  determined.  But 


after  the  law  has  determined  it,  and 
the  avowant  has  return  irreplevisa- 
ble, yet  if  the  plaintiff  makes  him  a 
sufficient  tender  he  may  have  an  ac- 
tion of  detinue  for  the  detainer  after, 
or  he  may.  upon  satisfaction  made  in 
court,  have  a  writ  for  the  redelivery 
of  his  goods.'  He  adds:  'And  there 
with  agree  all  the  books,  and  Pelk- 
ington's  Case,  in  the  fifth  part  of  my 
reports  (fol.  76),  and  so  all  the  books 
•which, pri)nn  facie,  seem  to  disagree, 
are,  upon  full  and  pregnant  reason, 
well  reconciled  and  agreed.' 

"  There  is  here  a  clear  statement 
of  the  principle  applicable  to  the 
case  at  bar.  Here  the  law  has  al- 
ready determined  the  right  which 
has  became  final  in  analogy  to  the 
'  return  irreplevisable '  of  Lord  Coke, 
and  the  tender  having  been  made 
and  refused,  if  it  were  sufficient  in 
amount,  an  action  of  replevin  in  the 
detinet  will  lie  in  analogy  to  the  ac- 
tion of  detinue  referred  to  by  him. 
It  should  also  be  observed  that  Lord 
Coke's  rule  provides  that  the  owner 
of  goods  has  his  election  to  make  an 
application  to  the  court  for  relief. 

"The  defendant  cites  in  opposition 
to  these  views  the  case  of  Jackson 
V.  Law,  5  Cow.  248,  9  id.  641.  That 
case,  however,  has  no  bearing  upon 
the  present  controversy.  The  point 
there  decided  was  that  a  tender  of 
money  due  upon  a  judgment  by  a 
junior  judgment  creditor  did  not 
discharge  it,  nor  take  away  the  lien 
of  the  senior  judgment  creditor 
upon  lands,  but  that  the  latter  might 
still  redeem  upon  his  judgment 
within  the  terms  of  the  statute  ap- 


70S  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  27S. 

of  special  assessments  for  street  improvements,  no  personal 
liability  therefor  existing.^ 

[4:73]  A  plea  of  tender  should  conclude  by  praying  judgment 
whether  the  plaintiff  ought  to  recover  any  damages  by  reason 
of  the  non-payment  of  the  sum  alleged  to  have  been  tendered.^ 
If  upon  the  trial  the  sum  tendered  and  brought  into  court  is 
found  by  the  jury  to  be  less  than  was  due  at  the  time  of  the 
tender  the  verdict  and  judgment  should  be  for  the  whole 
amount  of  the  plaintiff's  demand,  without  any  deduction  on 
account  of  the  money  brought  into  court.  The  defendant, 
however,  is  entitled  to  the  benefit  of  the  payment  by  indorse- 
ment upon  the  judgment  or  execution.^ 

[474]  §  278.  Paying  money  into  court.  A  practice  was 
introduced  into  England  in  the  time  of  Charles  II.  of  paying 
money  into  court  where  no  previous  tender  had  been  made.* 
This  is  supposed  to  have  been  adopted  to  avoid  the  hazard 
and  difficulty  of  pleading  a  tender.^  The  money  was  paid  in 
on  a  rule  of  court,  and  thereafter  the  plaintiff  proceeded  for 
more  at  the  hazard  of  paying  subsequent  costs.  The  amount 
paid  in  was  stricken  from  the  declaration,  and  no  evidence 
given  of  that  part  of  the  claim.^  It  was  at  first  required 
to    be  paid  in  before  plea,  but  was  afterwards  allowed    by 

plicabletothat  subject.    The  ground  court  of  equity  may  set  aside  a  sale 

of  this  decision  briefly  was  that  a  underit  as  irregular  and  void.  Mason 

judgment,  being  a  debt  of  record,  is  v.    Sudani,  2  Johns.  Cli.  172."    See 

not  discharged  by  a  tender,  and  it  is,  Crozer  v.  Pilling,  6  D.  &  R.  129. 

in  no  case,  the  effect  of  a  tender  to  ^  McGuire   v.  Bi'ockman,    58    Mo. 

discharge  the  debt.     The  judgment  App.  307. 

could  only  be  extinguished  by  act-  -Karthaus  v.  Owings,  8  Har.  &  J. 

ual   satisfaction.     As  long  as  it  re-  134. 

mained  in  force,  it  must,  by  its  very  3  Dakin  v.  Dunning,  7   Hill.  SO,  42 

nature,  as  prescribed  by  statute,  be  Am.  Dec.  33;  Huntington  v.  Zeigler, 

a  lien  on  the  land.     If  its  existence  2  Ohio  St.  10;  Bennett  v.  Odom,  30 

continued  it  could  not  be  deprived  Ga.  940;  Baker  v.  Gasque,  3  Strobh. 

of  its  ordinary  and  usual  character-  25;  Reed   v.  Woodman,  17  Me.  43;  1 

istics.     The    case    is    very  different  Tldd's  Pr.  569. 

with  a  pledge  or  mortgage,  or  lien  of  *  Payment   into  court  without    a 

any  kind  collateral  to  the  debt.     To  rule  may  be  disregarded.     Levan  v. 

this  class  of  collateral  liens  an  exe-  Sternfeld,  infra. 

cution  belongs,  and  on  general  prin-  5  Levan  v.  Sternfeld,  55  N.  J.  L.  41, 

ciples  a  tender  destroys  it.     Even  in  25    Atl.    Rep.    854;    Arch.    Pr.    199; 

the  case  of  a  judgment  a  tender  may  Boyden  v.  Moore,  5  Mass.  365;  Reed 

have  such  an  effect  as  to  make  it  in-  v.  Woodman,  17  Me.  43. 

equitable  to  enforce  the  lien;  and  a  *>  Id. 


§  279.]  STIPULATED    DAMAGES.  709 

withdrawing  the  plea.  The  rule  allowing  the  defendant  to  pay 
money  into  court  was  granted  generally  on  condition  of  pay- 
ing costs,  directing  that  sura  to  be  stricken  out  of  the  declara- 
tion, if  refused  by  the  plaintiff,  and  concerning  it  no  evidence 
to  be  received  on  the  trial.  This  reduced  the  controversy  to 
the  quantum  of  damages;  and  the  consequence  was  that,  if 
the  plaintiff  did  not  prove  a  greater  sum  due  than  that  paid 
in,  a  verdict  passed  for  the  defendant  and  he  had  judgment 
for  subsequent  costs.  If  the  plaintiff  proved  that  more  was 
due,  he  had  a  verdict  and  judgment  for  the  balance  and 
subsequent  costs.^  The  payment  of  money  into  court  was 
proved  by  production  of  the  rule.^  But  when  the  tender 
is  found  sufficient  and  the  money  has  been  brought  into  court 
the  verdict  should  be  for  the  defendant.' 

Section  6. 

stipulated  damages. 

§  279.  Contracts  to  liquidate  damages  valid.  After  [475] 
damages  have  been  sustained  an  agreement  to  pay  such  sum 
therefor  as  shall  be  ascertained  in  a  particular  way  is  binding.* 
And  parties  in  making  contracts  are  at  liberty  to  stipulate  the 
amount  which  shall  be  paid  by  either  to  the  other  as  compen- 
sation for  the  anticipated  actual  loss  or  injury  which  they  fore- 
see or  concede  will  result  from  a  breach  if  it  should  occur.* 
Without  express  statutory  authority  officers  who  are  author- 
ized by  law  to  make  contracts  for  a  state  or  municipality  have 

11  Bac.  Abr.  473c.     See  Ruble  v.  sence  of  proof  that  the  plaintiff  took 

Murray,  4  Hayw.  27.  it  in  satisfaction  of  his  claim,  he  was 

i  Id.  not  thereby  precluded   from  filing 

spennypacker    v.    Umberger,    22  new  counts  and  recovering  an  addi- 

Pa.  492;  Levan  v.  Sternfeld.  supra.  tional  sum  thereon. 

In  Hill  V.  Smith,  .34  Vt.  535.  the  de-  *  Longridge  v.  Dorville,  5  B.  &  Aid. 

fendant,    before    the    new    counts,  117.    See  Hosmer  v.  True,  19  Barb. 

upon   which   alone  the  plaintiff  re-  106. 

covered,  were  filed,  paid  into  court  a  ^Sun  Printing   &  Pub,    Ass'n   v. 

sum  of  money  sufficient  to  satisfy  all  Moore.  183  U.  S.  642,  22  Sup.  Ct.  Rep. 

the  damages  the  plaintiff  could  have  240;  Guerin  v.  Stacy,  175  Mass.  595, 

recovered  under  the  original  decla-  56  N.  E.  Rep.  892;  Holmes  v.  Holmes, 

ration  and  costs  to  the  time  of  such  12   Barb.    137;   Fasler  v.    Beard,    39 

payment,  and  the  plaintiff  took  the  Minn.  32,  38  N.  W.  Rep.  755. 
monev;  it  was  held  that  in  the  ab- 


710 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  279. 


power  to  fix  a  sum  as  liquidated  damages  for  their  violation. i 
The  sura  designated  in  the  contract  or  subsequently  agreed 
upon  becomes,  on  the  happening  of  the  event  on  which  its 
payment  depends,  the  precise  sum  to  be  recovered,  and  the 
jury  are  confined  to  it.^  ISTor  will  equity  relieve  from  the  pay- 
ment of  it.'  As  will  more  fully  appear  hereafter,  there  are 
limitations  on  the  power  thus  to  contract.  As  a  general  rule, 
where  the  injury  resulting  from  the  breach  of  a  contract  is 
susceptible  of  definite  measurement,  as  where  the  breach  con- 
sists in  the  non-payment  of  mone}^  the  parties  will  not  be 
sustained  in  the  enforcement  of  stipulations  for  a  further  sum, 
whether  in  the  form  of  a  penalty  or  liquidated  damages;  but 
where  the  damages  sustained  are  uncertain  and  are  not  readily 
susceptible  of  being  reduced  to  a  certainty  by  a  legal  compu- 
tation they  may  be  determined  before  a  breach  occurs."*     The 


1  State  Trust  Co.  v.  Duluth,  70  Minn. 
257,  73  N.  W.  Rep.  249;  Brooks  v. 
Wichita,  114  Fed.  Rep.  297,  52  C.  C. 
A.  209;  Little  v.  Banks,  86  N.  Y.  258; 
Parr  v.  Greeubush,  42  Hun,  232; 
Nelson  v.  Jonesboro,  57  Ark.  168,  20 
S.  W.  Rep.  1093;  Salem  v.  Anson,  40 
Ore.  339,  67  Pac.  Rep.  190,  56  L.  R.  A. 
169. 

2  Smith  V.  Newell,  37  Fla.  147,  20  So. 
Rep.  249;  American  Copper,  Brass  & 
L  Works  V.  Galland-Burke  Brewing 

&  M.  Co.,  —  Wash. ,  70  Pac.  Rep. 

238;  Kelso  v.  Reid,  145  Pa.  606,  27 
Am.  St.  716,  23  Ati.  Rep.  323;  Welch 
V.  McDonald.  85  Va.  500,  8  S.  E.  Rep. 
711;  Stanley  v.  Montgomery,  102 
Ind.  102,  26  N.  E.  Rep.  213;  Lowe  v. 
Peers,  4  Burr.  2225;  Beale  v.  Hayes, 
5  Sandf.  640;  Tardeveau  v.  Smith's 
Ex'r,  Hardin,  175,  18  Am.  Dec.  727. 
See  Bradshaw  v.  Craycraft,  8  J.  J. 
Marsh.  79;  Keeble  v.  Keeble,  85  Ala. 
552,  5  So.  Rep.  149. 

In  Louisiana  the  sum  agreed  to  be 
paid  by  way  of  liquidated  damages  is 
subject  to  reduction  under  certain 
circumstances;  when  the  reduction  is 
permissible,  and  suit  is  brought  for 
the  whole  amount,  the  onus  is  upon 


the  party  claiming  the  reduction  to 
establish  the  extent  to  which  it 
should  be  made.  Goldman  v.  Gold- 
man, 51  La.  Ann.  761,  25  So.  Rep.  555. 
Under  the  Ontario  judicature  act 
of  1895  equity  will  award  actual 
damages,  estimated  on  a  liberal  scale, 
in  lieu  of  the  damages  stipulated  for. 
Townsend  v.  Toronto,  etc.  R.  Co.,  28 
Ont.  195. 

3  Harper  v.  Tidholm,  155  111.  870,  40 
N.  E.  Rep.  575;  Ewing  v.  Litchfield, 
91  Va.  575,  22  S.  E.  Rep.  362;  Sanford 
V.  First  Nat.  Bank,  94  Iowa,  680,  63 
N.  W.  Rep.  459;  Wood  v.  Niagara 
Falls  Paper  Co.,  121  Fed.  Rep.  818 
(Ct.  Ct.  of  Appeals,  2d  Ct.);  Wi- 
baux  V.  Grinnell  Live  Stock  Co.,  9 
Mont.  154,  162,  22  Pac.  Rep.  492;  3 
Story's  Eq.  §  1318;  3  Lead.  Cas.  in 
Eq.  671  et  seq.;  Westerman  v.  Means, 
12  Pa.  97;  Downey  v.  Beach,  78  IlL 
53;  Brooks  v.  Wichita,  114  Fed.  Rep. 
297,  52  C.  C.  A.  209;  Sun  Printing  & 
Pub.  Ass'n  V.  Moore,  183  U.  S.  642, 
661,  22  Sup.  Ct.  Rep.  240;  Young  v. 
Gaut,  69  Ark.  114,  61  S.  W.  Rep  372. 

4  Goldman  v.  Goldman,  51  La.  Ann. 
761,  25  So.  Rep  555;  Kunkel  v. 
Wherry,  189  Pa.  198,  42  Atl.  Rep.  112, 


§  280.]  STIPULATED    DAMAGES.  711 

validity  of  an  agreement  to  stipulate  what  the  damages  shall 
be  is  to  be  determined  by  the  situation  of  the  parties  and  their 
apprehension  of  the  effect  of  a  breach  of  the  contract  at  the 
time  of  making  it.  The  fact  that  it  is  subsequently  ascertained 
that  the  damages  caused  by  the  breach  were  capable  of  ascer- 
tainment does  not  change  the  legal  effect  of  their  stipuhition.* 
There  is  an  implied  condition  in  every  judicial  sale  that  if  the 
purchaser  does  not  pay  the  price  he  offered  he  will  pay  the 
difference  between  that  price  and  the  price  realized  on  a  sub- 
sequent sale  duly  made  after  proper  notice,  and  also  pay  the 
expense  of  such  sale.  This  condition  has  the  same  effect  as  if 
there  was  a  formal  contract  stipulating  the  damages  for  such 
default.2 

§  280.  Damages  can  be  liquidated  only  on  a  valid  contract. 
A  valid  contract  must  exist  on  which  damages  could  be  re- 
covered.' If  void  for  not  being  in  writing/  or  if  impeached 
for  fraud,*  the  stipulation  for  damages  will  share  the  fate  of 
the  contract.  And  it  has  been  held  that  an  agreement  to  pay 
a  sum  as  liquidated  damages  in  case  a  court  in  which  an  action 
was  pending  should  fail  to  make  an  order  containing  a  speci- 
fied provision  is  void,  for  being  against  public  policy,  or  in  the 
nature  of  a  wager.''    A  contract  is  not  void  so  as  to  bar  the  re- 

69  Am.  St.  802;  Tobler  v.  Austin,  22  non-payment.      Royal    Victoria    L. 

Tex.  Civ.  App.  99,  53  S.  W.  Rep.  706;  Ins.  Co,  v.  Richards,  31  Ont.  483. 

Palmer  v.  Toms,  96  Wis.  a67,  71  N.  ^  Newman   v.  Perrill,  73  Ind.  153; 

W.  Rep.  654;  Fasler  v.  Beard. 39 Minn.  Scott  v.  Bush,  26  Mich.  418,  12  Am. 

32,  38  N.  W.  Rep.  755;  Sun  Printing  Rep.  311. 

&  Pub.  Ass'n  V.  Moore,  183  U.  S.  643,  ^Darrow  v.  Cornell,  12  App.  Div. 

20    Sup.    Ct.    Rep.    240;    Brooks    v.  604,  43  N.  Y.  Supp.  1081;  Wambaugh 

Wichita,  114  Fed.   Rep.  297,  52  C.  C.  v.  Bimer.  25  Ind.  368.     See  Fruin  v. 

A.  209;  Whitfield  v.  Levy,  35  N.  J.  L.  Crystal  R.  Co.,  89  Mo.  397,  14  S.  W. 

149.  Rep.  557. 

1  Wilson  V.  Jonesboro.  57  Ark.  168,  «  Dittrich  v.  Gobey,  119  Cal.  599,  51 
20  S.  W.  Rep.  1093;  Dunn  v.  Morgen-  Pac.  Rep.  962;  Cowdrey  v.  Carpenter, 
tliau,  73  App.  Div.  147,  76  N.  Y.  Supp.  1  Robert.  429.  A  party  to  an  action 
827.  for  the  foreclosure  of  a  mortgage  of 

2  Howison  V.  Oakley,  118  Ala.  215,  real  estate  on  assigning  a  junior 
238,  23  So.  Rep.  810.  mortgage  of  only  a  part  of  the  prem- 

'  The  ordinary  terms  of  an  applica-  ises  stipulated  with  its  assignee  that 
tion  for  life  insui'ance,  stipulating  the  order  of  sale  should  direct  the 
that  insurer  should  not  be  liable  un-  property  not  covered  by  the  junior 
til  it  received  the  first  premium,  does  mortgage  to  be  first  sold  for  the  pay- 
not  constitute  the  amount  of  such  ment  of  the  mortgage  being  fore- 
premium  liquidated  damages  for  its  closed.     It  was  held  that,  the  stipu- 


712 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  281. 


covery  of  the  sura  stipulated  as  damages  for  the  violation  of  its 
con.dition  as  to  the  sale  of  a  good-will  because  it  includes  more 
territor}'-  than  the  statute  allows.  Though  the  contract  is  void 
as  to  the  excess  of  such  territory  the  defendant,  by  breaching 
it  within  the  territory  as  to  which  it  was  valid,  became  liable 
for  the  entire  sum  stipulated  to  be  paid  in  that  event.^  A  pro- 
vision in  a  contract  for  liquidating  the  damages  which  may  re- 
sult from  its  breach  will  not  be  extended  by  construction  to 
other  provisions  or  conditions  in  it  than  are  within  its  obvious 
scope  and  purpose.^ 

§  281.  Modesof  liquidating  damages;  computation  of  time. 
[476]  The  stipulation  for  the  adjustment  of  the  amount  of 
damages  is  usually  embraced  in  the  contract  for  the  violation 
of  which  they  are  to  be  paid;  but  not  always  so.  A  deposit 
may  be  made  with  a  third  person  or  with  the  party,  of  money, 
a  note,  or  something  else  of  value  to  be  paid,  delivered  over  or 
retained  on  the  happening  of  the  breach.*     Agreements  are  of 


lation  being  void,  the  assignee  could 
not  recover  the  liquidated  damages 
specified  in  it  upon  its  breach  by  the 
making  of  an  order  without  the 
designated  provision.  See  Voorhees 
V.  Reed,  17  111.  A  pp.  21. 

1  Franz  v.  Bleler,  126  CaL  176,  56 
Pac.  Rep.  249,  58  id.  466;  Price  v. 
Green,  16  M.  &  W.  346. 

2  Curnan  v.  Delaware  &  O.  R.  Co., 
138  N.  Y.  480,  34  N.  E.  Rep.  201. 

3  Moore  v.  Durnam,  —  N.  J.  Eq.  — , 
51  Atl.  Rep.  449;  Wallis  v.  Smith.  21 
Ch.  Div.  243;  Lea  v.  Whitaker,  L.  R 
8  C.  P.  70;  Magee  v.  La  veil,  9  id.  107; 
Swift  v.  Powell,  44  Ga.  128;  Kellogg 
V.  Curtis,  9  Pick.  634;  Stillwell  v. 
Temple,  28  Mo.  156;  Reilly  v.  Jones, 
1  Bing.  302;  Betts  v.  Burch,  4  H.  & 
N.  506;  Hinton  v.  Sparkes,  L.  R.  3  G 
P.  160;  Leslie  v.  Macmichal,  2  N.  S. 
W.  250;  Sanders  V.  Carter,  91  Ga.  450, 
17  S.  E.  Rep.  345;  Csesar  v.  Rubinson, 
71  Ap)).  Div.  180.  75  N.  Y.  Supp.  544. 

In  White  v.  Dingley,  4  Mass.  433, 
the  plaintiff  had  given  the  defend 
ant  a  license  for  two  years,  and  cov- 
enanted not  to  sue  him  within  that 


time,  and  that  if  he  should  sue  him 
he  should  be  wholly  discharged  from 
the  claim.  The  creditor  brought  suit 
in  violation  of  the  covenant,  and  the 
debtor  was  Imprisoned  upon  the 
writ,  whereupon  he  brought  suit 
upon  the  covenant  for  damages.  It 
was  held  that  the  action  could  not 
be  maintained;  the  forfeiture  was  a 
liquidation  of  the  damages.  Upham 
V.  Smith,  7  Mass.  265. 

In  an  action  to  recover  damages 
for  breaking  up  a  highway  the  de- 
fendant gave  the  plaintiff  a  cognovit 
to  confess  judgment  for  £200,  with  a 
defeasance  that  no  execution  should 
issue  if  the  defendant,  within  a  lim- 
ited time,  should  reinstate  the  road 
according  to  certain  specifications. 
The  road  not  being  completely  rein- 
stated within  the  time  prescribed, 
the  plaintiff  sued  out  execution  and 
levied  the  £200  and  costs.  Held, 
that  the  £200  was  in  the  nature  of  a 
penalty,  and  not  of  stipulated  dam- 
ages; and  the  court  referred  it  to  a 
prothonotary  to  ascertain  what  dam- 
ages the  plaintiff  had  actually  sus- 


§  281.] 


STIPULATED   DAMAGES. 


713 


this  nature  and  valid  which  provide  a  particular  method  of 
proof;  as  that  property  covered  by  insurance,  if  afterwards 
destroyed  by  fire,  shall  be  estimated  by  a  particular  [4:77] 
standard,'  or  by  a  designated  person.^  An  agreement  between 
a  broker  and  a  farmer,  the  former  having  advanced  money  to 
the  latter  to  raise  a  crop,  for  the  repayment  of  such  money, 
with  interest,  and  to  ship  to  the  broker  a  certain  number  of 
bales  of  cotton  to  be  sold  by  him,  or,  in  default,  to  pay  the 
customary  broker's  commission  on  such  bales  as  he  failed  to 
ship,  is  for  liquidated  damages,  it  not  being  shown  to  be  a 
cover  for  usury.'  Where  a  part  of  the  work  required  to  be 
done  under  a  contract  which  provided  for  stipulated  damages 
in  consequence  of  delay  was  sublet  and  both  the  contractor 
and  the  subcontractor  were  in  default,  the  clause  providino- for 
such  damages  was  binding  on  the  latter,  and  each  was  respon- 
sible for  the  proportion  of  the  damages  his  delay  caused.*  A 
condition  in  a  contract  extending  municipal  ai(.l  to  a  railroad 
company  that  if  it  should  cease  to  remain  independent  for  a 


tained,  and  what  sum  he  was  enti- 
tled to  recover  from  the  defendant 
for  his  failure  to  reinstate  tiie  road. 
Charrington  v.  Laing.  3  M.  &  P.  587. 

Where  the  intention  of  the  parties 
is  potential,  the  circumstance  that 
the  sum  is  deposited  with  a  stake- 
holder to  be  paid  over,  or  in  the 
hands  of  the  opposite  party,  with  a 
stipulation  that  it  is  to  be  forfeited 
in  the  event  of  a  breach,  is  pointed 
out  as  stronger  evidence  of  an  inten- 
tion to  make  it  liquidated  damages 
than  the  words  or  nature  of  the  con- 
tract otherwise  would.  Magee  v. 
Lavell,  L.  R.  9  C.  P.  107:  Betts  v. 
Burch,  4  H.  &  N.  506;  Hinton  v. 
Sparkes,  L.  R.  3  C.  P.  160;  Wallis  v. 
Smith,  21  Ch.  Div.  243. 

A  contract  which  provides  that  if 
it  shall  be  broken  by  either  of  the 
parties  to  it  the  party  who  commits 
the  breach  shall  pay  such  sum  as  the 
other  party  would  have  received  if 
it  had  been  observed,  and  tiiat  the 
average  yearly  receipts  shall  be  the 


basis  on  wJiich  the  sum  to  be  paid 
shall  be  determined,  does  not  pro- 
vide for  liquidated  damages,  but 
fixes  the  basis  on  which  the  actual 
damages  shall  be  ascertained.  Tufts 
V.  Atlantic  Tel.  Co.,  151  Mass.  269,  23 
N.  E.  Rep.  844. 

1  ^tna  Ins.  Co.  v.  Johnson,  11 
Bush,  .587.  21  Am.  Rep.  223;  Common^ 
wealtli  Ins.  Co.  v.  Sennett,  37  Pa. 
208,  78  Am.  Dec.  418;  Lycoming  Ins. 
Co.  V.  Mitchell,  48  Pa.  3G7;  Bodine  v. 
Glading,  21  id.  50,  59  Am.  Dec.  749; 
Irving  V.  Manning,  6  C.  B.  391;  C.  H. 
Brown  Banking  Co.  v.  Baker,  74  S.  W. 
Rep.  454,  —  Mo.  App.  — . 

2  Faunce  v.  Burke.  16  Pa.  479;  Rol> 
inson  v.  Cropsey,  2  Edw.  Cb.  138; 
Wells  V.  Smith,  id.  78;  Barnet  v. 
Passumpsic  Turnpike  Co.,  15Vt.  757; 
City  Bank  v.  Smith,  3  G.  &  J.  2G5. 

3  Blackburn  V.  Haye.s,  59  Ark.  366, 
27  S.  W.  Rep.  240. 

<  Chicago  Bridge  &  Iron  Co.  v. 
Olson,  80  Minn,  523,  83  N.  W.  Rep. 
461. 


714 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  2S' 


stated  time  the  money  paid  should  be  returned,  provides  for 
liquidated  damages.' 

Where  the  stipulation  was  to  pay  five  dollars  per  day  for 
every  car  delayed  beyond  the  specified  date  the  court  refused 
to  exclude  Sunday  from  the  computation.  This  general  rule 
was  laid  down:  In  the  computation  of  rents,  interest,  dam- 
ages, or  any  other  amounts  in  which  the  day,  the  week,  the 
month,  or  any  other  fixed  period  of  time  is  the  agreed  standard 
of  measurement,  every  intervening  Sunday,  as  well  as  every 
secular  day,  must  be  included  and  counted  in  the  reckoning.^ 

§  28'-2.  Alternative  contracts.  These  are  such  as  by  their 
terms  may  be  executed  by  doing  either  of  several  acts  at  the- 
election  of  the  party  from  whom  performance  is  due.  Com- 
pletion in  one  of  the  modes  is  a  performance  of  the  entire  con- 
tract, and  no  question  of  damages  arises.  Such  a  contract, 
therefore,  is  not  one  for  liquidated  damages.'  Where  by  the 
condition  of  a  bond  the  obligor  might,  by  paying  $600  in 
twelve,  or  $400  in  six,  months,  become  the  owner  of  a  patent 
right  for  a  specified  district,  or  otherwise  should  account  for 
a  certain  share  of  the  profits,  he  had  a  choice  of  those  alterna- 
tives for  those  periods.*  Stipulating  the  damages  and  promis- 
ing to  pay  them  in  case  of  a  default  in  the  performance  of  an 
otherwise  absolute  undertaking  do  not  constitute  an  alternative 
contract.^  The  promisor  is  bound  to  perform  his  contract, 
though  there  is  generally  a  practical  option  to  violate  it  and 
take  the  consequences;  but  he  is  not  entitled  to  an  election  to 
pay  the  liquidated  damages  and  thus  discharge  himself.  A 
contract  stipulating  that  drainage  works  shall  be  completed  in 
all  respects  and  cleared  of  all  implements,  tackle,  impediments, 


1  Hamilton  County  v.  Grand  Trunk 
R.  Co.,  19  Ont.  App.  252. 

2  Pressed  Steel  Car  Co.  v.  Eastern 
R.  Co.,  121  Fed.  Rep.  609,  619  (Ct.  Ct. 
of  Appeals,  8tli  Ct.). 

3  Strickland  v.  Williams,  [1899]  1 
Q.  B.  382;  Salem  v.  Anson.  40  Ore.  339, 
345.  67  Pac.  Rep.  190,  56  L.  R.  A.  169; 
Smith  V.  Bergengren,  153  Mass,  236, 
26  N.  E.  Rep.  G90,  10  L.  R,  A.  768. 

nicNitt  V.  Clark,  7  Johns.  465; 
Fisher  v.  Shaw,  42  Me.  32;  Slosson  v. 
Beadle,  7  Johns.  72;  Mercer  v.    Irv- 


ing. 1  E.,  B.  &  E.  563;  Reynolds  v. 
Bridge,  6  E.  &  B.  528;  Choice  v.  Mose- 
ley,  1  Bailey,  136,  19  Am.  Dec.  661. 

5  Stewart  v.  Bedell,  79  Pa.  336; 
People  V.  Central  Pacific  R.  Co.,  76 
Cal.  29,  34,  18  Pac.  Rep.  90;  Crane  v. 
Peer,  43  N.  J.  Eq.  553,  4  Atl.  Rep.  72, 
quoting  the  text  and  examming  a 
large  number  of  cases.  Compare 
Hahn  v.  Concordia  Society,  42  Md. 
460.  And  see  Indianola  v.  Gulf,  etc 
R.  Co.,  56  Tex.  594. 


§  2S2.]  STIPULATED    DAMAGES.  715 

and  rubbish  on  or  before  a  date  fixed,  and  that  in  default  of 
such  completion  the  contractor  shall  forfeit  and  pay  lOO/.  and 
5^.  for  every  seven  days  during  which  the  works  shall  be  incom- 
plete after  the  said  time  as  and  for  liquidated  damages,  provides 
for  such  payment  only  in  a  single  event,  the  non-completion  of 
the  works.'  A  bond  conditioned  for  the  defendant's  oljedience 
to  a  perpetual  injunction  restraining  him  from  trespassing  on 
the  lands  of  the  plaintiff  or  the  walls,  gates  or  fences  thereof, 
or  inclosing  the  same,  and  from  pulling  down  or  removino" 
or  otherwise  injuring  the  same,  or  inciting  others  to  commit 
any  such  trespasses,  depends  upon  one  condition  only  —  a 
breach  of  the  injunction  —  and  the  sura  designated  in  it  was 
liquidated. 2  A  party  agreed  to  pay  §350  for  certain  real  estate, 
and  paid  down  a  small  part.  On  full  performance  the  promisee 
was  to  procure  for  the  promisor,  as  purchaser,  a  deed  from  a 
third  person;  it  was  also  agreed  that  if  the  purchaser  should 
fail  to  perform  the  contract  or  any  part  of  it,  he  should  pay 
the  other  party  $25  as  liquidated  damages,  and  immediately 
surrender  possession.  A  tender  of  that  sum  and  of  possession 
was  made  before  suit  brought  for  the  remainder  of  the  pur- 
chase-money, and  it  was  unsuccessfully  contended  in  behalf  of 
the  purchaser  that  he  was  entitled  by  the  terms  of  the  [478] 
contract  to  relieve  himself  by  those  acts  from  its  obligation.' 
On  entering  the  service  of  a  bank  the  defendant  executed  a 

1  Law  V.  Local  Board  of  Redditch,  3Ayres  v.  Pease,  12  Wend.  393; 
[1893]  1  Q.  B.  Div.  127;  Townsend  v.  Phoenix  Ins.  Co.  v.  Continental  Ins. 
Toronto,  etc.  R.  Co.,  28  Ont.  195.  Co.,  14  Abb.  Pr.  (N.   S.)  266;   Long  v. 

A  physician  who  goes  to  a  special-  Bowring,  33  Beav.  585;  Howard  v. 
ist  in  his  profession  for  treatment  Hopkyns,  2  Atk.  371;  Dike  v.  Greene, 
and  is  told  that,  in  the  event  of  a  4  R.  I.  285;  Dooley  v.  Watson.  1  Gray, 
cure,  he  would  require  either  a  cer-  414;  Gray  v.  Crosby,  18  Johns.  219; 
tificate  of  his  skill  and  proficiency  Sainter  v.  Ferguson.  7  C.  B.  716;  Hob- 
as  a  specialist  or  $5,000  in  cash,  is  son  v.  Trevor.  2  P.  Wms.  191;  Chilli- 
liable  for  the  latter  sum,  having  re-  ner  v.  Chilliner,  2  Ves.  Sr.  528;  In- 
fused to  give  the  certificate  after  as-  gledew  v.  Cripps,  2  Ld.  Raym.  814; 
senting  to  the  terms  proposed.  The  Preble  v.  Boglmx-st,  1  Swanst.  580; 
court  considered  the  question  as  de-  Sloman  v.  Walter,  1  Brown  Ch.  418; 
pending  upon  whether  the  contract  Lampraan  v-  Cochran,  16  N.  Y.  275; 
provided  for  a  penalty  or  liquidated  Ward  v.  Jewett.  4  Robert.  714;  Robe- 
damages.  Burgoon  v.  Johnson,  194  son  v.  Whitesides,  16  S.  &  R  320; 
Pa.  61,  45  Atl.  Rep.  65.  Robinson    v.    Bakewell,  25  Pa.  424; 

2  Strickland  v.  Williams,  [1899]  1  Cartwright  v.  Gardner,  5  Cush.  273. 
Q.  B.  382. 


716  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  2S3. 

bond  in  the  penal  sum  of  1,000?.,  its  condition  being  that  it 
should  be  void  if  he  discharged  his  duties  in  the  manner  stipu- 
lated, and  if  he  should  pay  the  plaintiffs  a  like  sum  in  case  he 
should  at  any  time  within  two  years  after  leaving  their  service 
accept  employment  in  any  other  bank  within  a  distance  of  two 
miles.  This  condition  was  violated.  It  was  held  that  the 
obligation  could  not  be  satisfied  by  paying  the  sura  mentioned ; 
there  was  an  agreement  implied  from  the  bond  that  the  defend- 
ant should  not  enter  the  service  of  a  rival  bank,  which  agree- 
ment would  be  enforced  by  a  court  of  equity.^  Such  courts 
may  enforce  performance,  or  enjoin  those  acts  that  would  be 
a  violation,-  but  in  such  cases  the  equitable  is  an  elective,  not  a 
cumulative,  remed3^  Before  granting  such  relief  equity  will 
require  the  plaintiff  to  forego  the  legal  claim  to  the  stipulated 
damages.* 

§  283.  Liquidated  damages  contradistinguished  from  pen- 
alty. The  most  important  and  difficult  question  in  respect  to 
a  sura  stated  in  connection  with  a  breach  of  contract  is 
whether  it  is  liquidated  daraages  or  penalt}'.  If  the  latter,  it 
is  not  an  actual  debt;  it  cannot  be  recovered,  but  only  the 
real  damages,  which  have  to  be  proved;  and  the  statement 
of  the  agreement  in  the  contract  is  of  ver}''  little  consequence. 
If  the  former,  it  is  the  precise  sum  to  be  recovered  on  proof  of 
a  breach  of  the  undertaking  to  which  it  refers,  and  no  evidence 
of  the  manner  and  extent  of  the  real  injury  is  necessary.* 

1  National  Provincial  Bank  v.  Mar-  3  Okl.   527.   41    Pac.   Rep.   615;    St 

shall,  40  Ch.  Div,  112.  Louis,  etc.  R.  Co.  v.  Shoemaker,  27 

-  Cases  cited  in  the  two  preceding  Kan.  677:  Hathaway  v.  Lynn,  75  Wis. 

notes.  186,  43  N.  W.  Rep.  956,  6  L.  R.  A.  551; 

••Howard  v.  Hopkins,  2  Atk.  371;  Spicer  v.  Hoop,  51  Ind.  365;  Wood  v. 

1  Story's  Eq.,  §§  717a,  793/;  3  Par.  on  Niagara  Falls  Paper  Co.,  121   Fed. 

Cont.  356,  note  q;  Gordon  v.  Brown,  Rep.  818  (Ct.  Ct  of  Appeals,  2d  Cir- 

4  Ired.  Eq.  399;  Dooley  v.  Watson,  1  cuit).     See  §  279  for  other  cases. 
Gray  414;  French  v.  Macale,  2  Drury         In  some  of  the  cases  the  qualifica- 

&  W.  2G9;  Long  v.  Bowring,  33Beav.  tion  is  added  that  the  damages  must 

585.     See  §  298.  be   beyond  nominal.      That  theory 

*  Salem  V.  Anson,  40  Ore.  339,  67  probably  originated  in  Hathaway  v. 

Pac.  Rep.   190,  56  L.  R.  A>  169;  Hen-  Lynn,  supra.     Doubt  as  to  its  being 

nessy  v.   Metzger,  152  111.  505,  38  N.  sound  was  expressed  in  the  second 

E.  Rep.  1058, 43  Am.  St.  267;  McCann  edition  of  this  work.     Since  its  pub- 

V.  Albany,  158  N.  Y.  634,  53  N.  E.  lication    that    doubt    has  been  ap- 

Rep.  673;  O'Keefe  v.  Dyer,  20  Mont,  proved  by  several  courts.     The  con- 

477,  52  Pac.  Rep.  196;  Kelley  v.  Seay,  trary  rule  was  held  prior  to    that 


a 


§  2S3.]  STIPULATED    DAMAGES.  717 

The  decision  of  this  question  is  often  intrinsically  difficult,  for 
judicial  opinions,  in  the  numerous  cases  on  the  subject,  are 
very  inharmonious;  they  furnish  no  universal  test  or  guide. 
But,  as  was  said  by  Christiancy,  J.:  ''While  no  one  can  fail 
to  discover  a  very  great  amount  of  apparent  conflict,  still  it 
will  be  found  on  examination  that  most  of  the  cases,  however 
conflicting  in  appearance,  have  yet  been  decided  according  to 
tlie  justice  and  equity  of  the  particular  case."  ^  "  The  (juestion 
whether  a  sum  named  in  a  contract  to  be  paid  for  a  failure  to 
perform,"  said  Earl,  J.,  "shall  be  regarded  as  stipulated  dam- 
ages or  a  penalty,  has  been  frequently  before  the  courts,  and 
has  given  them  much  trouble.  The  cases  cannot  all  be  har- 
monized, and  they  furnish  conspicuous  examples  of  judicial 
efforts  to  make  for  parties  wiser  and  more  prudent  contracts 
than  they  have  made  for  themselves.  Courts  of  law  have,  in 
some  cases,  assumed  the  functions  of  courts  of  equity,  and 
have  relieved  parties  by  forced  and  unnatural  constructions 
from  stipuhitions  highly  penal.  Where  an  amount  stipulated 
as  liquidated  damages  would  be  grossly  in  excess  of  the  actual 
damages,  they  have  leaned  to  hold  it  a  penalty.  Where  the 
actual  damages  were  uncertain  and  difficult  of  ascertainment, 
they  have  leaned  to  hold  the  stipulated  amount  to  have  been 
intended  as  liquidated  damages.  No  form  of  words  has  been 
regarded  as  controlling.  But  the  fundamental  rule,  so  often 
announced,  is  that  the  construction  of  these  stipulations  de- 
pends, in  each  case,  upon  the  intent  of  the  parties,  as  evidenced 
by  the  entire  agreement  construed  in  the  light  of  the  circum- 
stances under  which  it  was  made."^ 

time  in  Kelso  v.  Reid,  145  Pa.  606,  27  ^  Jaquith  v.  Hudson,  5  Mich.  123. 

Am.  St.  716.  23  Atl.  Rep.  323,  and  in  2  Kemp  v.  Knickerbocker  Ice  Co., 

Spicer  v.  Hoop,  51  Ind.  365.     If  the  69  N.  Y.  145;  Caesar  v.  Rubinson.  — 

money  deposited  is  to  be  treated  as  N.  Y.  — ,  67  N.  E.  Rep.  58:  Butler  v. 

liquidated  damages  proof  of  damage  Wallbaum   Stone  &  Minnig  Co.,  47 

because  of  the  breach  of  contract  111.  App.   153;  Sanders  v.  Carter,  91 

need   not   be   made.     "The  case  of  Ga.  450,  17  S.  E.  Rep.  345;  Allison  v. 

Hathaway  v.   Lynn,  75  Wis.  186,  43  Dunwody,  100  Ga.  51,  28  S.  E.  Rep. 

N.  W.  Rep.  956,  6  L.  R.  A.  551,  an-  651;  Salem  v.  Anson,  40  Ore.  339.  67 

nouncing  a  contrary  rule,  does  not  Pac.  Rep.  190,  56  L.  R  A.  169,  citing 

commend  itself  to  our  judgment."  the  text;  Taylor  v.  Times  Newspaper 

Sanford  v.  First  Nat.  Bank,  94  Iowa,  Co.,  83  Minn.  523,  86  N.  W.  Rep.  760; 

680,63   N.    W.    Rep.    459;   Smith   v.  Lennon  v.  Smith,  14  Daly,  520. 

Newell,  37  Fla.  147,  20  So.  Rep.  249.  The  question  whether  the  amount 


718  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  283. 

The  general  tendency  toward  "judicial  expansion,"  which 
has  been  a  marked  characteristic  of  recent  years,  has  in- 
creased the  uncertainty  involved  in  this  branch  of  the  law  of 
■damages.  That  uncertainty  was  never  absent;  but  it  has  be- 
come so  great  that  it  is  practically,  if  not  actually,  impossible 
to  formulate  a  rule  which  will  be  recognized  in  any  consider- 
able number  of  cases.  While  the  judicial  tendency  to  pater- 
nalism is  marked,  there  is  abundant  evidence  to  warrant  the 
conclusion  that  business  men  are  much  more  inclined  than  for- 
merly to  stipulate  their  liability  if  there  shall  be  failure  to  per- 
form their  contracts.  Why  the  courts  are  more  than  ever  dis- 
posed to  deny  the  same  freedom  of  contract  in  this  respect 
that  is  unhesitatingly  recognized  in  other  departments  of  law 
and  business  it  is  difficult  to  say.  N^otwithstanding  the  de- 
plorable state  of  the  decisions  it  may  be  assumed,  first,  that  if, 
by  the  terms  of  the  contract,  a  greater  sum  is  to  be  paid  upon 
default  in  the  payment  of  a  lesser  sum  at  a  given  time,  the 
provision  for  the  payment  of  the  greater  sum  will  be  held  a 
penalty;  second,  where,  by  the  terms  of  a  contract,  the  dam- 
ages are  not  difficult  of  ascertainment  according  to  such  terms 
and  the  stipulated  damages  are  unconscionable,  the  latter  will 
be  regarded  as  a  penalty;  third,  within  these  two  rules  parties 
may  agree  upon  any  sum  as  compensation  for  the  breach  of  a 
contract.' 

[4:79J  It  has  been  often  declared  judicially  that  a  stipulation 
in  a  contract  for  the  payment  of  a  stated  sum,  in  the  event  of 
a  breach,  should  be  interpreted,  like  all  its  other  provisions, 
with  a  view  to  carrying  into  effect  the  intention  of  the  parties. 
Referring  to  this  subject  Nelson,  C.  J.,  said:  "A  court  of  law 

stated  in  a  conditional  bond  or  con-  be  caused  by  the  several  breaches 

tract    is   to  be  taken  as  a  penalty  provided  against,  the  ease  or  diffi- 

or  a  liquidation  of  damages  arising  culty  of  measuring  a  breach  of  dam- 

from  a  breach  of  the  condition  is  to  ages,  and  such  other  matters  as  are 

be  determined  by  the  intention  of  legally  or  necessarily  inherent  in  the 

the  parties,  drawn  from  the  words  of  transaction.     The  concurrent  decla- 

the  wliole  contract,  examined  in  the  rations  of  the  parties  are  inadmissi- 

light  of  its  subject-matter  and  its  ble,  except  to  show  mistake  or  fraud, 

surroundings;  and  in  this  examina-  March  v.  Allabough,  103  Pa.  335. 

tion  will  be  considered    tiie  relation  i  Poppers  v.  Meagher,  148  111.  192, 

which  the  sum  stipulated  bears  to  35   N.   E.    Rep.    805:    Law   v.    Local 

the  extent  of  the  injury  which  may  Board  of  Redditch,  [1892]  1  Q.  B.  127. 


283.]  STIPULATED   DAMAGES.  719 


possesses  no  dispensing  power;  it  cannot  inquire  whether  tho 
parties  have  acted  wisely  or  rashl}"  in  respect  to  any  stipula- 
tion they  may  have  thought  proper  to  introduce  into  their 
agreements.  If  they  are  competent  to  contract,  within  the 
prudential  rules  the  law  has  fixed  as  to  parties,  and  there  has 
been  no  fraud,  circumvention  or  illegality  in  the  case,  the 
court  is  bound  to  enforce  the  agreement." '  Best,  C.  J.,  said 
3ii  7iisi  prius:  "The  law  relative  to  liquidated  damages  has 
always  been  in  a  state  of  great  uncertainty.  Tliis  has  been 
occasioned  by  judges  endeavoring  to  make  better  contracts 
for  parties  than  they  have  made  for  themselves.  1  think  that 
parties  to  contracts,  from  knowing  exactly  their  own  situa- 
tions and  objects,  can  better  appreciate  the  consequences  of 
their  failing  to  obtain  those  objects  than  either  judges  or 
juries.  Whether  the  contract  be  under  seal  or  not,  if  it  states 
what  shall  be  paid  bj''  the  party  who  breaks  it  to  the  party  to 
Avhose  prejudice  it  is  broken,  the  verdict  in  the  action  for  the 
breach  of  it  should  be  for  the  stipulated  sum.  A  court  of  jus- 
tice has  no  more  authority  to  put  a  different  construction  on 
the  part  of  the  instrument  ascertaining  the  amount  of  dam- 
ages than  it  has  to  decide  contrary  to  any  other  of  its 
clauses."  ^  Equally  emphatic  language  is  to  be  found  in  other 
cases.^ 

In  this  connection  language  employed  by  the  supreme  court 
of  the  United  States  in  a  case  *  ruled  in  1902  is  pertinent  as  in- 
dicating a  larger  regard  for  the  contractual  rights  of  parties 
than  is  manifested  in  many  of  the  recent  decisions.  The  con- 
tention made  was  that  where  actual  damages  can  be  assessed 
from  the  testimony  the  court  must  disregard  any  stipulation 
fixing  the  amount  and  require  proof  of  the  damage  sustained.* 

1  Dakin  V.  Williams,  17  Wend.  447.  <Sun   Printing  &    Pub.   Ass'n   v. 

'i  Crisdee  v.  Bolton,  3  C.  &  P.  240.  Moore,  183  U.  S.  642,  22  Sup.  Ct.  Rep. 

SDwinel    v.    Brown,   54  Me.   468;  240. 

Brewster  v.  Edgerly,  13  N.  H.  275;  *  Chicago  House-Wrecking  Ca  v. 

Clement  v.  Cash,  21  N.  Y.  253;  Yet-  United  States.  100  Fed.  Rep.  385,  389. 

ter  V.   Hudson,  57  Tex.  604;   May  v.  45  C.  C.  A.  343,  and  Gay  Manuf.  Ca 

Crawford,  142  Mo.  390,  44  S.  W.  Rep.  v.  Camp,  25  U.  S.  App.  134,  65  Fed. 

2G0;   Emack   v.  Campbell,  14  D.  C.  Rep.  794,  68  id.  67,  15  C.  C.  A-  228, 

App.  Cas.  186;  Knox  Rock  Blasting  were  relied  upon, 
Co.  V.  Grafton  Stone  Co.,  64  Ohio  St. 
361,  60  N.  E.  Rep.  563. 


720  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAK^iES.       [§  283. 

The  court  said:  We  think  the  asserted  doctrine  is  wrone:  in 
principle,  was  unknown  to  the  common  law,  does  not  prevail 
in  the  courts  of  England  at  the  present  time,  and  it  is  not  sanc- 
tioned by  the  decisions  of  this  court.  .  .  ,  The  decisions 
of  this  court  on  the  doctrine  of  liquidated  damages  and  pen- 
alties lend  no  support  to  the  contention  that  parties  may  not, 
hona  fide,  in  a  case  where  the  damages  are  of  an  uncertain 
nature,  estimate  and  agree  upon  the  measure  of  damages 
which  may  be  sustained  from  the  breach  of  an  agreement.  On 
the  contrary,  this  court  has  consistently  maintained  the  prin- 
ciple that  the  intention  of  the  parties  is  to  be  arrived  at  by  a 
proper  construction  of  the  agreement  made  between  them,  and 
that  whether  a  particular  stipulation  to  pay  a  sum  of  money  is 
to  be  treated  as  a  penalty,  or  as  an  agreed  ascertainment  of 
damages,  is  to  be  determined  by  the  contract,  fairly  con- 
strued, it  being  the  duty  of  the  court  always,  where  the  dam- 
ages are  uncertain  and  have  been  liquidated  by  an  agreement, 
to  enforce  the  contract.  ...  In  the  case  at  bar,  aside 
from  the  agreement  of  the  parties,  the  damage  which  might 
be  sustained  by  a  breach  of  the  covenant  to  surrender  the  ves- 
sel was  uncertain,  and  the  unambiguous  intent  of  the  parties 
was  to  ascertain  and  fix  the  amount  of  such  damage.  In  effect, 
however,  the  effort  of  the  petitioner  on  the  trial  was  to  nullify 
the  stipulation  in  question  by  mere  proof,  not  that  the  parties 
did  not  intend  to  fix  the  value  of  the  yacht  for  all  purposes, 
but  that  it  was  improvident  and  unwise  for  its  agent  to  make 
such  an  agreement.  Substantially,  the  petitioner  claimed  a 
greater  right  than  it  would  have  had  if  it  had  made  applica- 
tion to  a  court  of  equity  for  relief,  for  it  tendered  in  its  an- 
swer no  issue  concerning  a  disproportion  between  the  agreed 
and  actual  value,  averred  no  fraud,  surprise  or  mistake,  and 
stated  no  facts  claimed  to  warrant  a  reformation  of  the  as:ree- 
ment.  .  .  .  The  law  does  not  limit  an  owner  of  property, 
in  his  dealings  with  private  individuals  respecting  such  prop- 
erty, from  affixing  his  own  estimate  of  its  value  upon  a  sale 
thereof,  or  on  being  solicited  to  place  the  property  at  hazard 
by  delivering  it  into  the  custody  of  another  for  employment 
in  a  perilous  adventure.  If  the  would-be  buyer  or  lessee  is  of 
the  opinion  that  the  value  affixed  to  the  property  is  exorbitant, 
he  is  at  liberty  to  refuse  to  enter  into  a  contract  for  its  acqui- 


§  283.]  STIPULATED    DAMAGES.  72] 

sition.  But  if  he  does  contract  and  has  induced  the  owner  to 
part  with  his  property  on  the  faith  of  stipulations  as  to  value, 
the  purchaser  or  hirer,  in  the  absence  of  fraud,  should  not 
have  the  aid  of  a  court  of  equity  or  of  law  to  reduce  the  agreed 
value  to  a  sum  which  others  may  deem  is  the  actual  value.' 

Pleretofore  such  views  have  been  given  but  a  limited  prac- 
tical application;  and  cases  abound  in  which  stroner  lancruao'e 
of  a  different  tenor  is  employed.  "  They  mistake,"  says  Scott,  J., 
"the  object  and  temper  of  our  system  of  jurisprudence,  who, 
while  maintaining  that  men  in  making  all  contracts  have  a 
right  to  stipulate  for  liquidated  damages  regardless  of  the  dis- 
proportion to  the  sum  resulting  from  a  breach  of  the  contract, 
insist  that  it  would  be  hard  if  men  were  not  permitted  to  make 
their  own  bargains.  Ko  system  of  laws  would  demand  our 
respect,  or  secure  our  willing  obedience,  which  did  not  [480] 
to  some  extent  provide  against  the  mischiefs  resulting  from 
improvidence,  carelessness,  inexperience  and  undue  expecta- 
tions on  one  side,  and  skill,  avarice  and  a  gross  violation  of  the 
principles  of  honesty  and  fair  dealing  on  the  other.  The  folly 
of  one  making  a  wild  and  reckless  stipulation  will  not  justify 
gross  oppression  in  another.  A  just  man,  when  be  sees  one  in 
a  situation  in  which  he  is  prepared  to  make  a  contract  which 
must  grind  and  oppress  him,  will  not  take  advantage  of  his 
state  of  mind  and  enrich  himself  by  his  folly  and  want  of  ex- 
perience. It  has  been  remarked  that  in  reason,  in  conscience, 
in  natural  equity,  there  is  no  ground  to  say  because  a  man  has 
stipulated  for  a  penalty  in  case  of  his  omission  to  do  a  partic- 
ular act  —  the  real  object  of  the  parties  being  the  performance 
of  the  act  —  that  if  he  omits  to  do  the  act  he  shall  suffer  an 
enormous  loss,  wholly  disproportionate  to  the  injury  to  the 
other  party." ' 

The  trend  of  judicial  thought  and  action  on  the  subject  is 
well  and  frankly  expressed  by  Justice  Marshall  of  the  Wiscon- 
sin court:  The  law  is  too  well  settled  to  permit  any  reason- 
able controversy  in  regard  to  it  at  this  time,  that  where  par- 
ties stipulate  in  their  contract  for  damages  in  the  event  of  a 

1  See  Wood  V.  Niagara  Falls  Paper  quith     v.     Hudson,     5    Mich.     123; 

Co.,  121  Fed.  Rep.  818  (Ct.  Ct.  of  Ap-  Sclirimpf  v.  Tennessee  Manuf.  Co., 

peals,  2d  Circuit).  8G  Tenn.  219,  6  Am.  St.  832,  6  S.  W. 

2Basye  v.  Ambrose,  28  Mo.  39;  Ja-  Rep.  131. 
Vol.  1  —  46 


722  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.       [§  283. 

breach  of  it,  using  appropriate  language  to  indicate  that  the 
damages  are  agreed  upon  in  advance,  and  such  damages  are 
unreasonable  considered  as  liquidated  damages,  the  stipulated 
amount  will  be  considered  to  be  a  mere  forfeiture  or  penalty 
and  the  recoverable  damages  be  limited  to  those  actually  sus- 
tained. While  courts  adhere  to  the  doctrine  that  the  intention 
of  the  parties  must  govern  in  regard  to  whether  damages  men- 
tioned in  their  contract  are  liquidated,  they  uniformly  take 
such  liberties  in  regard  to  the  matter,  based  on  arbitrary  rules 
of  construction,  so  called,  as  may  be  necessary  to  effect  judicial 
notions  of  equity  between  parties,  guided  of  course  by  prece- 
dents that  are  considered  to  have  the  force  of  law,  sometimes 
calling  that  a  penalty  which  the  parties  call  stipulated  dam- 
ages, where  otherwise  an  unconscionable  advantage  would  be 
obtained  by  one  person  over  another.  The  judicial  power  thus 
exercised  cannot  properly  be  justified  under  any  ordinary  rules 
of  judicial  construction.  Such  rules  permit  courts  to  go  as  far 
as  possible  to  effect  the  intent  of  the  parties  where  it  is  left 
obscure  by  their  language  so  long  as  such  intent  can  be  read 
out  of  the  contract  without  violating  the  rules  of  language  or 
law.  But  in  determining  whether  an  amount  agreed  upon  as 
damages  was  intended  as  liquidated  damages  or  as  a  penalty, 
rules  of  language  are  ignored  and  the  express  intent  of  the  par- 
ties is  made  to  give  way  to  the  equity  of  the  particular  case, 
having  due  regard  to  precedents.^ 

As  is  remarked  in  the  last  paragraph,  the  intention  of  par- 
ties on  this  subject,  under  the  artificial  rules  that  have  been 
adopted,  is  determined  by  very  latitudinary  construction.^     To 

1  Seeman  v.  Biemann,  108  Wis.  365,  Where  the  damages  resulting  from 
373,  84  N.  W.  Rep.  490.  a  breach  of  the  agreement  were  evi- 

2  In  each  case  we  must  look  to  the  dently  the  subject  of  calculation  and 
language  of  the  contract,  the  inten-  adjustment  between  the  parties  and 
tion  of  the  parties  as  gathered  from  a  certain  sum  was  agreed  on  and  in- 
all  its  provisions,  the  subject  of  the  tended  as  compensation,  and  is  in 
contract  and  all  its  surroundings,  fact  reasonable  in  amount,  it  will  be 
the  ease  or  difficulty  of  measuring  allowed  by  the  court  as  liquidated 
the  breach  in  damages,  and  the  sum  damages;  but  though  the  intention 
stipulated,  and  from  the  whole  gather  of  the  parties  seems  clear  and  mani- 
the  view  which  good  conscience  and  fest  that  a  breach  shall  operate  as  a 
equity  ought  to  take  of  the  case,  complete  forfeiture  of  the  entire  sum 
Clements  v.  Schuylkill,  etc.  R  Co.,  named  in  the  agreement,  the  court 
132  Pa.  445,  19  Atl.  Rep.  274.  will  decline  to  render  its  assistance 


^  2S3.] 


STIPULATED    DAMAGES. 


be  potential  and  controlling  that  a  stated  sum  is  liquidated 
damage,  that  sum  must  be  fixed  as  the  basis  of  compensation 
and  substantial!}'-  limited  to  it;  for  just  compensation  is  reco"-- 
nized   as   the    universal   measure   of   damages   not  punitory. 


to  enforce  the  payment  of  an  amount 
whicli  is  grossly  excessive,  unreason- 
able and  unjust,  and  will  treat  the 
stipulation  as  in  the  nature  of  a  pen- 
alty and  will  award  only  such  dam- 
ages as  the  injured  party  may  have 
actually  sustained.  Sanders  v.  Carter, 
91  Ga.  450,  17  S.  E.  Rep.  345. 

In  d=itermining  whether  an  amount 
named  in  a  contract  is  to  be  taken 
as  penalty  or  liquidated  damages, 
courts  are  influenced  largely  by  the 
reasonableness  of  the  transaction  and 
are  not  restrained  by  the  form  of  the 
agreement  nor  by  the  terms  used  by 
the  parties,  nor  even  by  their  mani- 
fest intent.  Where  the  contract  has 
expressly  designated  the  amount 
named  as  liquidated  damages,  courts 
have  held  that  it  w^as  a  penalty:  and 
conversely,  where  the  contract  has 
called  it  a  penalty,  it  has  been  held 
to  be  liquidated  damages;  and  again, 
where  the  parties  have  manifestly 
supposed  and  intended  that  an  ex- 
orbitant and  unconscionable  amount 
should  be  forfeited,  the  courts  have 
carried  out  the  intent  only  so  far  as 
it  was  right  and  reasonable.  Davis 
V.  United  States.  17  Ct.  of  Cls.  201, 
215.  See  Beemanv.  Hexter,  98  Iowa, 
37-',  67  N.  W.  Rep.  270. 

The  term  "  estimated  damages  "  is 
equivalent  to  '"liquidated  damages." 
Gallo  V.  McAndrews,  29  Fed.  Rep. 
715. 

The  words  "  shall  act  as  a  forfeit- 
ure dnd  shall  be  forfeited"  have  been 
construed  to  provide  for  liquidated 
damages.  Eakin  v.  Scott,  70  Tex. 
442,  7  S.  W.  Rep.  777. 

"To  forfeit"  is  equivalent  to  "to 
pay."  Streeper  v.  Williams,  48  Pii, 
450. 

"  Forfeiture  "  is  synonymous  with 


"penalty."  Muldoon  v.  Lynch,  66 
Gal.  536.  But  it  will  be  presumed, 
in  order  to  effectuate  the  intention 
of  the  parties,  that  the  word  "  for- 
feit"  was  used  in  a  conversational 
sense.  Maxwell  v.  Allen,  78  Jle.  32, 
57  Am.  Rep.  783,  2  Atl.  Rep.  386; 
Lynde  v,  Tliompson,  2  Allen,  456. 

A  penalty  i.s  not  necessarily  to  be 
understood  from  the  use  of  tlieword 
"forfeit:"  the  circumstances  must 
be  considered.  Claude  v.  Shepard, 
122  N.  Y.397,  400,  25  N.  K  Rep.  358; 

Womack  v.  Coleman,  —  Minn.  , 

93  N.  W.  Rep.  663  (the  language  was 
"shall  be  ab.solute  forfeiture  and  in- 
demnity"); Chatterton  v.  Crothers,  9 
Ont.  683;  Tinkham  v.  Satori.  44  Mo. 
App.  659.  Nor  is  an  instrument 
using  the  words  "penalty"  or  "for- 
feit" to  be  always  construed  as  pro- 
viding for  a  penalty.  Lipscomb  v. 
Seegers,  19  S.  C.  425,  434. 

In  other  cases  "  penalty  "  and  "  for- 
feit "  have  been  given  their  usual 
signification.  Bagley  v.  Peddie,  16 
N.  Y.  469,  69  Am.  Dec.  713;  Laurea  v. 
Bernauer,  33  Hun,  307. 

A  penalty  is  implied  from  the  lan- 
guage "and  each  party  is  hereby  lield 
and  fully  bound  in  the  sum  of  $300 
for  the  faithful  fulfillment  of  the 
above  contract."  Moore  v.  Colt,  127 
Pa.  289,  14  Am.  St  845, 18  Atl.  Rep.  8. 

A  clause  in  a  charter-party  by 
which  the  parties  bind  themselves 
"in  the  penal  sum  of  estimated 
amount  of  freight"  is  a  penalty. 
Watts  V.  Camors,  115  U.  S.  353.  6 
Sup.  Ct.  Rep.  91.  But  if  the  sum  is 
mentioned  as  a  penalty  and  the  in- 
strument uses  the  words  "  which 
sum  is  hereby  named  as  stipulated 
damages,"  the  latter  expression  will 
control.     Tode  v.  Gross,  22  N.  Y.  St. 


724 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§   283. 


Parties  may  liquidate  the  amount  by  previous  agreement. 
But  when  a  stipulated  sum  is  evidently  not  based  on  that 
principle,  the  intention  to  liquidate  will  either  be  found  not  to 
exist  or  will  be  disre":arded  and  the  stated  sum  treated  as  a 


Rep.  818,  4  N.  Y.  Supp.  403;  Ward  v. 
Hudson  River  B.  Co.,  24  N.  Y.  St 
Rep.  347.  5  N.  Y.  Supp.  319.  And  so 
where  the  language  is  that  the  parties 
"  bind  themselves  in  the  penal  sum" 
of  "  as  fixed  and  settled  damages  to 
be  paid  by  the  failing  party."  Parr 
V.  Greenbush.  43  Hun,  232. 

The  use  of  the  words  "liquidated 
damages"  will  not  control  the  con- 
struction if  tiie  court  can  find  in  the 
whole  instrument  reason  to  doubt 
that  it  was  the  intention  of  the  par- 
ties to  so  contract.  Bagley  v.  Peddie, 
16  N.  Y.469,  69  Am.  Dec.  713;  Wolf 
V.  Des  Moines  R.  Co.,  64  Iowa.  380, 
20  N.  W.  Rep.  481;  Ex  parte  Pollard, 
2  Low.  411,  17  Nat.  Bank.  Reg.  229; 
Condon  v.  Kemper,  47  Kan.  126,  27 
Pac.  Rep,  829,  13  L.  R.  A.  671,  See 
§284. 

An  agreement  to  pay  $500,  be- 
sides all  damages  sustained,  provides 
for  a  penalty.  Foote  &  Davies  Co.  v. 
Malony.  115  Ga.  985, 42  S.  E.  Rep.  413. 
See  Dwinel  v.  Brown,  p.  726,  n. 

In  Pierce  v.  Jung,  10  Wis.  30, 
Paine,  J.,  said :  *•  The  opinions  on  this 
subject  are  conflicting.  On  the  one 
hand,  they  lean  towards  treating 
such  provisions  as  in  the  nature  of 
penalties,  and  to  do  so  have  some- 
times disregarded  the  positive  and 
implicit  language  of  the  parties.  On 
the  other,  they  go  for  upholding  con- 
tracts as  made,  treating  the  parties 
as  equally  competent  to  provide  for 
the  amount  of  damages  to  be  paid  in 
case  of  a  failure  to  perform  as  to  de- 
termine any  other  matter  contained 
in  them.  The  case  of  Astley  v.  Wel- 
don,  2  Bos.  &  Pul.  346,  and  Kemble 
V.  Farrel,  6  Bing.  141,  are  strong  il- 
lustrations of  the  first  class;  and  in 
Crisdee  v.  Bolton.  3  C.  &  P.  240,  the 


opposite  doctrine  is  very  clearly 
stated.  But  even  the  first  class  of 
cases  concede  the  power  of  the  par- 
ties to  liquidate  the  damages  by  their 
agreement  in  case  of  a  non-perform- 
ance. And  they  profess  also  to  go 
upon  the  intention  of  the  parties. 
And  perhaps  the  only  real  difference 
between  the  two  is  that  the  former 
takes  greater  liberties  than  the  latter 
with  the  words  of  the  parties  in  de- 
termining what  the  intention  is. 
They  pay  more  attention  to  the  whole 
nature  and  object  of  the  agreement 
than  to  the  precise  words  in  de- 
termining whether  the  intent  was 
to  create  a  penalty  or  provide  for 
liquidated  damages." 

In  Beale  v.  Hayes,  5  Sandf.  640, 
Duer,  J.,  said:  "It  is  not  always, 
however,  that  damages  are  to  be 
construed  as  liquidated  because  the 
parties  have  declared  them  to  be  so. 
The  language  of  the  parties  (to  the 
agreement  in  question)  is  clear  and 
emphatic  that  the  sura  of  £3,000 
shall  be  recoverable  from  the  party 
making  default  as  and  for  liquidated 
damages;  yet  no  court  of  justice, 
without  an  entire  disregard  of  prior 
decisions,  can  give  effect  to  the  ap- 
parent intention  of  the  parties  by 
adopting  that  construction  of  their 
agreement  which  the  terms  they 
have  used  so  forcibly  suggest.  .  .  . 
When  consequences  so  unreasonable 
would  follow,  the  law  presumes  that 
they  must  have  been  overlooked  by 
the  parties,  and  therefore  mercifully 
gives  to  their  language  an  interpre- 
tation which  excludes  them.  When 
it  would  be  plainly  unconscientious 
to  exact  a  large  sum  for  a  trivial 
breach,  even  a  court  of  law,  acting 
upon  a  principle  of  equity,  will  re- 


§  283.] 


STirULATED    DAMAGES. 


i25 


penalty.  Contracts  are  not  made  to  be  broken;  and  hence, 
when  parties  provide  for  the  consequences  of  a  breach,  they 
proceed  with  less  caution  than  if  that  event  was  certain,  and 
they  were  fixing  a  sum  to  be  paid  absolutely.     The  intention 


lease  the  parties  from  the  literal 
obligation  whicli  their  language  im- 
ports." 

In  Jaquith  v.  Hudson,  5  Mich.  123, 
Christiancy,  J.,  said:  "It  is  true  the 
courts  in  nearly  all  these  cases  pro- 
[4S-]  fess  to  be  construing  the  con- 
tract with  reference  to  the  intention 
of  the  parties,  as  if  for  the  purpose 
of  ascertaining  and  giving  effect  to 
that  intention;  yet  it  is  obvious  from 
these  cases  that  wherever  it  has  ap- 
peared to  the  court  from  the  face  of 
the  contract  and  the  subject-matter 
that  the  sum  was  clearly  too  lai'ge 
for  just  compensation,  here,  while 
they  will  allow  any  form  of  words, 
even  those  expressing  the  direct  con- 
trary, to  indicate  the  intent  to  make 
it  a  penalty,  yet  no  form  of  words, 
no  force  of  language,  is  competent 
to  the  expression  of  the  opposite  in- 
tent. Here,  then,  is  an  intention  in- 
capable of  expression  in  words:  and 
as  all  written  contracts  must  be  ex- 
pressed in  words,  it  would  seem  to  be 
a  mere  waste  of  time  and  effort  to 
look  for  such  an  intention  in  such  a 
contract.  And  as  the  question  is  be- 
tween two  opposite  intents  only,  and 
the  negation  of  one  necessarily  im- 
1)1  ies  the  existence  of  the  other,  there 
would  seem  to  be  no  room  left  for 
construction  with  reference  to  the 
intent.  It  mvist,  then,  be  manifest 
that  the  intention  of  the  parties  in 
such  cases  is  not  the  governing  con- 
sideration. 

"  But  some  of  the  cases  attempt  to 
justify  this  mode  of  construing  the 
contract  with  reference  to  the  intent, 
bydeolaring  in  substance  that  though 
the  language  is  the  strongest  which 
could  be  used  to  evince  the  intention 
in  favor  of  stipulated  damages,  still. 


if  it  appear  clearly  by  reff^rence  to 
the  subject-matter  tliat  the  parties 
have  made  the  stipulation  without 
reference  to  the  princijjid  of  just 
compensation,  and  .so  excessive  as  to 
be  out  of  all  proportion  to  tlie  actual 
damage,  the  court  must  hold  that 
they  could  not  have  intended  it  as 
stipulated  damages  though  they  have 
so  expressly  declared.  See,  as  an  ex- 
ample of  this  class  of  cases,  Keuible 
V.  Farren,  6  Bing.  141. 

"Now  this,  it  is  true,  may  lead  to 
the  same  result  in  the  particular  case 
as  to  have  placed  the  decision  upon 
the  true  ground,  viz.:  that  though 
the  parties  actually  intended  the  sum 
to  be  paid  as  the  damages  agreed  be- 
tween them,  yet  it  being  clearly  un- 
conscionable, the  court  would  disre- 
gard the  intention  and  refuse  to 
enforce  the  stipulation.  But,  as  a  rule 
of  construction  or  interpretation  of 
contracts,  it  is  radically  vicious  and 
tends  to  a  confusion  of  ideas  in  the 
construction  of  contracts  generally. 
It  is  this,  more  than  anything  else, 
which  has  produced  so  much  appar- 
ent conflict  in  the  decisions  upon 
this  whole  subject  of  penalty  and 
stipulated  damages.  It  sets  at  defi- 
ance all  rules  of  interpretation,  by 
denying  tlie  intention  of  the  parties 
to  be  what  they  in  the  most  unam- 
biguous terms  have  declared  it  to 
be,  and  finds  an  intention  directly 
opposite  to  that  which  is  clearly  ex- 
pressed —  'divinatio,  nan  interpnia- 
tio  est,  qucB  omnino  recedit  a  literaJ' 
"  Again,  the  attempt  to  place  this 
question  upon  the  intention  of  the 
parties,  and  to  make  this  the  gov- 
erning consideration,  necessarily  im- 
plies that  if  the  intention  to  make 
the  sum  stipulated  damages  should 


726 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  283, 


in  all  SQch  cases  is  material;  but  to  prevent  a  stated  sum  from 
being  treated  as  a  penalty  the  intention  should  be  apparent 
to  liquidate  damages  in  the  sense  of  making  just  compensa- 
tion; it  is  not  enough  that  the  parties  express  the  intention 


clearly  appear  the  court  would  en- 
force the  contract  accoi-ding  to  that 
intention.  To  test  this,  let  it  be 
asked  whether  in  such  a  case  if  it 
were  admitted  that  the  parties  act- 
ually intended  the  sum  to  be  consid- 
ered as  stipulated  damages  and  not 
as  penalty,  would  a  court  of  law  en- 
force it  for  the  amount  stipulated  ? 
Clearly,  they  could  not,  without  go- 
ing back  to  the  technical  and  long- 
exploded  doctrine  which  gave  the 
whole  penalty  of  the  bond,  without 
reference  to  the  damages  actually 
sustained.  They  would  thus  be 
simply  changing  the  names  of  things, 
and  enforcing  under  the  name  of 
[483]  stipxdated  damages  what  in 
its  own  nature  is  but  a  penalty. 

"The  real  question  in  this  class  of 
cases  will  be  found  to  be,  not  what 
the  parties  intended,  but  whether 
the  sum  is  in  fact  in  the  nature 
of  a  penalty;  and  this  is  to  be  de- 
termined by  the  magnitude  of  the 
sum,  in  connection  with  the  subject- 
matter,  and  not  at  all  by  the  w-ords 
or  the  understanding  of  the  parties. 
The  intention  of  the  parties  cannot 
alter  it.  While  courts  of  law  gave 
the  penalty  of  the  bond,  the  parties 
intended  the  payment  of  the  penalty 
as  much  as  they  now  intend  the 
payment  of  stipulated  damages;  it 
must  therefore,  we  think,  be  very 
obvious  that  the  actual  intention  of 
the  parties  in  this  class  of  cases  and 
relating  to  this  point  is  wholly  im- 
material; and  though  the  courts  have 
very  generally  professed  to  base  their 
decisions  upon  the  intention  of  the 
parties,  that  intention  is  not  and 
cannot  be  made  the  real  basis  of 
these  decisions.  In  endeavoring  to 
reconcile  these  decisions  with  the  act- 


ual intention  of  the  parties,  the  courts 
have  sometimes  been  compelled  to 
use  language  wholly  at  war  with 
any  idea  of  interpretation,  and  to 
say  'that  the  parties  must  be  con- 
sidered as  not  meaning  exactly  what 
they  say.'  Horner  v.  Flintoff,  9  M. 
&  W.  678,  per  Parke,  B.  May  it  not 
be  said,  with  at  least  equal  propriety, 
that  courts  have  sometimes  said 
what  they  did  not  exactly  mean  9 
The  foregoing  remarks  are  all  to  be 
confined  to  that  class  of  cases  where 
it  was  clear  from  the  sum  mentioned 
and  the  subject-matter  that  the  prin- 
ciple of  compensation  had  been  dis- 
regarded." 

In  Dwinel  v.  Brown,  54  Me.  468, 
the  defendant  had  bound  himself,  in 
the  event  of  a  failure  to  perform 
each  and  every  condition  and  stipu- 
lation represented  in  a  certain  license 
and  agreement  for  carrying  on  a 
lumbering  operation  upon  the  plaint- 
iff's land,  "in  the  full  and  liquidated 
sum  of  $1,000  well  and  truly  to  be 
paid,"  on  demand,  "over  and  above 
the  actual  damages  "  which  should 
be  sustained  by  the  non-performance. 
Dickerson,  J.,  said:  "The  question 
presented  for  our  determination  is 
whether  the  sum  named  in  the  con- 
tract to  be  paid  by  the  defendant  on 
his  failure  to  fulfill  its  conditions  is 
penalty  or  liquidated  damages.  It  is 
competent  for  the  parties  in  making 
a  contract  to  leave  the  damages  aris- 
ing from  a  breach  of  its  provisions 
to  be  determined  in  a  court  of  law,  or 
to  specify  the  amount  of  such  dam- 
ages in  the  contract  itself.  If  the 
contract  is  silent  in  respect  to  dam- 
ages, the  law  will  allow  only  the 
actual  or  proximate  damages.  In 
order,  however,  to  provide  for  con- 


§  283.] 


STIPULATED    DAMAGES. 


ir^ 


that  the  stated  sum  shall  be  paid  in  case  of  a  violation  of  the 
contract.  A  penalty  is  not  converted  into  liquidated  damages 
by  the  intention  that  it  shall  be  paid;  it  is  intrinsically  a  dif- 
ferent thing,  and  the  intention  that  it  shall  he  paid  cannot 


sequential  damages  or  secure  the 
profits  wliich  are  expected  to  arise 
from  business,  or  contracts  that  de- 
jiend  upon  tlie  performance  of  the 
principal  contract,  or  to  save  ex- 
pense, or  to  render  certain  what 
would  otherwise  be  difficult  if  not 
impossible  to  ascertain,  it  is  some- 
times desirable  that  the  contract 
should  fix  the  amount  of  damages. 
If,  for  instance,  a  party  has  a  con- 
tract for  building  a  ship  at  a  large 
profit,  conditioned  upon  his  having 
her  completed  at  a  specified  time,  it 
would  be  competent  for  him  in  con- 
tracting for  the  material  to  make  the 
damages,  in  case  of  breach,  suffi- 
cient to  cover  his  prospective  profits 
in  building  tlie  ship.  While  to  pei'- 
sons  unacquainted  with  the  circum- 
[484]  stances  the  damages  stipu- 
lated in  such  a  contract  might  seem 
greatly  disproportionate  to  the  loss 
sustained  by  a  breach  of  it,  they 
might,  in  fact,  be  insufficient  to  in- 
demnify the  party  against  the  loss  he 
might  sustain  by  being  prevented 
from  completing  the  ship  accordmg 
to  his  contract.  The  parties  them- 
selves best  know  what  their  expec- 
tations are  in  regard  to  the  advan- 
tages of  their  undertaking,  and  the 
damages  attendant  on  its  failure,  and 
when  they  have  mutually  agreed 
upon  the  amount  of  such  damages 
in  good  faith  and  without  illegality, 
it  is  as  much  the  duty  of  the  court 
to  enforce  the  agreement  as  it  is  the 
other  provisions  of  the  contract.  As 
in  construing  the  other  parts  of  the 
contract,  so  in  giving  construction  to 
the  stipulation  concerning  damages, 
the  intention  of  the  parties  governs. 
The  inquiry  is,  what  was  the  under- 
standing of  the  parties ;  and  when  it  is 


said  in  judicial  parlance  that  certain 
language  of  the  parties  is  held  to 
mean  liquidated  damages  and  cer- 
tain other  language  a  penalty,  this  is 
affirmed  of  the  intention  of  the  par- 
ties, and  not  of  the  construction  of 
tlie  court,  in  contradistinction  from 
such  intention.  It  isthe  province  of 
the  court  to  uphold  existing  con- 
tracts, not  to  make  new  ones.  It  is 
not  for  the  court  to  sit  in  judgment 
upon  the  wisdom  or  folly  of  the 
parties  in  making  a  contract  when 
their  intention  is  clearly  expressed, 
and  there  is  no  fraud  or  illegality. 
No  judges,  however  eminent,  can 
place  themselves  in  the  phice  or  posi- 
tion of  the  parties  when  the  contract 
is  made,  scan  the  motives  and  weigh 
the  considerations  which  influenced 
them  in  the  transaction  so  as  to  de- 
termine what  would  have  been  best 
for  them  to  do;  who  was  least  saga- 
cious, or  who  drove  the  best  bargain. 
Courts  of  common  law  cannot,  like 
courts  where  the  civil  law  prevails, 
award  such  damages  as  they  may 
deem  reasonable,  but  must  allow  the 
damages,  whether  actual  or  esti- 
mated, as  agreed  upon  by  the  parties. 
The  bargain  may  be  an  unfortunate 
one  for  the  delinquent  party,  but  it  is 
not  the  duty  of  courts  of  common 
law  to  relieve  parties  from  the  con- 
sequences of  their  own  improvidence, 
where  these  contracts  are  free  from 
fraud  and  illegality. 

"The  controversy  in  the  courts, 
whether  the  particular  language  of 
a  contract  in  regard  to  damages  is  to 
be  construed  as  a  penalty  or  liqui- 
dated damages,  ari.ses  mainly  from  a 
desire  to  relieve  parties  from  wliat, 
under  a  different  construction,  is  as- 
sumed to  be  an  imprudent  and  ab- 


T28 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  28." 


alter  its  nature.  A  bond,  literally  construed,  imports  an  in- 
tention that  its  penalty  shall  be  paid  if  there  be  default  in 
the  performance  of  the  condition;  and  formerly  that  was  the 
legal   e£Fect.     Courts    of  law  now,    however,   administer  the 


surd  agreement.  When,  however,  it 
is  considered  how  little  courts  know 
of  the  modifying  circumstances  of 
the  case,  how  far  the  particular  pro- 
vision was  framed  with  reference  to 
the  personal  feelings  of  the  parties, 
what  fluctuations  in  the  market 
were  anticipated  at  the  time  and 
what  efiPect  the  contract  in  question 
was  expected  to  have  upon  other 
business  engagements  or  negotia- 
tions, there  is  perhaps  less  cause  for 
departing  from  tlie  literal  construc- 
tion of  the  language  used  than  might 
at  first  view  be  supposed.  These 
considerations  should  at  least  ad- 
monish us  that  in  straining  the  lan- 
guage of  a  contract  to  prevent  a 
seeming  disadvantage  to  one  of  the 
parties,  we  may  impose  upon  the 
other  party  the  very  hardships  which 
both  intended  to  protect  him  against 
by  the  terms  of  their  agreement. 
The  interests  of  the  public  are  quite 
as  likely  to  be  subserved  in  main- 
taining the  inviolability  of  contracts 
as  they  are  in  contriving  ways  and 
means  to  make  a  contract  mean 
[485]  what  is  not  apparent  upon  the 
face  of  it  to  save  a  party  fi-oni  some 
conjectural  inequity  growing  out  of 
his  supposed  inadvertence  or  im- 
providence." The  judge  stated  three 
rules  upon  which  he  said  the  courts 
are  substantially  agreed,  and  the 
third  he  stated  as  follows:  "If  the 
instrument  provides  for  the  pay- 
ment of  a  larger  sum  in  future  to 
pay  a  less  sum,  the  larger  will  be  re- 
garded as  penalty  in  respect  to  the 
excess  over  the  legal  interest  what- 
ever the  language  used;  and  if  the 
contract  consist  of  several  stipula- 
tions, the  damages  for  the  breach  of 
which    independently    of    the   sum 


named  in  the  instrument  are  uncer- 
tain and  cannot  well  be  ascertained, 
the  sum  agreed  upon  is  to  be  treated 
as  liquidated  damages.  Orr  v. 
Churchill,  1  H.  BL  227;  Astley  v. 
Weldon,  3  B.  &  P.  346;  Mead  v. 
Wheeler,  13  N.  H.  351;  Atkyns  v. 
Kinnier,  4  Ex.  776.     .     .     . 

"  In  the  case  at  bar  the  defendant 
bound  himself  *in  the  full  and  liqui- 
dated sum  of  $1,000  over  and  above 
the  actual  damages  '  in  the  event  of 
his  failure  to  do  and  perform  each 
and  every  condition  and  stipulation 
in  his  contract.  Language  can 
scarcely  make  the  intention  of  the 
parties  to  fix  the  amount  of  the  dam- 
ages more  clear  and  emphatia  The 
sum  is  not  only  '  liquidated,'  but,  as 
if  to  exclude  all  possibility  of  its 
being  a  penalty,  it  is  declared  to  be 
'  over  and  above  the  actual  damages.' 
Whether  it  was  to  afford  an  addi- 
tional stimulus  to  secure  the  fulfill- 
ment of  the  contract,  or  to  provide 
against  all  other  losses,  or  compen- 
sate for  other  advantages  contingent 
upon  this  contract,  or  from  the  diffi- 
culty of  ascertaining  the  actual  dam- 
ages, or  for  some  other  reason,  it  is 
manifest  that  other  damages  than 
the  legal  damages  were  taken  into 
the  account  by  the  parties  when 
they  incorporated  this  provision  in 
their  agreement.  Besides,  the  con- 
tract contains  several  distinct  con- 
ditions and  requirements  for  the  ful- 
fillment of  which,  i-espectively,  no 
sum  is  specified;  and  it  is  impossible 
to  ascertain  such  damages  from  the 
very  nature  of  these  stipulations. 
What  actual  damages  would  result 
to  the  plaintiff  solely  from  the  de- 
fendant's omission  to  land  the  logs 
at  a  suitable  place,  or  to  notify  the 


§  2S3.- 


STIPULATED    DAMAGES. 


729 


same  equity  to  relieve  from  penalties  in  other  forms  of  con- 
tract as  from  those  in  bonds.  The  evidence  of  an  intention 
to  measure  the  damage,  therefore,  is  seldom  satisfactory  when 


scaler  seasonably,  or  to  mark  the 
logs,  or  drive  them  as  early  as  prac- 
ticable, or  to  cut  clear  without 
waste,  or  to  perform  the  dozen  other 
stipulations  of  the  contract,  is  prac- 
tically beyond  the  power  of  a  judi- 
cial tribunal  to  ascertain  with  any- 
thing like  accuracy.  The  case  clearly 
comes  within  the  second  clause  of 
the  third  rule  of  interpretation,  that 
when  parties  incorporate  several 
distinct  stipulations  in  a  contract, 
the  breach  of  which  cannot  be  re- 
spectively measured,  they  must  be 
taken  to  have  meant  that  the  sum 
agi-eed  upon  was  to  be  liquidated 
damages  and  not  a  penalty.  That 
such  was  the  intention  of  the  parties, 
moreover,  as  drawn  from  the  par- 
ticular language  of  the  contract 
upon  this  point,  cannot  admit  of  a 
doubt." 

The  stiptilation  in  this  case  is  so 
•expressed  that  it  would  seem  not  to 
have  been  intended  to  provide  the 
fixed  sum,  in  lieu  of  actual  damages 
difficult  of  proof,  but  acomminatory 
sum  in  addition.  The  dissenting 
opinion  of  Appleton,  C.  J.,  is  believed 
to  contain  a  sounder  exposition  of  the 
contract  and, the  law  applicable  to  it: 
"  In  case  of  a  contract  damages  are 
the  pecuniary  satisfaction  to  which 
the  injured  party  is  entitled  by  way 
of  compensation  for  its  breach.  Liqui- 
[480]  dated  damages  are  damages 
agreed  upon  by  the  parties,  as  and 
for  a  compensation  for  and  in  lieu 
of  the  actual  damages  arising  from 
such  breach.  They  may  exceed  or 
fall  short  of  the  actual  damages  — 
but  the  sum  thus  lixed  and  deter- 
mined binds  the  parties  to  such 
agreement.  When  this  sum  is  paid 
all  damages  are  paid.  In  the  case  at 
-bur  the  sum  of  $1,000  was  not  liqui- 


dated damages.  It  was  not  for  dam- 
ages at  all.  The  contract  so  expressly 
and  uuqualiliedly  states  it.  It  was 
a  sum  'over  and  above  the  actual 
damages.'  The  plaintiff,  by  its  terms, 
was  furtlier  entitled  to  recover  the 
'actual  damage'  which  he  might 
sustain  by  •  the  non-performance  of 
any  agreement  hereinafter  con- 
tained.' Suppose  the  actual  damages 
were  $5,000,  would  not  the  plamtitf 
be  entitled  to  recover  tliat  sum? 
Most  assuredly.  The  actual  damages 
are  therefore  excluded  from  the  sum 
of  $1,000,  and  yet  remain  to  be  as- 
sessed. .  .  .  Liquidated  damages 
are  fixed,  settled  and  agreed  upon  in 
advance,  to  avoid  all  litigation  as  to 
those  actually  sustained.  They  are  a 
compensation  for  and  in  lieu  of  act- 
ual damages,  never  in  addition  there- 
to. The  language  of  the  agreement 
leaves  no  room  for  any  other  con- 
clusion than  that  the  sum  fixed  is  a 
penalty.  It  is  not  for  damages  by 
the  terms  of  the  contract.  It  is  not, 
therefore,  a  sum  agreed  upon  in 
liquidation  of  damages,  but  is  a  pen- 
alty and  so  must  be  regarded." 
Gowen  v.  Gerrish,  15  Me.  2Td;  Gam- 
mon v.  Howe,  14  Me.  250. 

In  Chamberlain  v.  Bagley,  11  N.  H. 
234,  Upham,  J.,  said:  "Court.s,  from 
a  desire  to  avoid  cases  of  seeming 
hardship,  have  in  many  instances 
made  decisions  disregarding  the  evi- 
dent intent  and  design  of  the  parties 
to  contracts;  and  a  variety  of  rea- 
sons have  been  assigned  for  this 
course.  .  .  .  We  see  no  reason 
why  contracts  of  this  kind  should 
not  be  judged  of  by  the  rules  of 
construction  as  other  contracts;  or 
why  a  technical,  restricted  meaning 
should  be  given  to  particular  phrases 
without  reference  to  other  portions 


730 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  283. 


S 


the  amount  stated  varies  materially  from  a  just  estimate  of 
the  actual  loss  finally  sustained.^  If  a  contract  provides  for  a 
penalty  for  the  breach  of  some  of  its  provisions  it  must  be  re- 


of  the  instrument  to  learn  the  design 
of  the  parties.  The  modern  decisions 
upon  this  subject  have  turned  on  the 
construction  of  the  agreement  ac- 
cording to  the  general  intent.  In 
Reilly  v.  Jones,  8  Moore,  244,  it  is 
said  that  where  it  may  be  fairly  col- 
lected that  tlie  intent  of  the  parties 
was  that  the  damages  stipulated  for, 
as  between  themselves,  were  to  be 
considered  as  liquidated  they  cannot 
be  treated  as  a  penalty  although 
they  might  operate  as  such  in  a  pop- 
ular sense.  .  .  .  The  words  for- 
feit or  forfeiture,  penal  sum  or  pen- 
alty, have  in  some  instances  been  re- 
garded as  furnishing  a  very  strong, 
if  not  conclusive,  indication  of  the 
intention  of  the  parties  in  an  instru- 
ment of  this  description;  but  the 
weight  to  be  given  to  such  phraseol- 
ogy will  depend  entirely  on  its  con- 
nection with  other  parts  of  the  in- 
strument. If  an  individual  promises 
to  pay  the  damage  which  may  be  in- 
curred under  a  given  penalty,  or  un- 


der a  forfeiture,  the  damage  only  in 
such  case  is  agreed  to  be  paid.  On 
the  other  hand,  the  penalty  may  be 
expressly  agreed  to  be  paid  in  such 
terms  as  to  admit  of  no  doubt  that 
such  was  the  intent  of  the  parties; 
and  where  such  is  the  case,  notwith- 
standing it  may  be  named  as  a  for- 
feiture, or  the  parties  are  spoken  of 
as  bound  in  a  certain  sum,  if  it  was 
clearly  the  design  of  the  parties  that 
such  sum  should  be  paid,  it  is  [487] 
holden  in  the  more  modern  decisions 
as  liquidated  damages." 

In  Brewster  v.  Edgerly,  13  N.  H. 
275,  the  same  doctrine  is  affirmed, 
Gilchrist,  J.,  said:  "  Many  of  the  de- 
cisions of  the  judicial  tribunals  here- 
tofore have  been  based  upon  what  is 
now  admitted  to  be  an  insecure 
foundation;  for  the  judgments  have 
often  proceeded  not  upon  the  plainly 
expressed  intention  of  the  parties  in 
a  case  free  from  fraud  or  illegality, 
but  upon  the  view  which  the  court 
entertained  of  what  would  have  been 


1  ScoQeld  V.  Tompkins,  95  111.  190, 
35  Am.  Rep.  160;  Myer  v.  Hart,  40 
Mich.  517,  29  Am.  Rep.  553;  Muldoou 
V.  Lynch,  66  Cal.  536,  6  Pac.  Rep.  417, 
quoting  the  text  and  pronouncing  it 
a  clear  statement  of  the  result  of  the 
decisions;  Glasscock  v.  Rosengrant, 
55  Ark.  376,  18  S.  W.  Rep.  379;  Con- 
don V.  Kemper,  47  Kan.  126,  27  Pac. 
Rep.  829,  13  L.  R.  A.  671,  quoting  the 
text;  Doane  v.  Chicago  City  R  Co., 
51  111.  App.  353;  Iroquois  Furnace  Co. 
V.  Wilkin  Manuf.  Co..  181  III.  582,  54 
N.  E.  Rep.  987;  Willson  v.  Baltimore, 
83  Md.  203,  34  Atl.  Rep.  774,  55  Am. 
St.  339;  Cochran  v.  People's  R.  Co., 
113  Mo.  359,  21  S.  W.  Rep.  6; 
Schmieder  v.  Kingsley,  6  N.  Y.  Misc. 
107,  26  N.   Y.  Supp.  31;   Lindsay   v. 


Rockwall  County,  10  Tex.  Civ.  App. 
225,  30  S.  W.  Rep.  380;  Haliday  v. 
United  States,  33  Ct.  of  Cls.  453; 
Quinn  v.  United  States,  99  U.  S.  30; 
Mundy  v.  United  States,  35  Ct.  of 
Cls.  265;  Caesar  v.  Rubinson,  —  N.  Y. 

,  67  N.  E.  Rep.  58;  Rayner  v.  Red- 

eriaktiebolaget  Condor,  [1895]  2  Q.  B. 
289;  Radloflf  v.  Haase,  96  111.  App.  74; 
Denver  Land  &  Security  Co.  v.  Ro- 
senfeld  Construction  Co.,  19  Colo» 
539,  36  Pac.  Rep.  146;  Gillilan  v.  Rol- 
lins, 41  Neb.  540,  59  N.  W.  Rep.  893; 
New  Britain  v.  New  Britain  Tele- 
phone Co.,  74  Conn.  326,  332,  50  Atl. 
Rep.  881,  1015;  Zimmerman  v.  Con- 
rad, 74  S.  W.  Rep.  139  (St.  Louis  Ct. 
of  App.). 


§  283.] 


STIPULATED    DAMAGES. 


731 


garded  as  so  providing  if  there  is  a  breach  of  them  all;  as 
where  the  damages  resulting  from  the  breach  of  some  of  its 
stipulations  are  capable  of  being  ascertained.     It  cannot  pro- 


on  the  whole  just,  considering  such 
circumstances  as  were  proved  to 
exist.  Tlie  dangerous  uncertainty  of 
such  a  mode  is  manifest  wiien  the 
imjiossibility  of  placing  any  other 
person  in  the  exact  condition  of  the 
parties  at  the  time  the  contract  was 
made  is  considered.  Many  motives 
influence  tliem,  many  considerations 
weigh  witli  tliem  which  no  other 
person  could  understand  and  appre- 
ciate unless  lie  could  thorouglily 
identify  himself  with  the  parties; 
{ind  when  the  contract,  reasonably 
construed,  has  a  plain  meaning  that 
one  party  shall,  in  a  certain  contin- 
gency, pay  the  other  party  a  definite 
sum,  thus  relieving  him  from  that 
liability  and  making  the  contract 
mean  something  which  on  its  face  is 
not  apparent,  by  assuming  that  we 
can  place  ourselves  in  the  position  of 
the  parties,  and  can  then  know  pre- 
cisely what  would  have  been  equita- 
ble for  them  to  do,  is  nothing  else 
than  a  rescission  of  their  contract, 
and  a  substitution  for  it  of  one  made 
by  the  court.  This  result  the  cautious 
policy  of  the  common  law  has  never 
recognized  as  within  its  powers,  nor 
have  the  courts  ever  in  terms  claimed 
the  right  to  produce  it;  still  it  has 
sometimes  been  effected  by  the  anx- 
ious desire  of  tiie  tribunals  that  the 
law  should  not  be  made  the  insiru- 
ment  of  injustice;  forgetting  some- 
times, perhaps,  in  this  laudable  zeal 
that  one  of  the  greatest  evils  in  the 
administration  of  justice,  and  one 
which  brings  numberless  others  in 
its  train,  is  that  feeling  of  social  inse- 
curity which  will  exist  whenever  the 
inviolability  of  contracts  is  trenched 
upon,  however  pure  might  have 
been  the  motive  for  so  doing."  The 
court  seem  inclined  to  think  Kemble 


V.  Farren,  G  Bing.  141,  a  case  of  liq- 
uidated  damages  by  reason  of  tlie 
obvious  intent  of  the  parties  as  ex- 
pressed in  the  coiitracL  Mead  v. 
Wheeler,  13  N.  H.  351. 

But  in  Davis  v.  Gillett.  52  N.  TL 
126,  Foster,  J.,  said:  "Tiie  substance 
of  these  princifiles  (laid  down  by 
Sedgwick  in  his  treatise  on  tlie  Mea.-r- 
ure  of  Damages)  is  that  the  language 
of  the  agreement  is  not  conclusive; 
and  that  the  elFort  of  the  tribunal 
called  to  put  a  construction  upon  it 
will  be  to  ascertain  the  true  intent 
of  the  parties  and  to  effectuate  that 
intent.  In  order  to  do  this  courts 
will  not  be  absolutely  controlled  by 
terms  that  may  seem  to  be  quite 
definite  in  their  meaning,  but  will 
be  at  liberty  to  consider  and  declare 
a  sum  mentioned  in  the  bond  to  be 
a  penalty,  even  although  it  may  be 
denominated  liquidated  damages, 
and  vice  versa,  if  manifest  justice 
requires  that  a  construction  opposite 
to  the  expressed  language  of  the  in- 
strument should  be  adopted.  In  such 
cases  the  court  do  not  assume  (as  they 
certainly  could  not)  to  make  a  new 
contract  for  the  parties;  but  they  con- 
clude that  the  parties  have  incor- 
rectly and  inconsiderately  expressed 
their  intention.  The  court,  therefore, 
ascertain  the  intention  and  then  give 
effect  to  it." 

In  Williams  v.  Dakin  (court  [4SS] 
of  errors),  22  Wend.  201,  Walworth, 
J.,  said:  "There  is  undoubtedly  a 
class  of  cases  in  which  courts  have 
been  in  the  habit  of  considering  a 
certain  specified  sum  as  penalty, 
whatever  may  be  the  language  of  the 
agreement.  Such  is  the  case  wher- 
ever such  specified  sum  is  evidently 
intended  as  a  mere  collateral  secu- 
rity for  the  payment  of  a  different 


i3^ 


rONVENTIONAL    LIQUIDATION'S    AND    DISCHARGES,       [§  2 S3. 


vide  for  a  penalty  as  to  those  and  for  liquidated  damages  aa 
to  the  other  clauses,  though  the  consequences  of  their  breach 
are  uncertain.^ 


sum  which  is  the  real  debt;  or  where 
it  was  evidently  intended  to  be  in 
the  nature  of  a  mere  penalty;  and 
there  is  another  class  where  from 
the  language  of  the  agreement  it  was 
difficult  to  ascertain  what  the  parties 
really  intended,  in  which  the  courts 
have  taken  the  reasonableness  of  the 
provision  as  liquidated  damages  into 
consideration  for  the  purpose  of  de- 
termining whether  it  was  intended 
as  such  or  only  as  a  comminatory 
sum." 

In  Cotheal  v.  Talmage,  9  N.  Y.  551, 
the  court  recognize  it  as  a  general 
rule  that  courts  in  acting  upon  these 
stipulations  should  carry  into  effect 
the  intent  of  the  parties;  but  there  is 
an  intimation  that  this  rule  may  be 
departed  from  when  the  party  might 
be  made  responsible  for  the  whole 
amount  of  damages  supposed  to  be 
stipulated  for  breach  of  an  unim- 
portant part  of  his  contract;  *'and  so 
be  made  to  pay  a  sum  by  way  of 
damages  grossly  disproportionate  to 
the  injury  sustained." 

In  Lampman  v.  Cochran,  16  N.  Y. 
275,  61  Am.  Dec.  716,  a  sum  specially 
named  in  an  agreement  as  "liqui- 
dated damages,"  in  case  either  party 
shall  fail  to  perform  the  contract, 
was  nevertheless  held  a  penalty,  be- 
cause on  the  face  of  the  instrument 
it  appeared  that  such  sum  would 
necessarily  be  an  inadequate  com- 
pensation for  the  breach  of  some  of 
the  provisions,  and  more  than  enough 
for  the  breach  of  others.  The  court 
say:  "The  parties  to  this  contract 
must  be  regarded  as  having  given 
a  wrong  name  to  the  sum  of  $500, 
and  that  it  is  in  substance  a  penalty, 
and  not  liquidated  damages." 


In  Col  well  V.  Lawrence,  38  N.  Y. 
71,  Miller,  J.,  said:  "One  of  the 
rules  of  construction  established  is 
that  the  courts  are  to  be  governed 
by  the  intention  of  the  parties  to  be 
gathered  from  the  language  of  the 
contract  itself  and  from  the  nature 
of  the  circumstances  of  the  case. 
And  in  all  the  cases  the  courts  have 
treated  it  as  a  question  as  to  the 
intention  of  the  parties."  In  that 
case  a  contract  had  been  made  to 
build  and  place  in  a  steamboat  two 
steam-engines  of  a  particular  de- 
scription on  or  before  a  day  specified 
for  $8,000,  and  to  have  the  same 
ready  for  steam  on  or  before  that  day 
"  under  a  forfeiture  of  $100  per  day 
for  each  and  every  day  after  the 
above  date  until  the  same  is  com- 
pleted as  above."  Held,  the  amount 
being  large  and  grossly  dispropor- 
tionate to  the  actual  damage,  it  was 
not  a  reasonable  inference  that  it 
was  agreed  on  as  liquidated  dam- 
ages. 

In  Clement  v.  Cash,  21  N.  Y.  253, 
Wright,  J.,  said:  "When  the  sum 
fixed  is  greatly  disproportionate  to 
the  presumed  actual  damage,  prob- 
ably a  court  of  equity  may  relieve; 
but  a  court  of  law  has  no  right  to 
erroneously  construe  the  intention  of 
parties  when  clearly  expressed,  in 
the  endeavor  to  make  better  con- 
tracts for  them  than  they  have  made 
for  themselves.  In  these,  as  in  all 
other  cases,  the  courts  are  bound  to 
ascertain  and  carry  into  effect  the 
true  intent  of  the  parties.  I  am  not 
disposed  to  deny  that  a  case  may 
arise  in  which  it  is  doubtful,  from 
the  language  employed  in  the  instru- 
ment, whether  the  parties  meant  to 


1  Lansing  v.  Dodd,  45  N.  J.  L.  525;  Whitfield  v.  Levy,  39  id.  149;  Laurea 
V.  Bernauer,  33  Hun,  307. 


§  284.] 


STIPULATED    DAMAGES. 


Y33 


§284.  The  evidence  and  effect  of  intention  to  liquidate. 

A  bond  is  prima  facie  a  penal  obligation;  but  the  sura  [480] 
stated  where  a  penalty  is  usually  inserted  has  sometimes  been 
held  liquidated  damages.'     This  has  seldom   been  done,  how- 


agree  upon  the  measure  of  compen- 
sation to  the  injured  party  in  case  of 
a  breach.  In  such  cases  there  would 
be  room  for  construction,  but  cer- 
tainly none  where  the  meaning  of 
the  parties  was  evident  and  unmis- 
takable. When  they  declare,  in  dis- 
tinct and  unequivocal  terms,  that 
they  have  settled  and  ascertained  the 
damages  to  be  $500,  or  any  other  sum, 
to  be  paid  by  the  party  failing  to 
perform,  it  seems  absurd  for  a  court 
to  tell  them  that  it  has  looked  into 
the  contract  and  reached  the  conclu- 
sion that  no  such  thing  was  intended, 
but  that  the  intention  was  to  name  a 
sum  as  a  penalty  to  cover  any  dam- 
ages that  might  be  proved  to  have 
been  sustained  by  a  breach  of  the 
agreement;  still,  certain  rules  have 
crept  into  the  law  that  are  supposed 
to  control  the  construction  of  con- 
tracts of  this  character,  until  in  the 
view  of  some  it  has  become  difficult, 
if  not  impossible,  to  support  an 
agreement  for  liquidated  damages 
in  cases  where  the  amount  ascer- 
tained by  the  parties  seems  dispro- 
portionate to  the  conjectured  actual 
damage."  Rolf  v.  Peterson,  2  Brown, 
P.  C.  470. 

If  the  sum  would  be  very  enor- 
mous and  excessive,  considered  as 
liquidated  damages,  it  should  be 
taken  to  be  a  penalty  though  agreed 
to  be  paid.  Lord  Eldon,  C.  J.,  la- 
ments, in  Astley  v.  Weldon,  2  B.  & 
P.  346,  the  adoption  of  such  a  princi- 
ple. Hoag  v.  McGinnis,  22  Wend. 
163,  per  Cowen,  J.;  Spencer  v.  Tilden, 
5  Cow.  144  and  note;  Bagley  v.  Ped- 
dle, 5  Sandf.  192;  Berry  v.  Wisdom, 
3  Ohio  St.  241;  Esmond  v.  Van  Ben- 
schoten,  12  Barb.  366;  Nash  v.  Hcr- 
mosilla,  9  CaL  5S5,  70  Am.  Dec.  670; 


Bright  V.  llowland,  3  How.  (Miss.) 
398;  Shreve  v.  Brereton,  51  Pa.  IT'i; 
Streeper  v.  Williams,  48  id.  4."i0; 
Powell  v.  Burroughs,  54  id.  329; 
Moore  v.  Anderson,  30 Tex.  224;  Chase 
V.  Allen,  13  Cray,  42;  Gowen  v.  Ger- 
rish,  15  Me.  273;  Leggett  v.  Mutual 
L.  Ins.  Co.,  53  N.  Y.  394;  Dennis  v. 
Cummins,  3  Johns.  Cas.  297;  Hamil- 
ton V.  Overton,  6  Blackf.  206,  38  Am. 
Dec.  136;  Lea  v.  Whitaker,  L  R.  8 
C.  P.  70;  Streeter  v.  Rush,  25  Cal.  67. 

1  Guerin  v.  Stacy,  175  Masa  595. 
56  N.  E.  Rep.  892;  Shelton  v.  .Jack- 
son, 20  Tex.  Civ.  App.  443,  49  S.  W. 
Rep.  415;  De  Graff  v.  Wickham,  89 
Iowa,  720,  52  N.  W.  Rep.  503,  57  id. 
420:  Wilkinson  v.  Colley,6  Kulp,  401; 
Studabaker  v.  White,  21  Ind.  212; 
Fisk  V.  Fowler,  10  CaL  512;  DutTy  v. 
Shockey,  11  Ind.  70,  71  Am.  Dec.  348. 

It  is  not  to  be  regarded  as  a  uni- 
versal rule  that  contracts  in  the  ordi- 
nary form  of  penal  bonds,  designed 
as  an  indemnity  between  private 
persons  for  the  non-performance  of 
collateral  agreements,  are  to  be  re- 
garded as  a  penalty.  It  cannot  cor- 
rectly be  said  to  be  true  in  all  such 
cases  that  the  intention  to  treat  the 
sum  named  in  the  bond  as  a  penalty 
to  secure  the  performance  of  the 
condition  and  to  be  discharged  on 
payment  of  damages  arising  from 
non-performance  can  be  inferred  as 
a  rule  of  law  or  a  conclusive  pre- 
sumption from  the  mere  form  of  the 
obligation.  Clark  v.  Barnard,  lOS 
U.  S.  436,  453,  2  Sup.  CU  Rep.  878. 
See  n.  to  t^  283. 

The  weight  to  be  given  the  words 
"forfeit,"  "forfeiture,"  "paid  sum  " 
or  "  penalty  "  will  depend  on  their 
connection  with  other  parts  of  the 
instrument  in  which  they  are  used, 


^M 


CONVENTIONAL    LIQUIDATIONS    AND    DISCUARGES.       [§  284. 


ever,  unless  words  were  employed  in  connection  with  that 
sum  to  countervail  the  implication  of  penalty.^  And  where 
the  parties  in  any  other  form  of  contract  designate  the  stated 
sum  a  penalty,  or  characterize  it  by  other  equivalent  words,  it 
is  an  indication  that  a  penalty,  in  a  strict  or  technical  sense, 
is  intended; 2  but  the  inference  is  not  so  strong  because  the 
[490]  obligation  is  in  the  form  of  a  bond  as  may  be  inferred 
from  the  greater  number  of  instances  in  which  a  sura  called  a 
penalty  or  forfeiture  by  the  parties  in  contracts  has  been  held, 
nevertheless,  liquidated  damages.  The  tendency  and  prefer- 
ence of  the  law  is  to  regard  a  stated  sum  as  a  penalty,  because 


the  nature  of  the  agreement,  the  in- 
tention of  the  parties,  and  other  facts 
and  circumstances.  De  Graff  v. 
Wicliham,  supra;  Dobbs  v.  Turner, 
70  S.  W.  458. 

1  Cotheal  v.  Talmage,  9  N.  Y.  551, 
61  Am.  Dec.  716;  Shiell  v.  McNitt,  9 
Paige,  101;  Leary  v.  Laflin,  101  Mass. 
384;  Smith  v.  Wedgwood,  74  Me.  457. 

If  a  bond  which  stipulates  that  the 
obligor  shall  abide  by  the  determina- 
tion of  arbitrators  contains  no  ex- 
press agreement  that  the  sum  named 
in  it  is  to  be  regarded  as  liquidated 
damages,  and  there  is  no  evidence  of 
an  intention  that  it  should  be  so 
stated,  such  sum  will  be  regarded  as 
a  penalty.  Henry  v.  Davis,  123 
Mass.  345. 

A  stipulation  for  "a  penalty  as 
liquidated  damages,"  held  to  be  the 
latter.  Toomey  v.  Murpiiy,  [1897J  2 
Irish,  601. 

2  Iroquois  Furnace  Co.  v.  Wilkin 
Manuf.  Co.,  181  111.  583,  54  N.  E. 
Rep.  987;  Meyer  v.  Estes,  164  Mass. 
457,  32  L.  R.  A.  283,  41  N.  E.  Rep. 
683;  McCann  v.  Albany.  11  App.  Div. 
878,  43  N.  Y.  Supp.  94;  Edgar  & 
Thompson  Works  v.  United  States, 
34  Ct.  of  Cls.  205;  Bignall  v.  Gould, 
119  U.  S.  495,  7  Sup.  Ct.  Rep.  294; 
L.  P.  &  J.  A.  Smith  Co.  v.  United 
States,  34  Ct.  of  Cls.  472:  Moore  v. 
'Colt,    137   Pa,   289,    18   Atl.    Rep.   8; 


Wilkinson  v.  Colley,  164  Pa.  35.  30 
Atl.  Rep.  286.  26  L.  R.  A.  114;  Dill  v. 
Lawrence,  109  Ind.  564,  10  N.  E.  Rep. 
573;  March  v.  Allabough,  103  Pa.  335; 
Whitfield  v.  Levy,  35  N.  J.  L.  149; 
Yenner  v.  Hammond,  36  Wis.  277; 
Tayloe  v.  San  di  ford.  7  Wheat.  13; 
White  V.  Arleth,  1  Bond,  319;  Smith 
V.  Dickenson,  3  B.  &  P.  630;  Davies 
V.  Penton,  6  B.  &  C.  216;  Harrison  v. 
Wright,  13  East,  343;  Brown  v.  Bel- 
lows. 4  Pick.  179;  Burr  v.  Todd,  41 
Pa.  206;  Robinson  v.  Cathcart,  2 
Cranch  C.  C.  590;  Bigony  v.  Tyson, 
75  Pa.  157;  Esmond  v.  Van  Ben- 
schoten,  12  Barb.  366;  Clement  v. 
Cash,  21  N.  Y.  253;  Cheddick  v. 
Marsh,  21  N.  J.  L.  463;  Hodges  v. 
King,  7  Met.  583;  Salters  v.  Ralph, 
15  Abb.  Pr.  273;  Bearden  v.  Smith,  11 
Rich.  554;  Heatwole  v.  Gorrell,  35 
Kan.  693.  Compare  the  last  case 
with  Streeter  v.  Rush,  25  Cal.  67. 

Even  if  the  use  of  the  word  "pen- 
alty "  is  not  conclusive,  very  strong 
evidence  is  required  to  authorize  a 
court  to  say  that  the  parties'  own 
words  do  not  express  their  intention; 
the  use  of  that  word  prevents  a  court 
from  holding  that  the  parties  stipu- 
lated the  damages.  Smith  v.  Brown, 
164 Mass.  584, 42  N.  E.  Rep.  101;  Kelley 
V.  Seay,  3  Okl.  537,  41  Pac.  Rep.  615; 
Reno  V.  Cullinane,  4  Okl.  457,  46  Pac. 
Rep.  510. 


§  284.] 


STIPULATED    DAMAGES. 


735 


actual  damages  can  then  be  recovered,  and  the  recovery  bo 
limited  thereto.^  This  tendency  and  preference,  however,  do 
not  exist  where  the  actual  damages  cannot  be  ascertained  b\' 
any  standard.  A  stipulation  to  liquidate  in  such  cases  is  con- 
sidered favorably.-  If  the  amount  is  not  so  large  as  to  raise  a 
doubt  that  it  is  proportionate  to  the  injury,  other  circum- 
stances being  equal,  it  is  believed  the  tendency  of  the  judicial 
mind  is  to  treat  a  fixed  sura  as  liquidated  damages  by  what- 
ever name  it  may  be  mentioned  in  the  contract.''     Another 


1  Hennessy  v.  Metzger,  152  111.  505, 
38  N.  E.  Rep.  1058;  Willson  v.  Balti- 
more, 83  Md.  203,  34  AtL  Rep.  774,  55 
Am.  St.  339;  Williston  v.  Mathews,  55 
Minn.  422.  56  N.  W.  Rep.  1112;  Hali- 
day  V.  United  States,  33  Ct.  of  Cls. 
453;  O'Keefe  v.  Dyer.  20  Mont.  471, 
52  Pac.  Rep.  196,  quoting  the  text; 
Iroquois  Furnace  Co.  v.  Wilkin  Manuf. 
Co.,181  III.  582, 54  N.E.  Rep.  987;  Mon- 
mouth  Park  Ass'n  v.  Wallis  Iron 
Works,  55  N.  J.  L.  132,  26  Atl.  Rep. 
140,  .39  Am.  St.  626;  Fisk  v.  Gray,  11 
Allen,  132;  Lansing  v.  Dodd,  45  N.  J. 
L.  525;  Whitfield  v.  Levy,  35  id.  149; 
Burrill  v.  Daggett,  77  Me.  545;  Smith 
V.  Wedgwood,  74  id.  458;  Henry  v. 
Davis,  123  Mass.  345;  Shute  v.  Taylor, 
5  Met.  61;  Wallis  v.  Carpenter,  13 
Allen,  19:  Cheddick  v.  Marsh,  21  N. 
J.  L.  463;  Baird  V.  Tolliver,  6 Humph. 
186,  44  Am.  Dec.  298;  Spear  v.  Smith, 
1  Denio,  464. 

It  is  provided  by  sec.  961.  R.  S.  of 
the  U.  S.,  that  in  all  suits  brought  to 
recover  the  forfeiture  annexed  to 
any  articles  of  agreement,  covenant 
bond  or  other  specialty,  where  the 
forfeiture,  breach  or  non-perform- 
ance appears  by  the  default  or  con- 
fession of  the  defendant  or  upon  de- 
murrer, the  court  shall  render 
judgment  for  the  plaintiff  to  recover 
60  much  as  is  due  according  to  equity. 
And  when  the  sum  for  which  judg- 
ment should  be  rendered  is  uncertain 
it  shall,  if  either  of  the  parties  request 
it,  be  assessed  by  a  jury.  This  has, 
apparently,   been  considered    appli- 


cable to  a  contract  expressly  provid- 
ing for  stipulated  damages  in  a  ca.se 
where  no  material  damage  to  the 
government  was  shown  to  liave  re- 
sulted from  the  breach  of  the  con- 
tract. Chicago  House-Wrecking  Ca 
V.  United  States,  45  C.  C.  A.  343,  106 
Fed.  Rep.  385.  The  doctrine  of  this 
case,  aside  from  the  statute,  has  been 
disaj)proved.  Sun  Printing  &  Pub. 
Ass'n  V.  Moore.  183  U.  S.  042,  600,  23 
Sup.  Ct.  Rep.  240. 

2  Kelly  V.  Fejervary.  Ill  Iowa,  603, 
83  N.  W.  Rep.  791;  Sanders  v.  Carter, 
91  Ga.  450,  17  S.  E.  Rep.  345:  Mon- 
mouth Park  Ass'n  v.  Wallis  Iron 
Works,  55  N.  J.  L.  132,  26  Atl.  Rep. 
140,  39  Am.  St.  626;  Everett  Land 
Ca  V.  Maney,  16  Wash.  552,  48  Pac. 
Rep.  243;  Tennessee  Manuf.  Co.  v. 
James,  91  Tenn.  154,  18  S.  W.  Rep. 
262.  30  Am.  St.  865,  15  L.  R.  A.  211, 
quoting  the  text;  Jaquith  v.  Hudson, 
5  Mich.  123;  Duffy  v.  Shockey,  11 
Ind.  70;  Sparrow  v.  Paris.  7  H.  &  N. 
594;  Pierce  V.  Jung,  10  Wis.  30;  Co- 
theal  V.  Talmage,  9  N.  Y.  551;  Boys  v. 
Ancell,  5  Bing.  N.  C.  390;  Richards 
V.  Edick,  17  Barb.  200;  Noyes  v. 
Phillips,  60  N.  Y.  408:  Harris  v.  Mil- 
ler, 6  Sawyer,  319;  Knowlton  v.  Mac- 
kay,  29  Up.  Can.  C.  P.  601;  Ivinson 
V.  Althrop,  1  Wyo.  71;  Williams  v. 
Vance,  9  S.C.344:  Birdsall  v.  Twenty- 
third  St  Ry.  Co..  8  Daly,  419;  Salem 
V.  Anson,  40  Ore.  339,  67  Pac.  Rep 
190,  56  L.  R  A.  109. 

s  Hennessy  v.  Metzger,  152  111.  505, 
38  N.  K  Rep.  1058,  43  Am.  St.  267; 


736  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.       [§  284, 

statement  of  the  rule  is  that  if  the  language  of  the  parties  is 
clear  and  explicit  to  the  effect  that  the  sura  named  is  to  be 
deemed  liquidated  damages  and  the  actual  damages  contem- 
plated when  the  contract  was  made  "are  in  their  nature  un- 
certain and  unascertainable  with  exactness,  and  may  be  de- 
pendent upon  extrinsic  considerations  and  circumstances,  and 
the  amount  is  not,  on  the  face  of  the  contract,  out  of  all  pro- 
portion to  the  probable  loss,"  effect  will  be  given  the  con- 
tract.^ But  wherever  there  is  doubt  as  to  the  justice  of  the 
stipulation,  if  the  sum  be  called  a  "  penalty  "  in  the  contract, 
that  circumstance  is  frequently  referred  to  as  a  reason  for 
holding  it  to  be  a  penalty,  on  the  ground  of  intention.  The 
purpose  in  such  cases,  however,  is  commonly  a  deduction  from 
the  general  effect  of  the  contract,  and  the  word  "  penalty  "  is 
alluded  to  to  confirm  a  foregone  conclusion.^  On  the  other 
hand,  if  the  general  effect  of  the  contract  otherwise  leads  to 
the  conclusion  that  the  stipulated  sum  should  be  held  to  be  a 
penalt}',  the  circumstance  that  the  parties  have  called  it 
[491]  "liquidated  damages,"  and  said  they  do  not  mean  it  as 
penalty,  and  even  use  very  clear  language  that  it  is  to  be  act- 
ually paid,  will  not  control  the  interpretation;  it  will,  not- 
withstanding, be  considered  a  penalty.^    Bonds  given  to  secure 

Gates  V.  Parmly,  93  Wis.  294,  66  N.  i  Curtis  v.  Van  Bergh,  161  N.  Y. 

W.  Rep.  253,    67  id.   739;    Manistee  47,  55  N.  E.   Rep.  398;  Pressed  Steel 

Iron   Works  Co,  v.  Shores  Lumber  Car  Co.  v.  Eastern  R,  Co.,  121  Fed. 

Co.,  92  Wis.  21,  65  N.  W.  Rep.  863;  Rep.  609  (Ct.  Ct.  of  Appeals,  8th  Ct), 

Half  V.  O'Connor,  14  Tex.  Civ.  App.  citing  this  and  the  preceding  sec- 

191,  37  S.  W.  Rep.  238;  Standard  But-  tion, 

ton  Fastening  Co.  v.  Breed,  163  Mass.  ^^^iiigon  v.  Dunwody,  100  Ga.  51, 

10,  39  N.  E.  Rep  346;    McCurry  v.  28  S.  E.  Rep.  651 ;  Poppers  v.  Meagher, 

Gibson,  108  Ala.  451,  54  Am.  St.  177,  148  111.  193,  35  N.  E.  Rep.  805;  Gates 

18  So.  Rep.  806;  Boyce  v.  Watson,  53  v.  Parmly,  93  Wis.  294,  66  N.  W.  Rep. 

III.  App.  301;  Pastor  v.  Solomon,  26  253,  67  id.  739;  Edgar  &  Thompson 

N.  Y.  Misc.  125,  54  N.  Y.  Supp.  575;  Works  v.  United  States,  '34  Ct.   of 

Railroad  v.   Cabinet   Co.,  104  Tenn.  Cls.  205;  Willson  v.  Love,  [1896]  1  Q. 

568,  58  S.  W.  Rep.  303,  78  Am.  St.  933;  B.  626;  Houghton  v.  Pattee,  58  N.  H. 

Jaqua  v.  Headington,  114  Ind.  309.  326;    Mathews  v.  Sharp,  99  Pa,  560; 

16  N.  E.  Rep.  527;  Bird  v.  St  John's  Col  well  v.  Lawrence,  38  N.  Y.  75. 

Episcopal  Church,  154  Ind.  138,  65  N.  ^  Chicago  House- Wrecking  Co.  v. 

E.Rep.  129;  Maxwell  v.  Allen,  78  Me.  United  States,  45  C.  C.  A.  343,  106 

32,  57  Am.  Rep.  783,  3  Atl.  Rep.  386;  Fed.    Rep.    385  (disapproved  in  Sun 

Hoi  brook  v.  Tobey,  66  Me.  410,  22  Am,  Printing  &  Pub.  Ass'n  v.  Moore,  183 

Rep,'581;Lynde V.Thompson,  2 Allen,  U.  S.  642,660,  23  Sup.  Ct.  Rep.  240, as 

456;  Colby  v.  Bailey,  5  Hawaiia,  152.  is  Gay  Manuf.  Co.  v.  Camp,  infra)'. 


I  284.]  STIPULATED    DAMAGES.  737 

the  erection  of  public  works  pursuant  to  statutes  are  to  bo  re- 
garded as  penal  because  it  cannot  be  supposed  that  it  was  the 
intention  of  the  legislature  to  fix  the  damages  in  every  case 
for  each  and  every  breach  of  the  contracts  the  bonds  were 
given  to  secure  the  performance  of,  regardless  of  the  resulting 
injury.^  The  penalty  of  a  druggist's  bond  given  to  assure  his 
observance  of  the  law  is  not  to  be  considered  as  liquidated 
damages.-  And  so  of  bonds  usually  given  to  secure  the  per- 
formance of  statutory  duties,^  and  the  bonds  required  of  retail 
liquor  dealers,*  though  a  bond  given  under  the  liquor  tax  law 
of  Kew  York  to  secure  on  the  part  of  tlie  principal  therein  the 
observance  of  that  law  and  also  good  behavior  in  other  par- 
ticulars essential  to  the  orderW  and  proper  conduct  of  his  busi- 
ness, is  for  stipulated  damages,  and  the  liability  of  the  surety 
thereon  is  not  affected  because  a  judgment  has  been  rendered 
against  the  principal  for  a  sum  equal  to  the  penalty  of  the 
bond.^     The  rule  in  Connecticut  is  to  the  same  effect.^ 

It  is  apparent  from  this  consideration  of  the  cases  that  in 
determining  whether  the  sura  named  in  a  contract  is  to  be 
taken  as  a  penalty  or  liquidated  damages  courts  are  influenced 
largely  by  the  reasonableness  of  the  transaction,  and  are  not 
restrained  by  the  form  of  the  agreement,  nor  by  the  terms 

Radloff  V.   Haase,   96    111.   App.    74;  that  something  else  was  really  in- 
Gay  Manuf.  Co.  v.  Camp,  13  C.  C.  A.  tended.     Kelley    v.    Fejervary,    111 
137,  65  Fed.    Rep.  794;    Lowman  v.  Iowa,  693,  83  N.  W.  Rep.  791. 
Foley,   14  N.    Z.    699;   Wheedon    v.  i  Nevada  County  v.  Hicks,  38  Ark. 
American  Bonding  &  Trust  Co.,  128  557;  Pigeon  v.  United  States,  27  Ct. 
N.  C.  69,  38  S.  E.  Rep.  255;  Seeman  v.  of  Cls.   167.     But  see  tlie  last  para- 
Biemann,  108  Wis.  365,  84  N.  W.  Rep.  graph  of  this  section. 
490;  Higbie  v.  Farr.  28  Minn.  439,  10  2  state  v.  Estabrook,  29  Kan.  739. 
N.  W.  Rep.  592;  Horner  v.  Flintoff,  9  3  Clark  v.  Barnard,  108  U.  S.  436,  2 
M.  &  W.  678;  Dennis  v.  Cummins,  3  Sup.  Ct.  Rep.  878;    United  States  v. 
Johns.    Cas.    297,   2   Am.    Dec.    160;  Montell,  Taney,   47.    See  People  v. 
Lindsay    v.    Anesley,    6    Ired.    188;  Central  Pacific  R.  Co.,  76  Cal.  29,  18 
Baird  v.  ToUiver,  6  Humph.  186,  44  Pac.  Rep.  90. 

Am.  Dec.  298;  Yenner  v.  Hammond,  ^  State  v.  Larson,  83  Minn.  124,  86 

36  Wis.  277;  Lapman  v,  Cochran,  16  N.  W.  Rep.  3.     See  Jenkins  v.  Dan- 

N.  Y.  275.  ville.  79  111.  App.  339. 

If  the  parties  use  the  term  "liq-  ''Lyman     v.    Shenandoah    Social 

uidated   damages"  the   usual  tech-  Club,  39  App.  Div.  459,  57  N.  Y.  Supp. 

nieal  meaning  will  be  given  it  if  no  372. 

reason  appears  for  doing  otherwise,  ^  Quintard  v.    Corcoran,  50  Conn, 

and  the  party  objecting  to  such  con-  34. 
struction  has  the  burden  of  showing 
Vou  1  —  47 


738  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  284. 

used  by  the  parties,  nor  even  by  their  manifest  intent.  Where 
the  sum  named  has  been  expressly  designated  as  stipulated 
damages  it  has  been  held  to  be  a  penalty;  and,  conversely, 
where  the  sum  has  been  denominated  a  penalty,  it  has  been 
declared  to  be  stipulated  damages.  And  where  the  intent  of 
the  parties  has  been  manifest  it  has  been  disregarded  if  the 
sum  was  an  unconscionable  one.^  The  better  rule  is  that  de- 
clared in  a  recent  case  decided  by  the  supreme  court  of  the 
United  States,  the  doctrine  of  which  puts  agreements  for  the 
liquidation  of  damages  upon  substantially  the  same  footing  as 
other  contracts  in  which  fraud,  surprise  or  mistake  has  not 
entered." 

A  condition  in  an  ordinance  governing  the  rights  and  duties 
of  a  water  company  in  its  relations  to  the  municipality  may 
be  sustained  as  providing  for  stipulated  damages  though  it 
would  be  considered  as  providing  for  a  penalty  if  it  was  part 
of  a  contract  between  individuals.  It  was  said  in  a  case  in- 
volving this  question:  In  granting  the  franchise  to  the  water 
company  the  city  was  exercising  a  public  and  governmental 
function.  It  could  impose  such  conditions  and  enforceable 
penalties  as  it  deemed  necessary  and  proper  to  secure  the 
object  sought  to  be  attained.  It  had  the  right  to  provide  what 
rates  or  rentals  the  company  might  charge  for  water,  and  when 
and  under  what  circumstances  it  should  have  the  right  to 
charge  them.  The  business  in  which  the  water  company  was 
about  to  engage  was  one  affected  with  a  public  interest,  and 
hence  subject  to  regulation  in  the  exercise  of  the  police  power 
of  the  state.  In  accepting  the  ordinance  the  water  company 
accepted  it  with  all  its  terms  and  conditions.  Hence,  we  do 
not  think  the  ordinary  rules  which  apply  to  a  contract  between 
private  parties  with  reference  to  business  not  affected  with  a 
public  interest  have  any  application  in  determining  whether 
this  provision  is  or  is  not  a  non-enforceable  penalty.     Even  if 

1  Davis  V.  United  States,  17  Ct.  of  Ian  v.  Rollins,  41  Neb.  540,  59  N.  W. 

Cls.  201;  L.  P.  &  J.  A.  Smith  Co.  v.  Rep.  893;  Ctesarv.  Rubinson,  71  App. 

United  States.  34  id.  473;  Sanford  v.  Div.  180,  75  N.  Y.  Supp.  544;  Dobbs  v. 

First  Nat.  Bank,  94  Iowa,  683,  63  N.  Turner,  70  S.  W.  Rep.  458. 

W.  Rep.  459;  De  Graff  v.  Wickiiaiu,  89  ^  Sun  Printing  &  Pub.  Co.  v.  Moore, 

Iowa,     720,     52    N.    W.     Rep.     503,  183  U.  S.  642,  22  Sup.  Ct.   Rep.  240, 

57     id.     8:;0;      O'Keefe     v.     Dyer,  stated  and  quoted  from  in  §  283. 
20  Mont.  477,  52  Pac  Rep.  196;  Gilli- 


1 


§  2S5.]  STIPULATED    DAMAGES.  739 

it  is  to  be  considered  as  a  penalty  we  think  it  is  enforceable, 
although  the  same  provision,  if  contained  in  a  private  contract, 
might  be  non-enforceable.  There  is  no  reason  why  the  city, 
in  exercising  a  governmental  function  with  reference  to  a  busi- 
ness affected  with  a  public  interest,  might  not  incorporate 
into  the  very  ordinance  granting  the  franchise  an  enforceable 
condition  or  penalty  in  the  nature  of  a  public  regulation  to  in- 
sure performance  of  its  public  duty  on  part  of  the  grantee  of 
the  franchise.^ 

§  285.  Stipulated  sum  where  damages  otherwise  certain 
or  uncertain.  There  is  a  marked  difference  between  con- 
tracts which  relate  to  subjects  within  established  rules  for 
measuring  damages,  and  those  for  infraction  of  which  the 
damages  are  uncertain  and  difficult  to  be  proved.  A  stipulated 
sum  in  a  contract  of  the  former  class  is  generally  unnecessary 
unless  to  restrict  damages  below  the  legal  standard  or  extend 
them  beyond  it.  The  parties  have  the  right  to  do  either;  and 
when  the  intention  is  clearly  manifested  to  do  so,  it  will  be  en- 
forced in  cases  clear  of  fraud,  oppression  or  unconscionable  ex- 
travagance.- But  in  such  cases  the  disparity  between  the  agreed 
sum  and  the  actual  injury  is  readily  seen,  and  may  be  supposed 

1  State  Trust  Co.  v.Duluth,  70  Minn,  per  bushel,  when  they  were  worth 
257,73  N.  W.  Rep.  249.  See  Nilson  thirty-seven  cents.  It  was  held  that 
V.  Jonesboro,  57  Ark.  168,  20  S.  W.  the  jury  might  disregard  the  con- 
Rep.  1093;  Brooks  v.  Wichita,  114  tract  because  unconscionable  and 
Fed.  Rep.  297,  53  C.  C.  A.  209;  Salem  oppressive  as  to  the  sum  added  for 
V.  Anson,  40  Ore.  339,  67  Pac.  Rep.  costs;  but  otherwise  valid,  because 
190,  56  L.  R.  A.  169;  Whiting  v.  New  within  a  specified  time  the  debtor 
Baltimore,  127  Mich.  66,  86  N.  W.  had  the  option  to  pay  money  at  the 
Rep.  403.  rate  of  $1  for  five  bushels.     Cutler  v. 

^Lincoln  v.   Little  Rock  Granite  Johnson,    8    Mass.    266;    Baxter    v. 

Co.,  56  Ark.  405,  19  S.  W.  Rep.  1056;  Wales,  12  id.  365;  Leland  v.  Stone, 

Nielson  V.  Read,  ISPhila.  450.  12Fed.  10    id.    459;    James    v.    Morgan,    1 

Rep.  441;    Gallo   v.    McAndrews,  29  Levinz,  111;  Earl  of  Chesterfield  v. 

Fed.  Rep.  715;  Lipscomb  v.  Seegers,  Jansen,    1     Wils.    287;     Russell    v. 

19  S.  C.  425;    Sun  Printing  &  Pub.  Roberts,  3  E.  D.  Smith,  318. 
Ass'n  V.  Moore,  183  U.  S.  642,  22  Sup.        In  an  action  brought  on  a  promise 

Ct.  Rep.  240.  of  £1,000  if  the  plaintiff  should  find 

In  Cutler  v.  How,  8  Mass.  257,  a  the  defendant's  owl,  the  court  de- 
party  being  liable  to  have  his  prop-  clared,  though  the  promise  was 
erty  taken  to  satisfy  an  execution,  proved,  the  jury  might  mitigate  the 
gave  an  obligation  to  pay  tlie  debt,  damages.  Bac.  Abr.,  Damages,  D. 
and  a  certain  amount  for  costs  not  See  Thornborow  v.  Whitacre,  2  Ld. 
incurred,   in  oats  at  twenty   cents  Raym.  1164. 


740  CONVENTIONAL    LICiUIDATIONS    AND    DISCHAROES.        [§  285. 

to  liave  been  equally  apparent  to  the  parties;  and  courts,  pro- 
ceeding upon  the  rational  theory,  which  all  experience  con- 
firms, that  large  damages  for  small  injurj^  are  never  willingly 
stipulated  to  be  actually  paid,  nor  a  small  and  disproportionate 
compensation  accepted  for  a  great  injury,  are  seldom  con- 
vinced that  such  unequal  contracts  are  voluntarily  entered  into 
to  liquidate  damages.  Of  this  nature  are  contracts  for  the 
[492]  payment  of  money,  and  all  others  for  the  violation  of 
which  market  values  furnish  the  data  ordinarily  adequate  for 
the  ascertainment  of  due  compensation.  AVhen  such  contracts 
provide  for  damages,  either  more  or  less  than  those  due  by  the 
legal  standard,  they  must  be  drawn  with  great  clearness  to 
express  the  intention ;  and  in  general  there  should  appear  on 
their  face  or  otherwise  some  ground  for  departing  from  that 
standard ;  for  the  leaning  of  the  court  in  case  of  doubt  will  be 
towards  the  construction  that  the  provision  is  a  penalty.^  On 
the  other  hand,  where  a  contract  is  of  such  a  character  that 
the  damaofes  which  must  result  from  a  breach  of  it  are  uncertain 
in  their  nature  and  not  susceptible  of  proof  by  reference  to 
any  pecuniary  standard,  it  is  deemed  especially  fit  that  the 
parties  should  liquidate  them,  and  any  stipulation  they  make 
ostensibly  for  that  purpose  receives  favorable  consideration.^ 

iWilliston  V.  Mathews,  55  Minn.  Pac.  Rep.  196;  Squires  v.  El  wood,  33 
422,  56  N.  W.  Rep.  1112;  State  Trust  Neb.  126,  49  N.  W.  Rep.  939;  Mcln- 
Co.  V.  Duluth,  70  Minn.  257,  73  N.  W.  tosh  v.  Johnson,  8  Utah,  359,  30  Pac. 
Rep.  257:  Lowman  v.  Foley.  14  N.  Z.  Rep.  1091;  Maudlin  v.  American  Sav- 
699:  Parlin  v.  Boatman,  84  Mo.  App.  ings  &  Loan  Ass'n,  63  Minn.  258,  65 
67;  Seemanv.  Beemann,  108Wis.  365,  N,  W.  Rep.  645;  Radloff  v.  Haase, 
84  N.  W.  Rep.  490;  Tilley  v.  Ameri-  196  III.  365,  63  N.  E.  Rep.  729,  and 
can  Building  &  Loan  Ass'n,  52  Fed.  local  cases  cited:  Nilson  v.  Jones- 
Rep.  618;  Lansing  v.  Dodd.  45  N.  J.  boro,  57  Ark.  168,  175,  20  S.  W.  Rep. 
L.  525:  Tinkham  v.  Satori,  44  Mo.  1093,  citing  the  text;  Johnson  v. 
App.  659:  Fisk  v.  Gray.  11  Allen,  132;  Cook,  24  Wash.  474,  64  Pac.  Rep.  729, 
Baird  V.  ToUiver,  6  Humph.  186,  44  citing  the  preceding  section;  Home. 
Am.  Dec.  298;  Foote  v.  Sprague,  13  Land  &  Cattle  Co.  v.  McNamara,  Til 
Kan.  155;  Tholen  v.  Duffy,  7  id.  405;  Fed.  Rep.  822,  49  C.  C.  A.  642,  apply- 
Kurtz  V.  Sponable,  6  id.  395;  Wil-  ing  the  Montana  code,  and  citing  the 
mington Transportation  Co.  V.  O'Neil,  text;    Ctesar  v.  Rubinson,  —  N.  Y. 

98  Cal.  1,  32  Pac,  Rep.  705;  Easton  v.  ,  67  N.  E.  Rep.  58. 

Cressey,  100  Cal.  75,  34  Pac.  Rep.  622;        2  Consolidated  Coal  Co.  v.  Peers,  150 

Jack  V.  Sinsheimer,  125  Cal.  563,  58  111.  344,  37  N.  E.  Rep.  937;  Hennessy 

Pac.  Rep.  130;  North  &  South  Rolling  v.  Metzger,  152  111.  505,  38  N.  E.  Rep. 

Stock  Co.  V.  0'Hara,73  111.  App.  691;  10-58,    43    Am.    St.    267;     Heisen  v. 

O'Keefe  v.  Dyer,   20   Mont.   477,    52  Westfall,  86  111.  App.  576;  Louisville 


§  286.] 


STIPULATED    DAMAGES. 


r4i 


§  2SG.  Contracts  for  the  payment  of  money.  These  are 
contracts  of  the  highest  degree  of  certainty.  Interest  is  the 
universal  measure  of  damages  for  mere  delay  of  payment.* 
But  some  latitude  is  allowed  for  modifying  the  rate  by  con- 
tract. Stipulations  as  to  rate  before  maturity,  not  exceeding 
any  statutory  limit,  are  uniformly  enforced  in  cases  free  from 
fraud  or  oppression.  There  is  no  reason  why  a  party  may  not 
stipulate  the  rate  after  maturity  as  freely  and  effectually  as  be- 
fore, except  that  such  stipulations  are  made  with  less  caution, 
for  they  are  made  only  to  be  operative  in  case  of  default,  an 
event  not  then  anticipated  to  occur.  When,  therefore,  the  rate 
is  made  very  much  higher  immediately  after  maturity  than 
that  reserved  before,  there  is  a  departure  from  the  standard  of 
compensation  fixed  by  the  parties  for  the  period  of  credit,  and 
it  has  been  held  in  some  cases  that  such  increased  rate  [493] 
as  damages  is  in  the  nature  of  a  penalty  i^  and  in  other  cases 


Water  Co.  v.  Youngstown  Bridge  Co., 
16  Ky.  L.  Rep.  350;  Woodbury  v. 
Turner,  etc.  Manuf.  Co.,  96  Ky.  459, 
29  S.  W.  Rep.  ^'95;  Monmouth  Park 
Ass'n  V.  Wallis  Iron  Works,  55  N.  J. 
L.  132,  26  Atl.  Rep.  140,  39  Am.  St. 
626;  Goldman  v.  Goldman,  51  La. 
Ann.  761,  25  80.  Rep.  555;  Willson  v. 
Baltimore,  83  Md.  203,  34  Atl.  Rep. 
774,  55  Am.  St.  339;  Mawson  v.  Lea- 
vitt,  16  N.  Y.  Misc.  289,  87  N.  Y. 
Supp.  1138;  Nilson  v.  Jonesboro,  57 
Ark.  168,  20  S.  W.  Rep.  1093,  citing 
the  text;  Waggoner  v.  Cox,  40  Ohio 
St.  539;  Berrinkott  v.  Traphagen,  39 
Wis.  219;  Wooster  v.  Kisch,  26  Hun, 
61;  Jones  v.  Binford,  74  Me.  439; 
Geiger  v.  Western  Maryland  R.  Co., 
41  Md.  4;  Pennsylvania  R.  Co.  v. 
Reichert,  58  id.  201,  277;  Wolf  Creek 
Diamond  Coal  Co.  v.  Schultz,  71  Pa. 
180;  Kemble  V.  Farren,  6  Bing.  141; 
Sainter  v.  Ferguson,  7  C.  B.  716; 
Fletcher  v.  Dyche,  2  T.  R.  32;  Spar- 
row V.  Paris,  7  H.  &  N.  594;  Mundy 
V.  Culver,  18  Barb.  336;  Bagley  v. 
Peddie,  16  N.  Y.  469,  69  Am.  Dec.  713; 
Dakin  v.  Williams,  17  Wend.  447; 
Knapp   V.    Maltby,    13   Wend.   587; 


Price  V.  Green.  16  IL  &  W.  346; 
Jaquith  v.  Hudson,  5  Mich.  123; 
Cotheal  v.  Talmage,  9  N.  Y.  551; 
Dennis  v.  Cummins,  3  Johns.  Cas. 
297,  2  Am.  Dec.  160;  Whiting  v.  New 
Baltimore,  127  Mich.  66,  88  N.  W. 
Rep.  403,  citing  the  text;  Peach  v. 
Jewish  Congregation  of  Johannes- 
burg, 1  So.  African  Rep.  345  (1894). 

1  Morrill  v.  Weeks,  70  N.  H.  178,  46 
Atl.  Rep.  32;  Orr  v.  Cliurchill,  1  H. 
Black.  227;  Fisk  v.  Gray.  11  Allen, 
132;  Watkins  v.  Morgan,  6  C.  &  P. 
661;  Hughes  v.  Fisher,  Walk.  (Miss.) 
516. 

2  Waller  v.  Long,  6  Munf.  71 ;  Upton 
V.  O'Donahue.  32  Neb.  565,  49  N.  W. 
Rep.  207;  Hallam  v.  Telleren,  55  Neb. 
255,  75  N.  W.  Rep.  560. 

In  Astley  v.  Weldon,  2  B.  &  P.  346, 
Heath,  J.,  said:  "It  is  a  well-known 
rule  in  equity  that  if  a  mortgage 
covenant  be  to  pay  5L  per  cent.,  and 
if  tlie  interest  be  paid  on  certain 
days  then  to  be  redm-ed  to  4/.  per 
cent,  the  court  will  not  relieve  if  the 
early  days  be  suffered  to  pass  with- 
out payment;  but  if  the  covenant 
be  to  pa)'  4/.  per  cent.,  and  the  party 


742 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  286. 


that  anything  above  the  legal  rate  is  a  penalty,  even  though 
parties  are  by  law  at  liberty  to  stipulate  for  any  rate  of  inter- 
est proper  without  restriction.^  But  the  general  current  of 
authority  is  that  any  rate  which  parties  may  lawfully  agree 
to  pay  before  maturity  may  be  fixed  as  the  rate  afterwards, 
though  the  debt,  before  it  becomes  due,  bears  no  interest  or  a 
lower  rate.-  If,  however,  a  rate  is  fixed  for  interest  as  dam- 
ages which  is  above  the  highest  that  may  be  reserved  by  agree- 
ment to  be  paid  during  the  period  of  credit,  it  is  not  usurious, 
[494]  because  the  debtor  can  at  any  time  relieve  himself  by 
payment.'  But  such  excessive  rate  will  be  held  a  penalty  if  it 
exceeds  any  which  the  law  recognizes  as  compensation.*  In 
Illinois  even  a  rate  above  that  allowed  by  law  to  be  contracted 
for  before  maturity  may  be  fixed  as  liquidated  damages  after 
maturity,  if  not  intended  as  an  evasion  of  the  statute  against 


do  not  pay  at  a  certain  time  it  shall 
be  raised  to  5Z.  per  cent,  there  the 
court  of  chancery  will  relieve."  See 
Gully  V.  Remy,  1  Blackf.  69;  Her- 
bert V.  Salisbury,  etc.  R.  Co.,  L.  R.  2 
Eq.  321;  Ay  let  v.  Dodd,  2  Atk.  238; 
Watts  V.  Watts,  11  Mo.  547. 

1  Mason  v.  Cailender,  2  Minn.  350, 
72  Am.  Dec.  102;  Talcott  v.  Marston, 
3  Minn.  339;  Daniels  v.  Ward,  4  id. 
168:  Robinson  v.  Kinney,  2  Kan.  184; 
Watkins  v.  Morgan,  6  C.  &  P.  661. 

2  Palmer  v.  Leffler,  18  Iowa,  125; 
Phinney  v.  Baldwin,  16  111.  108,  61 
Am.  Dec,  62;  Fisher  v.  Bid  well,  27 
Conn.  363;  Downey  v.  Beach,  78  111. 
53:  Funk  v.  Buck.  91  111.  575;  Wern- 
wag  V.  Mothershead,  3  Blackf.  401; 
Latham  v.  Darling,  2  111.  203;  Young 
V.  Fluke,  15  Up.  Can.  C.  P.  360; 
Witherow  v.  Briggs,  67  111.  96;  Davis 
V.  Rider,  53  111.  416;  Brewster  v. 
Wakefield,  22  How.  118;  Wyman  v. 
Cochrane,  35  111.  152;  Gould  v. 
Bishop  Hill  Colony.  35  111.  334;  Law- 
rence V.  Cowles,  13  111.  577;  Smith  v. 
Whitaker,  23  111.  367;  Young  v. 
Thompson,  2  Kan.  83;  Dudley  v. 
Reynolds,   1    Kan.    285;    Wilkinson 


V.  Daniels,  1  Greene,  179;  Taylor  v. 
Meek,  4  Blackf.  388.     See  ch.  8. 

3  Lawrence  v.  Cowles.  13  111.  577; 
Gould  V.  Bishop  Hill  Colony,  35  III. 
324;  Davis  v.  Rider,  53  ill.  416; 
Witherow  v.  Briggs,  67  111.  96;  Wil- 
day  V.  Morrison,  66  III.  532;  Cutler  v. 
How,  8  Mass.  357;  Call  v.  Scott,  4 
Call,  402;  Wilson  v.  Dean,  10  Iowa. 
432;  Gower  v.  Carter,  3  Iowa,  244,  66 
Am.  Dec.  71;  Moore  v.  Hylton,  1  Dev. 
Eq.  433;  Campbell  v.  Shields,  6 
Leigh.  517;  Gambril  v.  Doe,  8  Blackf. 
140,  44  Am.  Dec.  760;  Fisher  v.  Otis, 
3  Pin.  78;  Shuck  v.  Wight,  1  G. 
Greene,  128;  Wight  v.  Shuck,  Morris, 
425;  Fisher  v.  Anderson,  25  Iowa,  28, 
95  Am.  Dec.  761 ;  Jones  v.  Berryhill,  25 
Iowa,  289;  Rogers  v.  Sample.  33  Miss. 
310,  69  Am.  Dec.  349;  Roberts  v.  Tre- 
mayne,  Croke's  James,  507;  Floyer  v. 
Edwards,  1  Cowp.  112;  Wells  v.  Gir- 
ling, 1  Brod.  &  Bing.  447;  Caton  v. 
Shaw,  2  H.  &  G.  13;  Bac.  Abr.,  title 
Usury. 

4  Gower  v.  Carter,  3  Iowa,  244,  66 
Am.  Dec.  71;  Shuck  v.  Wight,  1  G. 
Greene,  128;  Wilson  v.  Dean,  10  Iowa, 
432;  Wight  v.  Shuck,  Morris,  425. 


§  2sn.] 


STIPULATED    DAMAGES. 


743 


usury.i  jlo  damages  for  the  mere  non-payment  of  money  can 
be  so  liquidated  between  the  parties  as  to  evade  that  statute.'' 
An  a^^^reement  in  a  note  and  mortgage  to  pay  an  increased  rate 
of  interest  in  case  of  default  in  payment  of  any  instalment  of 
interest,  insurance  premium,  taxes  or  the  principal,  is  in  the 
nature  of  a  penalty,  and  will  not  be  enforced  in  a  foreclosure 
suit.* 

Where  there  are  special  circumstances  which  require  punctu- 
ality in  the  payment  of  moneys  when  due  or  which  cause 
special  loss,  or  necessitate  a  particular  OTitJay  in  consequenco 
of  default,  a  stipulated  forfeiture  on  that  default  equity  has 
refused  to  relieve  against,  and  stipulated  compensations  there- 
fur  have  been  sanctioned.  Thus  costs  and  expenses  of  making 
collection,  including  attorney's  fees,  are  sometimes  imposed  on 
the  debtor  by  the  terms  of  the  contract,  and  when  reasonable 
in  amount  have  been  sustained  as  valid  in  some  states,*  but  held 
void  as  against  public  policy  in  others."'*  • 


1  Smith  V.  Whitaker,  23  III.  367; 
Downey  v.  Beach,  78  111.  53;  Funk  v. 
Buck,  91  111.  575. 

2  0rr  V.  Churchill,  1  H.  Black.  227; 
Gray  v.  Crosby,  18  Johns.  219. 

3Krutz  V.  Robbins,  12  Wash.  7,  40 
Pac.  Rep.  415,  50  Am.  St.  871. 

4  Peyser  v.  Cole,  11  Ore.  39,  50  Am. 
Rep.  451,  4  Pac.  Rep.  520;  Imler  v. 
Imler,  94  Pa.  372;  Darly  v.  Maitland, 
88  id.  384,  32  Am.  Rep.  457  (the 
amount  provided  as  attorney's  fee  in 
a  mortgage  is  rather  in  the  nature  of 
a  penalty  than  stipulated  damages, 
and  may  be  reduced);  Miner  v.  Paris 
Exchange  Bank,  53  Tex.  559;  Parham 
V,  Pulliam,  5  Cold.  497;  Smith  v.  Sil- 
vers, 32  Ind.  321:  First  Nat.  Bank  v. 
Larsen,  60  Wis.  206,  50  Am.  Rep.  365, 
19  N.  W.  Rep.  67  (the  stipulation  is 
not  conclusive  as  to  the  amount  to 
be  recovered);  Robinson  v.  Loomis, 
51  Pa.  78;  Huling  v.  Drexell,  7  Watts, 
126;  Fitzsimons  v.  Baum,  44  Pa.  32; 
M'Al lister's  Appeal,  59  Pa.  204;  Tall- 
man  V.  Truesdell,  3  Wis.  443;  Mosher 
V.  Chapin,  12  id.  453;  Billingsley  v. 
Dean,  11  Ind.  331;  Kuhn  v.  Myers, 


37  Iowa,  351;  Nelson  v.  Everett,  29 
id.  184;  Williams  v.  Meeker,  id.  292; 
Wilson  S.  M.  Co.  v.  Moreno,  6  Sawyer, 
35;  Bank  of  British  North  America 
V.  Ellis,  id.  90;  Merck  v.  American 
Freehold  L.  M.  Co.,  79  Ga.  213,  233; 
Reed  v.  Miller.  1  Wash.  426.  See  g  564^ 

*  State  V.  Taylor,  10  Oiiio,  308;  Shel- 
ton  V.  Gill,  11  id.  417;  Witherspoon  v. 
Musselman,  14  Bush,  214;  Bullock  v. 
Taylor.  39  Mich.  137,  33  Am.  Rep.  356; 
Dow  V.  Updike,  11  Neb.  95,  7  N.  W. 
Rep.  857.     See  §  504. 

In  Foote  v.  Sprague,  13  Kan.  155,  a 
stipulation  in  a  mortgage  for  $50  as 
liquidated  damages  for  its  foreclosure 
was  held  void.  Valentine,  J.,  said: 
"The  stipulation  in  the  mortgage  in 
this  case  ...  is  for  a  certain 
sum  to  be  paid  by  the  debtor  as 
liquidated  damages  over  and  above 
tiie  debt  and  interest  and  all  legiti- 
mate costs.  Now  what  was  the 
term  *  liquidated  damages '  in  tills 
mortgage  designed  to  cover  ?  If  it 
was  designed  to  cover  attorney  fees, 
why  did  not  the  parties  say  so  in  the 
mortgage?    If  it  was  designed   to 


744 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  287. 


[405]  §  287.  Same  subject.  Where  there  is  a  stipulation  in 
public  undertakings  that  shareholders,  on  non-payment  of  calls, 
shall  forfeit  their  shares,  equity,  upon  grounds  of  public  policy 
and  from  the  necessity  of  punctuality  in  payment  in  such 
cases,  will  refuse  to  interfere  and  grant  relief  from  forfeiture.' 
Sir  William  Grant,  M.  R.,"'^  refused  to  relieve  against  a  forfeit- 
ure under  a  by-law  of  an  incorporated  company  which  pro- 
vided that  the  members  receiving  notice  of  default  in  paying  a 
call  should  incur  a  forfeiture  by  non-payment  ten  days  after, 
although  the  non-payment  arose  from  ignorance  of  the  call, 
absence  from  the  town  where  the  notice  was  sent  and  other 
accidental  circumstances.  He  said:  "This  bill  is  founded  on 
forfeiture,  and  upon  the  ground  that  the  plaintiflf  did  not  con- 
sider himself  as  a  partner,  and  offering  compensation,  and 
praying  to  be  relieved  from  the  forfeiture.  The  parties  might 
contract  upon  any  terms  they  thought  fit,  and  might  impose 


cover  any  legitimate  cliarge  or  ex- 
pense, why  did  they  not  say  so?  .  .  . 
If  the  damages  were  for  usurious 
interest  they  could  not  be  allowed. 
And  would  it  be  proper  to  allow  an 
issue  to  be  framed  and  a  trial  had  to 
determine  whether  these  '  liquidated 
damages '  were  intended  to  cover 
some  legitimate  charge  or  expense, 
or  to  cover  usurious  interest  ?  " 

In  Johnsons  v.  Anderson,  3  N.  J.  L. 
983,  the  defendant  was  indebted  to 
the  plaintiff  in  the  sum  of  $500;  and 
the  plaintiff  was  indebted  to  two 
other  persons  in  the  sum  of  $100, 
which  would  come  due  May  1,  1810. 
In  consequence  of  plaintiff  being  in 
danger  of  suit  and  costs  for  these 
debts,  the  defendant  promised  that 
he  would  pay  the  debt  due  from  him 
to  the  plaintiff  to  enable  him  to  dis- 
charge in  time  these  debts,  and  in 
case  of  failure  to  do  so,  and  the 
plaintiff  should  be  sued  and  put  to 
costs  and  expenses,  the  defendant 
would  pay  them.  The  defendant 
failed  to  pay  the  money  at  the  time, 
whereupon  the  plaintiff  was  sued  in 
two  actions  and  put  to  $80  costs,  for 


recovery  of  which  from  the  defend- 
ant this  suit  was  brought.  It  was 
held  that  the  plaintiff  was  not  en- 
titled to  recover.  The  court  say, 
"  there  is  no  Jegal  consideration  on 
which  the  promise  can  attach.  If 
this  was  law,  usury  and  oppression 
would  take  a  wide  range.  The  cred- 
itor in  most  cases  suffers  an  incon- 
venience in  the  case  of  a  want  of 
punctuality  in  his  debtor;  he  cannot, 
however,  recover  more  than  the 
debt,  interest  and  costs;  nor  will  a 
promise  to  pay  more  help  his  case." 
A.  being  indebted  to  B.  and  not  be- 
ing able  to  raise  the  money  himself 
directed  B.  to  raise  it  and  promised 
to  pay  him  whatever  he  had  to  pay 
for  it.  B.  raised  it  at  an  exorbitant 
interest  for  three  years;  held,  that 
B.  was  the  mere  agent  of  A.  in  rais- 
ing the  loan  and  was  entitled  to  re- 
cover the  whole  amount  paid  by  B. 
for  the  use  of  the  money.  Shirley  v. 
Spencer,  9  111.  583. 

1  3  Lead.  Cas.  in  Eq.  917. 

2  Sparks  v.  Liverpool  Water  Works, 
13  Ves.  428. 


§  287.]  8TIPDLATED    DAMAGES.  745 

terms  as  arbitrary  as  they  pleased.  It  is  essential  to  such 
transactions.  This  struck  me  as  not  like  the  case  of  individ- 
uals. If  this  species  of  equity  is  open  to  parties  enga^-ed  in 
those  undertakings,  they  could  not  be  carried  on.  It  is  essen- 
tial that  the  money  should  be  paid,  and  that  they  should  [4%] 
know  what  is  their  situation.  Interest  is  not  an  adequate 
compensation,  even  among  individuals,  much  less  in  these  un- 
dertakings. In  particular  cases  interest  might  be  a  compen- 
sation, but  in  a  majority  of  cases  it  is  no  compensation  from 
the  uncertamty  in  which  they  may  be  left.  The  effect  is  the 
same  whether  the  money  has  been  paid  or  not.  They  know 
the  consequence;  the  party  making  default  is  no  longer  a 
member;  but  if  a  party  can,  in  equity,  enter  into  a  discussion 
of  the  circumstances  each  may  bring  his  suit.  They  must  re- 
main a  considerable  time  to  see  whether  a  suit  will  be  be^un, 
and  before  the  suit  can  be  decided.  They  do  not  know  when 
any  member  will  sue.  If  a  bill  is  to  be  permitted  there  can- 
not be  an}'-  certainty  that  every  member  who  has  made  default 
may  not  file  a  bill.  Can  the  court  impose  a  limitation  of  the 
period  when  bills  may  be  filed  ?  If  the  court  ever  began  to 
deal  with  these  cases  the  number  must  be  infinite.  This  is  the 
mode  which  a  party  has  to  withdraw  from  a  losing  concern. 
AVhy  is  not  this  equity  open  to  contracts  for  the  government 
loans?  Why  may  not  they  come  here  to  be  relieved,  when 
they  have  failed  in  making  their  deposit  ?  And  if  they  could 
have  their  relief,  how  could  the  government  go  on  ?  It  would 
be  just  as  difficult  for  these  undertakings  to  go  on.  If  com- 
pensation cannot  be  effectually  made,  it  ought  not  to  be  at- 
tempted. It  would  be  hazardous  to  entertain  such  a  bill. 
Accident  here  is  only  the  want  of  precaution,"* 

1  See  Georgia  Land  and  Cotton  Co.  paid  because  the  sliareholder  had 
V.  Flint,  35  Ga,  226;  Huglies  v.  died,  and  no  administrator  had  been 
Fisher,  Walk.  (Miss.)  516;  Fowler  v,  appointed  before  the  time  for  pay- 
Word,  Harp.  372.  rnent   had   fully    elapsed.     Glass  v. 

Equity,  says  Mr.  Cook  in  vol.  1  of  Hope,  16  Grant  (Up.  Can.  Ch.)  420. 

his  treatise  on  Corporations  (3d  ed.),  Cf.    Walker  v.  Ogden,  1  Biss.  287.  29 

§  134,  will  sometimes  set  aside  a  for-  Fed.   Cas.    41.    .    .    ,     But  it  seems 

feiture  on  purely  equitable  grounds;  that  the  weight  of  authority  is  to  tlio 

as,  for  example,  where  a  forfeiture  etlect  that    a   forfeiture  of  shares, 

was  de  lared    for   non-payment  of  lawful  and  regular,  for  non-payment 

•calls,  which,  it  was  shown,  were  not  of  assessments,  is  one  of  those  for- 


r4G 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  287.- 


A  sum  greater  than  interest  may  be  fixed  by  the  parties  a»- 
compensation  for  paying  a  debt  at  an  earlier  time  or  at  a. 
different  place.'  It  is  obvious  that  the  omission  to  pay  money 
pursuant  to  agreement  in  particular  situations,  or  for  specific 
purposes  which  would  otherwise  miscarry,  followed  by  loss 
or  injury  of  uncertain  amount,  and  for  which  interest  would 
be  no  adequate  compensation,  may  be  the  subject  of  a  differ- 
ent measure  of  reparation  by  agreement,  as  it  often  is  without 
such  asreement.^ 


feitures  from  which  equity  will  not 
afford  relief  except  in  very  excep- 
tional cases.  Sparks  v.  Liverpool 
Water  Works,  13  Ves.  428;  Prender- 
gast  V.  Turner,  1  Y.  &  C.  98;  Ger- 
raantown,  etc.  R.  v.  Fitler,  60  Pa. 
124;  Clark  v.  Barnard,  2  Sup.  Ct. 
Rep.  878,  108  U.  S.  436,  4.56.  Equity 
will  not  relieve  where,  on  the  reor- 
ganization of  a  company,  old  stock- 
holders fail  to  use  their  options  for 
securing  new  shares  before  the  expi- 
ration of  a  fixed  time  limit.  Vatable 
V.  New  York,  etc.  R.  Co.,  96  N.  Y.  49, 
57.  Equity  will  not  relieve  from 
such  forfeiture,  because  to  do  so 
would,  it  is  said,  be  in  contravention 
of  the  direct  expression  of  the  legis- 
lative will.  Small  v.  Herkimer 
Manuf.  Co.,  2  N.  Y.  330.  340.  Neither 
can  a  shareholder  have  a  forfeiture 
set  aside  merely  because  the  calls 
which  he  refused  to  pay  were  for 
the  purpose  of  paying  debts  which 
the  company  would  not  have  owed 
but  for  the  previous  misappropria- 
tion of  the  corporate  funds  by  the 
trustees.  Marshall  v.  Golden  Fleece, 
etc.  Co.,  16  Nev.  1.56,  179;  Weeks  v. 
Silver  Islet,  etc.  Co.,  55  N.  Y.  Super, 
Ct.  1;  Taylor  v.  North  Star,  etc.  Co., 
79  Cal.  285,  21  Pac.  Rep.  753. 

1  Plummer  v.  McKean,  2  Stew.  423; 
Jordan  v.  Lewis,  id.  426;  Thompson 
v.  Hudson,  L.  R  4  Eng.  &  Ir.  App.  1, 
reversing  L.  R  2  Eq.  612;  Lord  Ash- 
town  V.  White,  11  Irish  L.  400.  See 
United  States  v.  Gurney,  4  Cranch, 
333. 


2Woodbridge  v.  Bropley,  2  West. 
L.  Monthly,  274;  Hardee  v.  Howard. 
33  Ga.  533,  83  Am.  Dec.  176;  Sutton 
V.  Howard,  33  Ga.  536.     See  §  76. 

In  Parfitt  v.  Chambre,  L  R.  15 
Eq.  36,  an  action  at  law  was  by  con- 
sent referred,  and  the  arbitrator 
awarded  and  ordered  that  the  de- 
fendant should  pay  to  the  plaintiff 
in  the  action  an  annuity  of  £1,200  a 
year  for  life,  and  that  in  order  to 
secure  the  annuity  the  defendant 
should,  within  two  months,  purchase 
and  convey  to  trustees  on  behalf  of 
the  plaintiff  a  government  annuity 
of  £1,200  a  year,  and  that  if  for  any 
reason  the  annuity  should  not  have 
been  legally  secured  before  the  last 
day  of  the  second  month  from  the 
date  of  the  award,  then,  in  addition 
to  the  annuity,  a  further  sum  of  £100 
should  become  due  and  payable  by 
the  defendant  to  the  plaintiff  on  the 
last  day  of  the  second  month,  and  a 
like  sum  of  £100  on  the  last  day  of 
each  successive  month,  until  such 
annuity  should  be  legally  secured; 
and  the  award  added:  "These 
monthly  payments  are  to  be  consid- 
ered as  additional  to  the  payments 
due  in  respect  of  the  annuity,  and  as 
a  penalty  for  delay  in  the  legal  set- 
tlement of  the  same."  No  annuity 
as  directed  by  the  award  having 
been  purchased,  the  plaintiff  having 
been  adjudicated  a  bankrupt,  the  de- 
fendant having  died,  and  the  £1,200 
a  year  and  £100  a  month  having 
been  regularly  paid  to  the  plaintiff 


§  288.]  STIPULATED    DAMAGES.  747 

A  contract  between  a  borrower  and  a  loan  association  that 
the  gross  amount  of  the  stock  dues  without  any  rebate  or  dis- 
count for  the  time  they  had  run  might  be  recovered  as  liqui- 
dated damages  in  case  of  default  in  complying  with  the  terms 
of  the  mortgage,  is  void,  because  the  breach  of  the  mortgage 
is  merely  the  breach  of  a  contract  for  the  payment  of  money, 
the  damages  for  which  are  easily  ascertained. •  Where  thoro 
is  a  breach  of  a  contract  to  deliver  property  in  exchange  or 
pay  its  agreed  value,  the  obligation  becomes  one  for  the  pay- 
ment of  money,  and  no  question  as  between  penalty  and  li<|ui- 
dated  damages  arises.' 

The  duty  of  a  bank  to  pay  the  checks,  drafts  and  or-  [407] 
ders  of  a  d(>positor,  so  long  as  it  has  in  its  possession  funds  of 
his  sufficient  to  do  so,  and  which  are  not  incumbered  by  any 
earlier  lien  in  its  favor,  is  but  a  legal  obligation  to  pay  money. 
It  is  implied  from  the  usual  course  of  business,  if  it  is  not  ex- 
press; and  it  usually  is  not.'  The  customer  may  draw  out  his 
funds  in  such  parcels  as  he  may  see  fit,  both  as  regards  num- 
ber and  amount.  The  rule  of  law  forbidding  a  creditor  to 
split  up  his  demand  does  not  affect  this  principle,  which  is 
based  upon  a  custom  of  the  banking  business.^  This  duty  of 
the  bank  is  of  such  importance  that  if  it  refuses  without  suf- 
ficient justification  to  pay  the  check  of  the  customer,  lie  has 
his  action,  and  may  recover  substantial  damages,  though  no 
actual  loss  or  injury  be  shown,  and  ma}'  recover  for  such  ap- 
proximate loss  or  injury  as  may  be  proven.^ 

§  288.  Large  sum  to  secure  payment  of  a  smaller.  Where 
a  large  sum,  which  is  not  the  actual  debt,  is  agreed  to  be  paid 

and  her  assigns  up  to  the  defendant's  Loan  Ass'n,  63  Minn.  358,  65  N.  W. 

death,  but  not  since,  upon  claim  by  Rep.  645. 

the  assignees  to  prove  against  the  ^  First  Nat.  Bank  v.  Lynch,  6  Tex. 
defendant's  estate  for  the  payment  Civ.  App.  590,  25  S.  W.  Rep.  1042. 
due  in  respect  of  the  annuity,  and  of  3  j)ownes  v.  Pha?nix  Bank,  6  Hill, 
the  monthly  payments  accrued  due  297;  Marzetti  v.  Williams,  1  B.  &  Ad. 
since  his  death:  Held,  that  the  £100  415;  Watson  v.  Phoenix  Bank,  8  ^let. 
per  month,  though  called  a  penalty,  217,  41  Am.  Dec.  500;  Morse  on  Bank- 
was  not  to  be  regarded  strictly  as  ing,  29. 

such,  and  that  the  assignees  were  en-  *ld.:  Munn    v.    Burch,  25  III.  35; 

titled  to  prove  for  the  arrears  both  of  Chicago,  etc.  Ins.  Co.  v.  Stanford,  23 

the  annuity  and  the  £100  a  month."  111.  168,  81  Am.  Dec.  270. 

1  Maudlin  v.  American  Savings  &  sjjollin  v.   Steward,  14  C  R  595; 

Morse  on  Banking,  453;  g  77. 


74S 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.       [§  288. 


[198]  in  case  of  a  default  in  the  payment  of  a  less  sum,  which 
is  the  real  debt,  such  larger  sum  is  always  a  penalty.^  This 
rule  has  often  been  loosely  stated,  and  its  true  scope  and  oper- 
ation overlooked  by  following  too  rigidly  the  letter.  A  con- 
tract may  be  framed  so  as  apparently  to  secure  the  payment 
of  a  less  sura  b}^  a  greater,  when  it  is  in  substance  but  an  alter- 
native or  conditional  agreement  to  accept  a  stipulated  part  in 
full  satisfaction  if  paid  at  a  particular  time  or  in  a  specified 
manner.^     A  demise  of  land   was  made  at  a  yearly  rent  of 


1  Cimarron  Land  Co.  v.  Barton,  51 
Kan.  554,83  Pac.  Rep.  317;  Schmieder 
V.  Kingsley,  6  N.  Y.  Misc.  107.  26 
N.  Y.  Supp.  31;  Goodj'ear  Shoe  Ma- 
chinery Co.  V.  Selz,  157  111.  186,  41 
N.  E.  Rep.  625;  Kimball  v.  Doggett, 
63  111.  App.  528;  Turrell  v.  Archer,  1 
Mart.  Ch.  103;  Fisk  v.  Gray.  11  Allen, 
132;  Walsh  v.  Curtis.  73  Minn.  254,  76 
N.  W.  Rep.  52;  Krutz  v.  Robbins,  12 
Wash.  7,  40  Pac.  Rep.  415,  50  Am.  St. 
871;  Bradstreet  v.  Baker,  14  K  I.  546; 
Bryton  v.  Marston,  33  111.  App.  211; 
Clements  v.  Railroad  Co.,  132  Pa.  445, 
19  Atl.  Rep.  274,  276:  Astley  v.  Wel- 
don,  2  B.  &  P.  346;  Taul  v.  Everet,  4 
J.  J.  Marsh.  10;  Bagley  v.  Peddle,  5 
Sandf.  192;  Beale  v.  Hayes,  id.  640; 
Cairnes  v.  Knight,  17  Ohio  St.  69; 
Morris  v.  McCoy,  7  Nev.  399;  Tiernan 
V.  Hinman,  16  111.  400:  Fitzpa trick  v. 
Cottingham,  14  Wi&  219;  Haldeman 
V.  Jennings,  14  Ark.  329;  Mead  v. 
Wheeler,  13  N.  H.  353;  Chamberlain 
V.  Bagley,  11  id.  234;  Kerable  v 
Farren,  6  Bing.  141;  Mason  v.  Callen- 
der,  2  Minn.  350.  72  Am.  Dec.  102; 
Niver  v.  Rossman,  18  Barb.  50;  Kuhn 
V.  Myers,  37  Iowa,  351;  Davis  v. 
Hendrie,  1  Mont  499;  Wallis  v.  Car- 
penter. 13  Allen,  19;  Gray  v.  Crosby, 
18  Johns.  219;  Brockway  v.  Clark,  6 
Ohio,  45;  Brevard  v.  Wimberly,  89 
Mo.  App.  331;  Morrill  v.  Weeks,  70 
N.  H.  178,  46  Atl.  Rep.  32. 

-  In  Thompson  v.  Hudson.  L.  R.  2 
Eq.  612,  a  creditor  had  agreed  with 
his  debtor  to  remit  part  of  his  debt 
upon  having  a  mortgage  to  secure 


the  payment  of  the  balance  in  two 
years,  without  prejudice  to  his  right 
to  recover  the  whole  debt  if  such 
balance  was  not  paid  within  that 
time.  The  debtor  executed  a  mort- 
gage for  such  balance,  containing  a 
proviso  that  if  the  mortgage  debt  be 
not  paid  within  two  years,  the  whole 
of  the  original  should  be  recovered; 
and  it  was  held  that  the  proviso  was 
of  the  nature  of  a  penalty  from  which 
the  mortgagor  was  entitled  to  be  re- 
lieved in  equity;  that  the  mortgagee 
could  only  recover  the  smaller  sum. 
But  on  appeal  to  the  house  of  lords 
(L.  R.  4  Eng.  &  Ir.  App.  1),  this  decis- 
ion was  reversed;  and  it  was  held  if 
the  larger  sum  is  actually  due,  and 
the  creditor  agrees  to  take  a  lesser 
sum,  provided  that  sum  is  secured  in 
a  certain  way  and  paid  on  a  certain 
day,  and  that,  if  these  stipulations 
be  not  performed,  he  shall  be  entitled 
to  recover  the  whole  of  the  original 
debt,  such  remitter  to  such  original 
debt  does  not  constitute  a  penalty, 
and  a  court  of  equity  will  not  relieve 
against  it.  Mayne  on  Dam.  101. 
Lord  Westbury  said  that  any  plain 
man  walking  the  streets  of  London 
would  have  said  that  it  was  in  ac- 
cordance with  common  sense;  and 
if  he  were  told  that  it  would  be  requi- 
site to  go  to  three  tribunals  before 
getting  it  accepted,  would  have  held 
up  his  hands  with  astonishment  at 
the  state  of  the  law.  Carter  v.  Cor- 
ley,  23  Ala.  6ia 


§  2S8.]  STIPULATED    DAMAGES. 


740 


£187,  with  the  usual  clauses  for  distress  and  entry  on  non-puv- 
ment,  and  an  agreement  that  so  long  as  the  lessee  porlonnc'd 
the  covenant  the  lessor  would  be  content  with  the  yearly  rent 
of  £93,  payable  on  the  same  day  as  the  first  reserved  [4M9] 
rent.  It  was  held  that  tlie  larger  rent  was  not  penal;  that 
ejectment  could  be  maintained  on  its  non-payment.^ 

Such  cases  must  be  determined  on  the  true  intent  of  tiie 
transaction.  If  the  larger  sum  is  in  truth  the  actual  price  or 
debt,  and  the  smaller  only  agreed  upon  as  a  satisfaction  if  paid 
under  stated  conditions,  the  omission  to  comply  with  the 
terms  of  payment  in  the  easier  mode  will  preserve  to  the 
creditor  the  right  to  exact  the  larger  sum.^  A  case  in  Wisconsin 
was  correctly  decided  on  this  principle.  A  bond  was  mad.,-  in 
a  penalty  of  $900,  conditioned  that  if  the  obligor  should  pay 
to  the  obligee  one  year  after  the  death  of  her  husband,  and  an- 
nually thereafter  during  her  natural  life,  the  sum  of  the  interest 
on  $464  at  the  rate  of  seven  per  cent,  per  annum,  the  bond 
should  be  void,  otherwise  of  force;  and  it  was  also  provided  in 
the  condition  that  should  any  default  be  made  in  the  payment 
of  the  said  interest  or  any  part  thereof  on  any  day  wherein 
the  same  was  made  payable  by  the  bond,  and  the  same  should 
remain  unpaid  and  in  arrear  for  thirty  days,  then  and  in  tliat 
case  the  principal  sura  of  $464,  with  arrearages  of  interest 
thereon,  should,  at  the  option  of  the  obligee,  become  immedi- 
ately payable;  and  that  if  the  payment  of  said  interest  were 
promptly  made,  then  at  the  obligee's  death  the  debt  and  the 
mortgage  given  to  secure  the  bond  should  cease  and  be  null. 
A  default  occurred  in  the  payment  of  the  annuities  of  interest; 
and  the  obligee  gave  notice  of  her  option  to  consider  the  prin- 
cipal, with  the  arrears  of  interest,  presently  due  and  payable. 
The  question  was  what  sum  was  due  on  the  bond  which  the 
mortgage  in  suit  was  given  to  secure.  A  decree  had  been 
made  adopting  the  sum  of  $464,  mentioned  in  the  condition  as 
the  principal  that  became  due  on  its  breach,  and  for  that  sum, 
with  the  delinquent  interest,  judgment  was  rendered.  The  de- 
fendant contended  that  the  sum  the  plaintiff  was  entitled  to 
recover  was  not  $464,  but  only  the  value  of  a  life  annuity  of 

1  Lord  Ashtown  v.  White,  11  Irish        2  Waggoner  v.  Cox,  4  Ohio  St  539, 
L.  400;  McNitt  v.  Clark,  7  Johns.  465.     543,  quoting  the  text. 


750  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  28S. 

$32.48  at  the  time  the  plaintiff  declared  her  option;  at  which 
time  she  was  fifty-two  or  fifty-three  years  of  age.  Such  value, 
computed  by  the  Northampton  tables,  was  then  a  little  less 
than  $300.  Lyon,  J.,  said :  "  The  covenant  was  voluntarily 
[500]  made  by  the  obligor,  and,  so  far  as  appears,  he  received 
therefor  full  value  for  the  sum  which  he  agreed  to  pay  at  the 
option  of  the  obligee  in  case  of  default.  The  most  that  can  be 
said  against  the  justice  of  it  is  that  the  damages  would  be  the 
same  if  default  were  made  and  the  option  declared  at  a  much 
later  period  in  the  life  of  the  obligee.  But  that  is  a  contingency 
which  it  may  be  fairly  presumed  the  obligor  took  into  consider- 
ation when  he  made  his  covenant;  and  it  was  always  in  his 
power  to  prevent  the  happening  of  such  contingency  by  paying 
the  annuity  which  he  covenanted  to  pay."  The  judge  added: 
"  It  follows  that  the  sum  named  in  the  bond  is  to  be  regarded 
as  stipulated  damages  unless  the  gross  value  of  the  life  annuity 
can  be  ascertained  by  some  exact  pecuniary  standard."  He 
discusses  this  question  and  arrives  at  the  conclusion  that  the 
value  is  uncertain.  It  may  be  observed  that  that  method  of 
determining  whether  the  sum  mentioned  in  the  condition  was 
penalty  or  not  would  be  very  proper  if  it  be  assumed  that  the 
annuity  was  the  primary  object  of  the  arrangement,  and  that 
no  sum  was  originally  fixed  which  represented  the  value  of  the 
defendant's  undertaking,  or  of  the  consideration  received;  and 
that  the  gross  sum  was  stipulated  as  the  valuation  put  by  the 
parties  on  the  annuity;  and  equally  so  if  the  case  was  that  $464 
was  a  sum  arising  in  the  transaction  which  they  agreed  might 
be  withheld  so  long  as  the  interest  on  it  was  promptly  paid, 
and  with  the  further  benefit  that  the  debt  should  cease  at  the 
creditor's  death,  otherwise  to  be  paid  at  once;  then  the  case 
stands  on  the  principle  of  Thompson  v.  Hudson,*  and  the  con- 
ditional method  of  discharge  not  having  been  strictly  followed, 
the  dispensation  depending  on  it  failed,  and  the  original  debt 
remained  unsatisfied  and  absolute.^ 


IL.  R  2  Eq.  612,  stated  supra.  brought  to  foreclose  a  mortgage  made 

2Berrinkott  V.  Traphagen,  39  Wis.  to  secure  a  payment  of   this  note: 

219.  "For  value  received,  I  promise  to 

Longworth  v,  Askren.  15  Ohio  St.  pay  N.   L.,  or  order,  one  thousand 

370,  does  not  appear  to  be  consistent  dollars,  with  interest  yearly  till  paid, 

-with   these  views.     An   action  was  and   payable    as    follows:     In   two, 


^§  288.] 


STIPULATED    DAMAGES. 


751 


Whore  a  large  sum  is  stipulated  to  be  paid  on  the  non-  [oOl] 
payment  of  a  less  amount  made  payable  by  the  same  instru- 
ment, the  former  is  prima  facie  a  penalty.  If  the  question  is 
to  bo  determined  by  construction  of  the  instrument  alone  it 


three,  four,  five,  six,  seven, eight,  nine 
and  ten  years,  equal  instahnents, 
with  interest  yearly,  as  aforesaid, 
being  the  contract  price  of  a  lot.  But 
if  each  and  every  payment  is  made 
punctually  as  due.  or  before  due,  or 
v.'ithin  ten  days  after  each  is  due,  as 
an  inducement  to  punctuality,  two 
hundred  dollars  of  the  amount  will 
be  released.  And  eight  hundred  dol- 
lars and  its  yearly  interest  accepted 
in  full  payment,  but  not  otherwise." 
Before  the  ten  years  expired  full 
$800  and  annual  interest  on  that  sum 
had  been  paid;  but  the  payments  had 
not  been  made  according  to  the 
terms  of  the  contract  as  to  time  and 
amount.  The  court  held  that  the 
sum  of  $1,000  was  penalty,  and  $800 
the  actual  debt  according  to  the  face 
of  the  note.  White,  J.,  said:  "This 
case  presents  the  single  legal  ques- 
tion: whether,  upon  the  true  con- 
struction of  the  mortgage  note  sued 
on,  the  one  thousand  dollars  therein 
mentioned  is  to  be  regarded  as  a  pen- 
alty. If  that  be  its  character,  the 
judgment  of  thesuperiorcourtshould 
be  affirmed;  otherwise,  it  should  be 
reversed.  This  is  not  the  case  of  an 
agreement  for  the  composition  of  a 
subsisting,  independent  indebtedness. 
The  instrument  in  question  creates 
the  only  debt  on  which  the  plaintiff 
relies  for  a  recovery.  Nor  can  the 
claim  made  by  the  plaintiff's  counsel 
be  supported,  that  the  stipulation  for 
the  discharge  of  the  obligation  by 
the  punctual  payment  of  $800  in  in- 
stalments is  a  privilege  given  to  the 
payer,  and  inserted  for  his  exclusive 
benefit.  This  claim  is  based  on  the 
assumption  that  the  $1,000  was  the 
sole  consideration  for  the  lot.  and 
■consequently  is  the  amount  of  the 


actual  debt.  But  it  is  as  fair  to  pre- 
sume that  the  omiss. on  of  the  stipu- 
lation in  regard  to  the  $-800  would 
have  defeated  the  sale  as  that  the  in- 
sertion of  the  $1,000  secured  it.  The 
transaction  was  the  sale  of  tiie  lot: 
and  the  instrument  in  question  con- 
tains the  terms  upon  which  it  was 
made.  All  the  stipulations  on  the 
part  of  the  Ricords  are  supported  by 
the  same  identical  consideration.  It 
is  not  to  be  presumed  that  the  sale 
would  iiave  been  concluded  had  any 
of  the  terms  actuallyagreed  to  been 
omitted;  and,  as  the  terms  of  the 
sale  were  satisfactory  to  the  parties, 
the  presumption  is  they  were  ac- 
quiesced in.  not  as  a  special  favor  to 
either,  but  for  the  mutual  benefit  of 
both.  Nor,  in  our  view,  does  the 
order  in  which  the  sums  are  stated 
change  their  character,  or  the  legal 
effect  of  the  instrument;  for  whether 
the  amount  to  be  paid  is  to  be  re- 
duced upon  compliance  with  the 
terms  of  payment,  or  to  be  increased 
as  a  default,  is  only  a  different  mode 
of  expressing  the  same  thing. 

"All  that  the  plaintiff,  at  the  time 
of  making  the  contract,  had  a  right 
to  expect  was  the  payment  of  $800, 
with  the  interest,  in  the  instalments 
and  at  the  times  stipulated.  These 
payments  Ricords  had  promised  to 
make  punctually'.  A  default  oc- 
curred; and  in  such  a  contract,  in 
our  opinion,  interest  is  to  be  regarded 
as  a  compensation  for  the  injury 
caused  by  the  delay.  All  beyond 
must  be  regarded  either  as  penalty 
or  liquidated  damages;  but  under 
neither  form  can  the  plaintiff  be  al- 
lowed to  recover  more  than  wliat  the 
law  deems  adequate  compensation 
for  the  breach. 


752 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  288, 


would  be  deemed  a  penalty.  May  the  real  transaction  be  in- 
vestigated and,  upon  proper  facts,  a  different  interpretation 
and  effect  be  given  to  the  agreement?  No  language  of  the 
contract  can  be  adopted  which  will  shelter  a  penalty  so  that 
[502]  inquiry  may  not  be  made  into  the  subject-matter  and 
surroundings  to  ascertain  if  it  be  such.  The  principle  is  often 
declared  in  terras  that  permits  inquiry  to  go  to  the  intrinsic 
nature  of  the  transaction;  and  a  large  sum  promised  as  a 
consequence  of  the  non-payment  of  a  small  one  will  be  held  a 
penalty  whatever  may  be  the  language  describing  it.'  "Wright, 
C.  J.,  said  in  an  Iowa  case:  "From  all,  however,  we  may  de- 
duce one  point  as  settled.  Whether  the  sum  mentioned  shall 
be  considered  as  a  penalty  or  as  liquidated  damages  is  a  ques- 
tion of  construction,  on  which  the  court  may  be  aided  by  cir- 
cumstances existing  extraneous  to  the  writing.  The  subject- 
matter  of  the  contract,  the  intention  of  the  parties,  as  well  as 
other  facts  and  circumstances  may  be  inquired  into,  although 


"  It  is  to  be  noted  that  the  only 
evidence  of  the  terms  of  the  sale  is 
what  appears  from  the  instrument 
itself.  There  is  nothing  to  show  that 
the  contract  for  the  purchase  of  the 
lot  was  originally  made,  in  fact,  at 
§1,000;  and  that  the  remission  of  the 
contract  price  to  §800  was  the  gratu- 
itous act  of  the  vendor.  If  the 
abatement  stood  on  this  footing,  it 
would  devolve  on  the  party  seeking 
its  benefit  to  show  that  he  had  com- 
plied with  the  conditions  upon  which 
it  was  offered." 

This  opinion  bases  the  right  of  the 
debtor  to  discharge  the  bond  by  pay- 
ment of  $800  on  its  being  reserved  in 
the  agreement  of  purchase;  it,  how- 
ever, concedes  that  it  was  equally  a 
part  of  the  contract  of  sale  that 
$1,000  should  be  paid  if  all  the  instal- 
ments should  not  be  punctually  paid. 
It  would  seem  to  be  a  reciprocal 
right  to  enforce  the  bond  according 
to  its  terms;  that  there  was  as  am  pie 
a  consideration  for  the  agreement  in 
either  alternative  as  in  the  cases  of 


Lord  Ashtown  v.  White,  supra,  and 
McNitt  V.  Clark,  7  Johns.  465. 

Longworth  v.  Askren,  supra,  is  ap- 
proved in  Goodyear  Shoe  Machinery 
Co.  v.  Selz,  158  111.  186.  41  N.  E.  Rep. 
625.  In  the  latter  case  a  contract  for 
the  monthly  rental  of  certain  pat- 
ented machines,  to  be  computed  on 
the  month's  manufacture  of  goods 
with  the  machines,  stipulated  that 
the  rental  should  be  due  on  the  first 
day  of  the  month  next  following, 
and  to  be  paid  within  one  month 
from  that  day,  and  that  if  the  rents 
due  on  the  first  day  of  any  month 
shall  be  paid  on  or  before  the  fif- 
teenth day  thereof  the  lessor  will 
grant  a  discount  of  fifty  per  cent.  It 
was  resolved  that  the  sum  to  be  com- 
puted, less  the  discount,  was  the  act- 
ual debt,  and  that  the  so-called 
discount  was  a  penalty. 

1  Bryton  v.  Marston,  33  111.  App. 
211;  Bagley  v.  Peddle,  5  Sandf.  192; 
Niver  v.  Rossman,  18  Barb.  55;  Mor- 
ris V.  McCoy,  7  Nev.  399. 


§  289.] 


STIPULATED    DAMAGES. 


the  words  are  to  be  taken  as  proved  exclusively  by  tbu  uui 

inrr"! 


ins: 


§  289.  Stipulations  where  damages  certain  and  easily 
proved.  On  general  principles,  an  agreement  to  pay  a  [50:{J 
fixed  sura  as  damages  for  non-performance  of  a  contract,  where 
the  loss  or  injury  might  without  it  be  easily  determin.Hl  by 
proof  of  market  values,  or  by  a  precise  pecuniary  standard,  is 
subject  to  nearly  the  same  criticism  as  a  contract  to  liquidate 
damages  for  non-payment  of  money.  There  are  no  pt-culiar 
reasons  why  a  stipulated  sum  should  be  treated  as  a  penalty 
for  exceeding  just  compensation  for  a  default  in  the  paym«.'nt 
of  money,  and  not  be  so  treated  in  case  of  a  different  agree- 
ment where  the  excess  is  capable  of  being  made  equally  mani- 
fest.2  In  money  contracts  any  rate  of  interest  not  prohibited 
by  statute  may  be  contracted  to  be  paid  as  interest  proper; 


1  Foley  V.  McKeegan,  4  Iowa,  1,  66 
Am.  Dec.  107;  Perkins  v.  Lyman,  11 
Mass.  76,6  Am.  Dec.  158;  Hodges  v. 
King,  7  Met.  583;  Dennis  v.  Cum- 
mins, 3  Johns.  Cas.  297,  2  Am.  Dec. 
160. 

In  Morris  v.  McCoy,  7  Nev.  399, 
Lewis,  C.  J.,  said:  "Although,  as  a 
general  rule,  it  is  acknowledged  that 
the  intention  of  the  parties  as  ex- 
pressed in  the  contract  should  be  en- 
forced, still,  it  is  clearly  ignored  in 
that  class  of  cases  where  the  parties 
stipulate  for  the  payment  of  a  large 
sum  of  money  as  damages  for  the 
non-payment  of  a  smaller  sum  at  a 
given  day.  In  such  cases,  it  is  said, 
no  matter  what  may  be  the  language 
of  the  parties,  the  large  sum  will  be 
deemed  a  penalty,  and  not  liquidated 
damages."  But  upon  an  exception 
to  the  exclusion  of  parol  testimony 
to  affect  the  question  where  the 
agreement  was  apparently  of  this 
nature,  and  such  extrinsic  evidence 
was  offered  to  rebut  the  inference 
that  the  larger  sum  was  a  penalty, 
the  learned  judge  said  "  that  was  not 
admissible,  because  there  was  no  am- 
biguity: and  it  must  be  supposed 
that  the  agreement  was  fully  em- 
Vou  1  —  48 


bodied  in  tlie  written  instrument.  1 
Greenlf.  Ev.,  g  275." 
2  Fisher  v.  Bid  well,  27  Conn.  36A 
Sec.  1670  of  the  Civil  Code  of  Cali- 
fornia pi'ovides  that  "every  contract 
by  which  the  amount  of  damage  to 
be  paid,  or  other  compensation  to  be 
made,  for  a  breach  of  an  obligation, 
is  determined  in  anticipation  thereof, 
is  to  that  extent  void,  except  as  ex- 
pressly provided  "  in  sec.  1071,  wliich 
says:  "The  parties  to  a  contract 
may  agree  therein  upon  an  amount 
which  shall  be  presumed  to  be  the 
amount  of  damage  sustained  by  a 
breach  thereof,  when,  from  the  nat- 
ure of  the  case,  it  would  be  imprac- 
ticable or  extremely  diflScult  to  fix 
the  actual  damage."  It  has  been 
ruled  under  these  provisions  that  a 
stipulation  by  a  building  contractor 
to  pay  tlie  owner  a  specified  sum  for 
each  day's  delay  in  completing  the 
building  is  not  of  itself  sufficient  to 
authorize  a  recovery.  Patent  Brick 
Co.  V.  Moore,  75  Cal.  205, 16  Pac.  Rep. 
890;  Long  Beach  City  School  Dis- 
trict V.  Dodge,  135  Cal.  401,  67  Pac. 
Rep.  499. 

There  is  no  difficulty  in  fixing  the 
actual  damage  wliicli  one  sustains 


754  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  289. 

that  is,  during  the  period  of  credit;  so  any  sura  may  be  con- 
tracted to  be  paid  for  property  or  services  in  a  contract  of 
purchase  or  hiring.  But  when  parties  contract  for  the  same 
thinff  in  advance  as  damao-es  for  a  considerable  excess  above 
the  customary  rate  of  interest,  or  the  market  value  of  prop- 
erty or  other  thing,  the  agreement  will  raise  the  inquiry 
whether  such  excessive  sum  was  intended  to  be  paid ;  or 
whether,  even  if  it  was,  it  is  not  a  penalty.  It  would  be  such, 
according  to  the  preponderance  of  authority,  if  not  intended 
to  be  paid  in  case  of  default,  and  if  not  fixed  on  the  basis  of 
compensation.^  In  such  cases  courts  generally  arrive  at  har- 
monious conclusions  by  diverse  modes  of  reasoning.  One  will 
say  the  sum  fixed  is  so  flagrantly  excessive  it  was  evidently 
not  the  intention  of  the  parties  that  it  should  be  paid  or  en- 
forced, and  therefore  it  is  a  penalty.  Another  will  say  the 
excess,  per  se,  makes  the  stated  sum  a  penalty,  and  the  inten- 
tion of  the  parties  is  simply  immaterial.  It  generally  occurs 
that  where  there  is  an  agreement  to  pay  a  gross  sum  in  the 
[504:]  event  of  the  non-performance  of  a  contract,  and  the  case 
is  such  that  a  jury  can  ascertain  with  reasonable  certainty  how 
much  damages  the  injured  party  has  actually  sustained  by  the 
non-performance,  courts  are  strongly  inclined  to  regard  the 
gross  sum  as  a  penalty,  and  not  as  liquidated  damages.^     If 

by  being  deprived  of  the  use  of  land  Co.,  16  Ohio  Ct.  Ct.  21,  64  Ohio  St. 

to  which  he  is  entitled.     Eva  v.  Mc-  361.    60    N.   E.    Rep.    563;    Seim    v. 

Mahon,  77  Cal.  467,  19  Pac.  Rep.  873.  Krause,  13  S.  D.  530,  83  N.  W.  Rep. 

Nor  in  ascertaining  the  damage  re-  583;  Schroeder  v.  California  Yukon 

suiting  from  the  breach  of  a  war-  Trading  Co.,  95  Fed.  Rep.  296;  Wil- 

ranty  of  the  fitness  of  a  harvesting  mington  Transportation  Co.  v.  O'Neil, 

machine.      Greenleaf     v.    Stockton  98  Cal.  1,  32  Pac  Rep.  705;  Willson 

Combined  Harvester  &  A.  Works,  78  v.  Baltimore.  83  Md.  203,  34  Atl.  Rep. 

Cal.  606,  21  Pac.  Rep.  369.  774,  55  Am.  St.  339;  Chaude  v.  Shep- 

iSee  Sun  Printing  &  Pub.  Ass'n  v.  ard,  122  N.  Y.  397,  25  N.  E.  Rep.  358; 

Moore,  183  U.  S.  642,  22  Sup.  Ct.  Rep.  March   v.    Allabough,    103   Pa.   335; 

240.  Brennan  v.  Clark,  45  N.  W.  Rep.  472, 

2  Carson  v.  Arvantes.  10  Colo.  App.  29  Neb.  385;  Lansing  v.  Dodd,  45  N. 

382,  50  Pac.  Rep.  1080;  Smith  v.  New-  J.    L.    525;  Bradstreet   v.   Baker,    14 

ell.  37  Fla.  147,  20  So.  Rep.  249;  Si-  R.  L  546;  Davis  v.  United  States,  17 

mon  V.  Lanius,  9  Ky.  L.  Rep.  59;  Hill  Ct.   of  Cls.   201;    Spear   v.   Smith,   1 

V.  Wertheinier-Swarts  Shoe  Co.,  150  Denio,  464;  Dennis   v.  Cummins,  3 

Mo.  483,  51  S.  W.  Rep.  702;  Connelly  Johns.   Cas.    297.   2    Am.    Dec.    160; 

V.  Priest,   72   Mo.    App.    673;    Knox  Streeter  v.  Rush,  25  Cal.  67;  Bright 

Rock  Blasting  Co.  v.  Grafton  Stone  v.  Rowland,  3  How.  (Mi.ss.)  398;  Sco- 


§  2S9.] 


STIPULATED    DAMAGES. 


the  intention,  however,  is  clear  to  liquidate  damages,  and  the 
amount  is  either  not  greatly  above  or  below  the  sum  which 
would  otherwise  be  recoverable;  or,  if  above,  was  fixed  spe- 
cially to  cover  contemplated  consequential  losses,  not  provable 
under  legal  rules,  and  is  not  an  unreasonable  provision  there- 
for, the  sum  fixed  may  be  sustained  as  liquidated  damages.* 
But  if  the  intention  be  doubtful,  or  the  amount  materially 
varies  from  a  just  estimate  of  compensation,  the  stated  sum  will 
be  considered  a  penalty .^ 


field  V.  Tompkins,  95  111.  190,  35  Am. 
Rep.  160;  In  re  Newman,  4  Ch.  Div. 
724:  Mansur  &  T.  Implement  Co.  v. 
Tissier  Arms  &  H.  Co.,  —  Ala.  — , 
33  So.  Rep.  818. 

In  Spencer  v.  Tilden,  5  Cow.  144, 
the  defendant  had  agreed  in  writing 
not  under  seal,  for  value  received,  to 
pay  $360,  or  twelve  cows  and  calves, 
"to  be  paid  or  delivered  at  a  place 
mentioned,  in  four  years.  It  was  held 
that  the  value  of  the  consideration, 
and  of  the  cows  and  calves,  might 
be  inquired  into  to  see  whether  the 
sum  expressed  was  intended  by  the 
parties  as  penalty  or  liquidated  dam- 
ages; and  it  appearing  that  that 
sum  was  much  beyond  the  value  of 
either,  it  was  considered  in  the  nat- 
ui'e  of  a  penalty,  and  the  plaintiff's 
recovery  was  confined  to  the  value 
of  the  cows  and  calves.  See  note  at 
end  of  the  case. 

1  May  V.  Crawford,  150  Mo.  504,  51 
S.  W.  Rep.  693;  Henderson  v.  Mur- 
phree,  109  Ala.  556,  20  So.  Rep.  45; 
Burk  V.  Dunn,  55  111.  App.  25;  Bird 
V.  St.  John's  Episcopal  Church,  154 
Ind.  138;  Jaqua  v.  Headington,  114 
Ind.  309,  16  N.  E.  Rep.  527:  Nielson 
V.  Read,  12  Fed.  Rep.  441:  Gallo  v. 
McAndrews,  29  id.  715;  Brooks  v. 
Wichita,  114  id.  297,  52  C.  C.  A.  209; 
Hodges  V.  King,  7  Met.  583;  Man  ice 
V.  Brady,  15  Abb.  Pr.  173;  Durst  v. 
Swift.  11  Tex.  273;  Walker  v.  Engler, 
30  Mo.  130;  Cotheal  v.  Talmage,  9 
N,  Y.  551,  61  Am.  Dec.  716;  Fitzpat- 


rick  V.  Cottingham,  14  Wis.  219; 
Easton  v.  Penn.sylvania  &  O.  C.  Co.. 
13  Ohio,  80;  Tardeveau  v.  Smith's 
Ex'r,  Hardin,  175.  3  Am.  Dec.  727; 
Bradshaw  v.  Craycraft,  3  J.  J.  Marsh. 
79;  Hodges,  Ex  parte,  24  Ark.  197; 
Talcott  V.  Marston,  3  Minn.  339; 
Shreve  v.  Brereton,  51  Piu  175; 
Knapp  v.  :\Ialtby,  13  Wend.  587; 
Powell  v.  Burrouglis,  54  Pa.  329; 
John.ston  v.  Cowan, .59  id.  275;  Keeble 
V.  Keeble,  85  Ala.  552;  Salem  v,  An- 
son, 40  Ore.  339,  67  Pac.  Rep.  190.  56 
L.  R.  A.  169;  Nilson  v.  Jonesboro,  57 
Ark.  168,  20  S.  W.  Rep.  1093;  Indi- 
anola  v.  Gulf,  etc.  R  Co..  59  Tex.  594. 

2  Chicago  House-Wrecking  Co.  v. 
United  States,  45  C.  C.  A.  343,  106 
Fed.  Rep.  385  (disapproved  in  Sua 
Printing  &  Pub.  Ass'n  v.  Sloore,  sn- 
pi'a);  Dennis  v.  Cummins,  3  Johns. 
Cas.  297,  2  Am.  Dec.  100;  Lindsay  v. 
Anesley,  6  Ired.  188;  Mills  v.  Fox,  4 
E.  D.  Smith,  220;  Esmond  v.  Van 
Benschoten,  12  Barb.  306:  Baird  v. 
Tolliver,  6  Humph.  186,  44  Am.  Dec. 
298. 

The  Alabama  court  looks  with 
more  favor  upon  contracts  to  stipu- 
late damages  than  do  most  courts. 
It  does  not  apply  an  exceptional 
rule  of  construction  to  them,  nor 
protect  one  of  the  parties  from  the 
consequences  of  his  error  of  judg- 
ment or  improvidence  at  the  ex- 
pense of  the  other  who  may  be,  and 
in  the  case  of  any  other  contract 
would  be,  entitled  to  the  rights  given 


756 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  290. 


§  290.  Stipulation  when  damages  uncertain.  If  a  contract 
does  not  afford  any  data  from  which  actual  damages  can  be 
calculated  this  circumstance  has  been  held  to  afford  a  reason 
for  regarding  a  sum  designated  in  it  as  liquidated  damages.^ 
[505]  This  test  would  include  among  those  deemed  uncertain 
all  contracts  which  require  any  extrinsic  evidence  to  ascertain 
the  extent  of  the  actual  injury.  Expressions  may  be  found  in 
some  cases  favoring  this  criterion  of  uncertain  damages.^  But 
where  the  damages  cannot  be  calculated  by  market  values,  nor 
by  any  precise  pecuniary  standard,  or  where,  from  the  peculiar 
circumstances  which  the  contract  contemplates,  there  must  be 
other  uncertainty  affecting  the  practical  ascertainment  of  the 
amount  of  the  actual  loss,  the  law  favors  any  fair  adjustment 
of  it  by  stipulation.*     The  damages  resulting  from  breach  of  a 


him  under  it.  "Wiiether  the  sum 
agreed  to  be  paid  is  out  of  propor- 
tion to  the  actual  damages,  which 
will  probably  be  sustained  by  a 
breach,  is  a  fact  into  which  the  court 
will  not  enter  on  inquiry  if  the  in- 
tent is  otherwise  made  clear  that 
liquidated  damages,  and  not  a  pen- 
alty, is  in  contemplation."  Keeble 
V.  Keeble.  85  Ala.  552,  5  So.  Rep.  149, 
quoted  with  approval  in  Henderson 
V.  Murphree,  109  Ala.  556,  20  So.  Rep. 
45.  This  is  in  harmony  with  Sun 
Printing  &  Pub.  Ass'n  v.  Moore,  183 
U.  S.  642,  23  Sup.  Ct.  Rep.  240. 

1  Nilson  V.  Jonesboro,  57  Ark.  168, 
20  S.  W.  Rep.  1093;  Garst  v.  Harris, 
177  Mass.  72,  58  N.  E.  Rep.  174; 
Guerin  v.  Stacy,  175  Mass.  595,  56  N. 
E.  Rep.  892;  Thorn  &  Hunkins  Lime 
&  Cement  Co.  v.  Citizens'  Bank,  158 
Mo.  272,  59  S.  W.  Rep.  109;  Coal 
Creek,  etc.  Co.  v.  Tennessee  Coal,  etc. 
Co.,  106  Tenn.  651,  62  S.  W.  Rep.  162; 
Collier  v.  Betterton,  87  Tex.  440,  29 
S.  W.  Rep.  467;  Barry  v.  Harris,  49 
Vt.  392;  Everett  Land  Co.  v.  Maney, 
16  Wash.  552,  48  Pac.  Rep.  243;  San- 
ders V.  Carter,  91  Ga.  450,  17  S.  E. 
Rep.  345;  Fletcher  v.  Dyche,  2  T.  R. 
34;  Waggoner  v.  Cox,  40  Ohio  St. 
539;  Wolf  V.  Des  Moines  R  Co.,  64 


Iowa,  380,  20  N.  W.  Rep.  481;  Ward 
V.  Hudson  River  B.  Co.,  125  N.Y.  230. 
26  N.  E.  Rep.  256;  Tode  v.  Gross,  127 
N.  Y.  480,  13  L.  R.  A.  652,  28  N.  E. 
Rep.  469,  24  Am.  St.  475;  De  Graff  v. 
Wickham,  89  Iowa,  720,  52  N.  W. 
Rep.  503;  Talkin  v.  Anderson,  19  S. 
W.  Rep.  852  (Texas  Sup.  Ct.). 

2  Bagley  v.  Peddie,  16  N.  Y.  469,  69 
Am.  Dec.  713;  Streeter  v.  Rush,  25 
Cal.  67;  Esmond  v,  Van  Benschoten, 
12  Barb.  366;  Craig  v.  Dillon,  6  Up. 
Can.  A  pp.  116. 

3  New  Britain  v.  New  Britain  Tele- 
phone Co.,  74  Conn.  326,  333,  50  Atl. 
Rep.  881;  Monmouth  Park  Ass'n  v. 
Wallis  Iron  Works,  55  N.  J.  L.  132, 
26  Atl.  Rep.  140:  Tennessee  Manuf. 
Co.  V.  James,  91  Tenn.  154,  15  L.  R 
A.  211,  18  S.  W.  Rep.  262;  Common- 
wealth v.  Ginn  &  Co.,  23  Ky.  L. 
Rep.  521,  63  S.  W.  Rep.  467;  Kil- 
bourne  v.  Burt  &  Brabb  Lumber  Co., 
23  Ky.  L.  Rep.  985,  64  S.  W.  Rep.  631 ; 
Whiting  v.  New  Baltimore,  127  Mich. 
66,  86  N.  W.  Rep.  403;  Taylor  v.  Times 
Newspaper  Co.,  83  Minn.  523,  86  N. 
W.  Rep.  760;  Keeble  v.  Keeble,  85 
Ala.  552,  5  So.  Rep.  149;  St.  Louis, 
etc.  R.  Co.  V.  JeflFerson  Stone  Co.,  90 
Mo.  App.  171;  Emery  v.  Boyle,  200 
Pa.  249,  49  Atl.  Rep.  779;    Jennings 


§  290.] 


STIPULATED    DAMAGES. 


marriage  promise; '  of  an  agreement  not  to  engage  in  a  partic- 
ular occupation  or  business; 2  from  delay  in  completing  par- 
ticular works,  or  in  doing  some  other  act  on  which  ulterior 
transactions  depend;'' or  damages  from  the  disclosure  of  the 


V.  McCormick,  25  Wash.  427,  67  Pac. 
Rep.  764;  Reichenbach  v.  Sage,  liJ 
Wash.  364.  43  Pac.  Rep.  354  52  Am. 
St.  51;  Menges  v.  Milton  Piano  Co., 
—  Mo.  App.  — ,  70  S.  W.  Rep.  250; 
American  Copper,  Brass  &  Iron 
Works   V.    Galland-Burke    Brewing 

&  M.  Co.,  —  Wash. ,  70  Pac.  Rep. 

236;  Wooster  v.  Kisch,  26  Hun,  61; 
Kemp  V.  Knickerbocker  Ice  Co.,  69 
N.  Y.  45;  Indiauola  v.  Gulf,  etc.  R. 
Co.,  56  Tex.  594;  Jones  v.  Binford, 
74  Me.  439;  Lipscomb  v.  Seegers.  19 
S.  C.  425;  1  Dane's  Abr.  549,  §  18; 
Gammon  v.  Howe,  14  Me.  250;  Ting- 
ley  V,  Cutler,  7  Conn.  291;  Cotheal  v. 
Talmage,  9  N.  Y.  551;  Bagley  v.  Ped- 
die,  supra;  Mundy  v.  Culver,  18 
Barb.  336;  Wolf  Diamond  Coal  Co. 
V.  Schultz,  71  Pa.  180;  Bingham  v. 
Richardson,  1  Win.ston,  217;  DeGrofT 
V.  American  L.  T.  Co..  24  Barb.  375; 
Fisk  V.  Fowler,  10  Cal.  512.  In  this 
case  an  ordinary  bond  with  condi- 
tion for  delivery  of  title  to  a  boat 
within  a  specified  time  was  held  to 
liquidate  the  damages  at  the  sum 
stated  as  a  penalty.     See  §  289. 

1  Lowe  V.  Peers,  4  Burr.  2225.  See 
Abranis  v.  Kounts,  4  Ohio,  214. 

2  McCurry  v.  Gibson,  108  Ala.  451, 
18  So.  Rep.  806,  54  Am.  St.  177;  Boyce 
V.  Watson,  52  111.  App.  361 ;  Stover  v. 
Spielman,  1  Pa.  Super.  Ct.  526;  Tob- 
ler  V.  Austin,  22  Tex.  Civ.  App.  99, 
53  S.  W.  Rep.  706;  Borley  v.  Mc- 
Donald, 69  Vt.  309,  38  Atl.  Rep.  60; 
Snider  v.  McKelvey,  27  Ont.  App. 
339;  Palmer  v.  Toms,  96  Wis.  367,  71 
N.  W.  Rep.  654;  Newman  v.  Wolfson, 
69  Ga.  764;  Mueller  v.  Kline,  27  111. 
App.  473;  Stevens  v.  Pillsbury,  57 
Vt.  205;  Tode  v.  Gross.  127  N.  Y.  480, 
24  Am.  St.  475,  28  N.  E.  Rep.  469,  13 
L.  R.  A.  652;  Grasselli  v.  Lowden,  11 


Ohio  St.  349;  Applegate  v.  Jacoby.  9 
Dana,  2UG;  Mott  v.  Mott,  11  Barb.  127; 
Rawlinson  v.  Clarke,  14  M.  &  W.  1S7; 
Hitchcock  v.  Coker,  6  Ad.  &  El.  438; 
Galesworthy  v.  Strutt,  1  Ex.  6.59; 
Green  v.  Price,  13  M.  &  \V.  695; 
Dakin  v.  Williams,  17  Wend.  447; 
Williams  v.  Dakin,  22  id.  210;  Lange 
V.  Werk,  2  Ohio  St.  519;  Gushing  v. 
Drew,  97  Mass.  445;  Atkyns  v.  Kin- 
nier,  4  Ex.  776;  Mercer  v.  Irving,  1 
E.,  B.  &  K  563;  Reynolds  v.  Bridge, 
6  E.  &  B.  528;  Nobles  v.  Bates.  7 
Cow.  307:  Pierce  v.  Fuller,  8  Mass. 
223,  5  Am,  Dec.  102;  California  Steam 
Nav.  Co.  v.  Wright,  6  Cal.  258;  De- 
Groff  V.  American  L.  T.  Co.,  24  Barb. 
375;  Stewart  v.  Bedell,  79  Pa.  336; 
Horner  v.  Flintolf,  9  M.  &  W.  678; 
Lightner  v.  Menzel,  35  Cal.  452; 
Sainter  v.  Ferguson,  7  C.  B.  716;  Davis 
V.  Penton,  6  B.  &  C.  216;  Bigony  v. 
Tyson,  75  Pa.  157;  Hoi  brook  v.  Tobey, 
66  Me.  410,  22  Am.  Rep.  581;  Reilly 
v.  Jones,  1  Bing.  302;  Leighton  v. 
Wales,  3  M.  &  W.  545;  Crisdee  v. 
Bolton.  8  C.  &  P.  240. 

3  Pressed  Steel  Car  Co.  v.  Eastern 
R.  Co.,  121  Fed.  Rep.  609  (Ct.  Ct.  of 
Appeals,  8th  Ct.);  Ward  v.  Hudson 
River  B.  Co.,  135  N.  Y.  230,  26  N.  K 
Rep.  256;  O'Brien  v.  Anniston  Pipe- 
works,  93  Ala,  582,  9  So.  Rep.  415; 
Law  V.  Local  Roard  of  Redditch, 
[1892]  1  Q.  B.  127;  De  Graff  v.  Wick- 
ham,  89  Iowa,  720.  52  N.  W.  Rep.  503; 
Hall  V.  Crowley,  5  Allen,  304,  81  Am- 
Dec.  745;  Curtis  v.  Brewer,  17  Pick. 
513;  Fletcher  v.  Dyche,  2  T.  R  32; 
Hamilton  v.  Moore,  33  Up.  Can.  Q. 
B.  100  and  520;  Gaskin  v.  Wales.  9 
Up.  Can.  C.  P.  314;  McPhee  v.  Wil- 
son, 25  Up.  Can.  Q.  B.  169;  Bergheim 
V.  Blaenavon  Iron  &  S.  Co ,  L.  R.  10 
Q.  B.   319;  Folsom  v.  McDonougli,  6 


758  CONTENTIOXAL    LIQUIDATIO^'S    AND    DISCHARGES.       [§  290. 

[506]  secrets  of  business,'  or  from  breach  of  an  agreement  to 
abate  a  nuisance,-  are  manifestly  of  that  nature;  and  stipula- 
tions fixin<i-  the  damages  for  the  total  loss  of  a  bars^ain  for  the 
purchase  or  leasing  of  lands  and  real  estate,'  or  personal  prop- 
erty,* have  also  been  frequently  sustained.  An  agreement  by 
an  employer  to  pay  an  employee  a  stated  sum  per  year,  or  in 
a  lump,  if  the  former's  business  should  be  discontinued  within 
a  specified  time,  is  for  stipulated  damages.* 

There  is  more  or  less  uncertainty  in  everything  which  de- 
pends upon  the  opinions  or  memories  of  witnesses;  it  may  be 
increased,  in  the  sense  of  furnishing  a  motive  for  stipulating 
damages,  if  the  testimony  under  the  circumstances  contem- 
plated by  the  contract  would  be  at  a  great  distance;^  or  must 
come  solely  from  the  defendant.'^  In  a  contract  for  the  pur- 
chase of  several  cit}^  lots  from  one  having  still  a  large  number 
to  sell,  the  purchaser,  in  consideration  of  having  the  property 
conveyed  to  him  for  $21,000,  covenanted  that  he  would  by  a 
certain  day  erect  on  the  lots  so  conveyed  two  brick  houses  of 
specified  dimensions,  or,  in  default  thereof,  would  pay  on  de- 
mand to  the  seller  the  sum  of  $4,000.  This  sum  was  held  to 
be  liquidated  damages.  "Whether  the  vendors  would  be  better 
off  if  they  got  the  money  than  they  would  have  been  had  the 

Cusli.  208;  Harmony  V.  Bingham,  12  ler,  7  Conn.  291;  Knapp  v.  Maltby, 

N.  Y.  100;  Dunlop  v.  Gregory,  10  N.  13  Wend.  587;  Slosson  v.  Beadle,  7 

Y.  241,  61  Am.  Dec.  746;  Weeks  v.  Johns,   72;    Lynde  v.   Thompson,   2 

Little,  47  N.  Y.  Super.  Ct.  1:  Worrell  Allen,  456:  Lampman  v.  Cochran,  1& 

V.  McClinagan,  5  Strob.  115;  Young  Barb.  388,  16  N.  Y.  275;   Mundy  v. 

V.  White,  5  Watts,  460;  O'Donnell  v.  Culver,   18    Barb.    836;    Clement  v. 

Rosenberg,  14    Abb.  Pr.  (N.  S.)  59;  Cash,  21  N.  Y.  253;  Hasbrouck  v.  Tap- 

Pettis  V.  Bloomer,  21  How.  Pr.  817;  pen,  15  Johns.  200;  Harris  v.  Miller, 

Crux  V.  Aldred,  14  Week.  Rep.  656;  6  Sawy.  319. 

Legge   V.    Harlock,    12   Q.    B.    1015.  '♦.Peirce  v,  Jung,  10  Wis.  30;  Allen 

But  see  Wilcus  v.  Kling,  87  111.  107.  v.  Brazier,  2  Bailey,  .55;  Main  v.  King, 

1  Nessle  v.  Reese,  29  How.  Pr.  38:2;  10  Barb.  59;  Knowlton  v.  Mackay,  29 

Reindel  v.  Schell,  4  C.  B.  (N.  S.)  97;  Up,  Can.  C.  P.  601;  Sun  Printing  & 

Bagley  v.  Peddie,  16    N.  Y.  469,  69  Pub.  Ass'n  v.  Moore,  183  U.  S.  642,22 

Am.  Dec.  713.  Sup.  Ct.  Rep.  240. 

2Grasselli  v.  Lowden,  11  Ohio  St.  &  Glynn  v.  Moran,  174  Mass,  233,  54 

349;  Taylor  v.  Times  Newspaper  Co.,  N.  E.  Rep.  535. 

83  Minn,  523,  86  N,  W,  Rep.  760,  6  Cotheal  v.  Talmage,  9  N.  Y.  551, 

3  Leggett  V.  Mutual  L,  Ins.  Co.,  50  61  Am,  Dec.  716, 

Barb.  616.  53   N.  Y.  394;    Heard  v.  '  Bagley  v.  Peddie,  supra. 
Bovvers,  28  Pick,  455;  Tingley  v.  Cut- 


§  291.]  STIPULATED    DxlMAGES.  759 

houses  been  erected  must  from  the  nature  of  the  case  be  a  diffi- 
cult question  to  decide;  and  that  is  one  reason  why  the  parties 
should  be  left  to  settle  the  matter  for  themselves."  In  another 
case  an  agreement  was  made  simultaneously  with  a  sale  of 
village  lots  by  the  purchaser,  that  he  would  not  sell  [507] 
spirituous  liquors  on  the  premises  purchased,  or  in  the  buildings 
erected  thereon  ;  and  if  he  did  so  he  should  be  liable  to  pay  the 
vendor  in  the  first  case  a  fine  of  $10,  in  the  second  case  a  fine  of 
$20,  and  for  each  subsequent  selling  §50.  It  was  held  that  the 
contract  was  not  invalid  for  being  in  restraint  of  trade;  ^  but 
the  "fine"  was  held  to  be  a  penalty  and  not  liquidated  dam- 
ages.' 

§  291.  Same  subject.  The  damages  for  breach  of  contracts 
for  the  purchase  of  the  good  will  of  an  established  trade  or 
business,  or  for  the  withdrawal  of  competition,  are  so  obviously 
uncertain  that  courts  have  recognized  the  fullest  liberty  of 
parties  to  fix  beforehand  the  amount  thereof  in  that  class  of 
cases.  In  the  decision  of  such  cases  the  strongest  expressions 
are  to  be  found  to  the  effect  that  the  intention  of  the  parties  is 
all-controlling,  and  that  courts  have  no  power  to  defeat  it  on 
the  pretext  of  relieving  from  a  bad  bargain.  Referring  to  such 
a  stipulation,  Sedgwick,  J.,  in  an  early  Massachusetts  case, 
said:  "The  parties  were  competent  in  law  to  make  a  contract 
imposing  a  limited  restraint  on  the  defendant's  trade  for  the 
plaintiff's  benefit  and  without  injury  to  the  public.  They  were 
competent  to  determine  on  what  consideration  it  should  be 
made;  and  to  liquidate  the  damages  if  it  should  be  broken. 
The  consideration  of  one  dollar  is  a  valuable  consideration.  It 
would  be  sufficient  to  pass  by  sale  the  defendant's  stage  and 
stage  horses,  where  no  fraud  or  imposition  was  practiced.  The 
parties  have  considered  it  reasonable  and  adequate,  and  the  de- 
fendant, by  honestly  fulfilling  his  agreement,  might  have  pro- 
tected himself  from  the  forfeiture.  But  he  has  broken  it,  and 
he  shall  not  be  permitted  to  say  that,  although  the  contract 
was  fairly  and  honestly  made,  and  for  a  valuable  consideration 
to  w^hich  he  assented,  the  consideration  was  inadequate;  that 
he  made  a  bad  bargain;  and  that  when  the  plaintiif  lias  suffered 

1  Pearson    v.  Williams,  26  Wend.        ^  Laubenheiraer  v.  Mann,  17  Wis. 
630,  24  id.  244.     See  Chase  v.  Allen,    542. 
13  Gray,  42.  as.  C,  19  Wis.  519. 


760 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  291. 


by  a  breach  of  it,  he  shall  be  relieved  from  the  terms  to  which 
he  had  voluntarily  submitted,"^  The  tendency,  however,  of 
[508]  more  recent  decisions  is  against  holding  any  contract  for 
liquidated  damages  to  be  binding  in  this  absolute  sense.  Courts 
generally  assume  jurisdiction  to  declare  an  excessive  sum  men- 
tioned in  connection  with  the  breach  of  any  contract  a  penalty.' 
If  the  disproportion  between  the  consideration  and  the  under- 
taking, and  the  disparity  between  the  probable  advantages  of 
performance  and  the  sum  agreed  to  be  paid  in  the  event  of 
failure,  negative  the  intention  to  limit  the  amount  to  just  or 
reasonable  compensation,  they  say  it  should  be  deemed  a  pen- 
alty, however  uncertain  the  damages.  The  same  principles  govern 
this  stipulation  in  all  contracts,  but  courts  will,  in  general,  en- 
force such  stipulations  where  the  damages  are  uncertain;'  be- 
cause the  parties,  where  no  fraud  or  oppression  is  practiced, 
know  better  their  situations,  and  can  form  a  more  correct  esti- 
mate of  the  injury  than  a  court  or  jury.  Because  the  damages 
are  not  susceptible  of  precise  measurement  the  judgment  and 
agreement  of  the  parties  should  have  large  scope;  but  when, 
as  sometimes  happens,  it  is  discovered  that  such  stipulations 
are  not  based  on  the  idea  of  compensation  they  are  not  sus- 
tained.*    This  will  be  particularly  seen  in  the  instances  of  con- 


'  Pierce  v.  Fuller,  8  Mass.  223,  5 
Am.  Dec.  102;  Dakin  v.  Williams,  17 
Wend.  454,  per  Nelson,  C.  J.;  Streeter 
V.  Rush,  25  Cal.  67,  per  Rhodes.  J. 
Compare  Hathaway  v.  Lynn,  75  Wis. 
186,  43  N.  W.  Rep.  956,  6  L.  R.  A.  558, 
which  is  mentioned  in  a  note  to 
g288. 

2  J.  G.  Wagner  Co.  v.  Cawker,  112 
Wis.  532,  88  N.  W.  Rep.  599;  Seeman 
V.  Biemann,  108  Wis.  365, 84  N.  W.  Rep. 
490.  See  Davies  v.  Daniels,  8  Hawaiia, 
88. 

3  Potter  V.  Ahrens,  110  Cal.  674,  43 
Pac.  Rep.  388;  Seeman  v.  Biemann, 
108  Wis.  365,  375,  84  N.  W.  Rep.  490; 
Simon  v.  Lanius,  9  Ky.  L.  Rep.  59; 
Connelly  v.  Priest,  72  Mo.  App.  673; 
Seim  V.  Krause,  13  S.  D.  530,  83  N.  W. 
Rep.  583;  Hurst  v.  Hurst,  4  Ex.  571; 
Ponsenby  v.  Adams,  2  Brown  P.  C. 
431;  Roy  v.  Duke  of  Beaufort,  2  Atk. 


190;  Allen  v.  Brazier,  2  Bailey,  55; 
Chase  v.  Allen,  13  Gray,  42;  Pearson 
V.  Williams,  26  Wend.  630.  See 
^■§  289,  290. 

4  In  Wilkinson  v.  Colley,  164  Pa.  35, 
30  Atl.  Rep.  286,  26  L.  R,  A.  114,  one 
phj'sician  sold  his  practice  to  an- 
other, stipulating  that  at  the  end  of 
a  certain  time  he  would  cease 
practicing.  The  vendee  sold  the 
practice  to  another  physician.  The 
defendant  violated  his  agreement, 
after  which  he  and  the  plaintiff  en- 
tered into  a  contract  in  which  the 
defendant  covenanted  not  to  prac- 
tice in  the  locality  for  ten  years,  and 
bound  himself  in  the  penal  sum  of 
$400  to  that  effect.  This  contract  he 
also  violated.  It  was  ruled  that  the 
sum  mentioned  was  a  penalty;  that 
it  was  not  the  intention  of  the  parties 
that  the  defendant  was  to  have  the 


I 


f  291.]  STIPULATED    DAMAGES.  761 

tracts  which  provide  the  same  sum  to  be  paid  in  the  case  of  a 
partial  or  of  a  total  breach.  Stipukations  in  an  agreement  by 
the  vendor  of  a  business  and  its  good  will  that  he  will  not  "-o 
into  business  in  G.,  or  within  a  certain  distance  of  it,  either  for 
himself  or  as  clerk  for  another,  and  will  not  permit  his  wife  to 
do  so,  all  refer  to  the  same  thing,  and  the  objection  that  the 
sura  named  is  a  penalty,  because  the  forbidden  acts  are  of  dif- 
ferent degrees  of  importance,  is  without  force.'  After  the  sale 
by  the  vendee  of  the  busmcss  and  good  will  of  the  vendor  no 
beneficial  interest  in  the  contract  stipulating  the  damages  re- 
mains ill  the  covenantee  and  he  cannot  enforce  the  covenant. 
The  purpose  of  the  contract  being  to  protect  the  property  or 
business  to  which  it  related,  it  was  an  incident  of,  and  adhered 
to,  such  property  and  business.^ 

The  damages  which  may  result  from  delay  in  fulfilling  con- 
tracts for  particular  works,  or  for  performance  of  any  specified 
act  stipulated  to  be  done  and  completed  within  a  given  time, 
^re  not  always  of  the  most  uncertain  nature.  Damages  for 
failure  to  complete  a  house,  or  any  other  structure,  may  some- 
times be  ascertained  proximately  b}''  a  rental  standard.  But 
when  intended  for  a  particular  purpose  other  than  to  be  rented, 
and  when  delay  may  hinder  or  thwart  other  and  dependent  con- 
tracts or  enterprises,  the  damages  will  be  more  uncertain.  In 
a  building  contract  containing  the  usual  clauses  fixing  the  days 
for  completing  the  various  parts  of  the  work,  a  stipulation  to 
the  effect  that  any  neglect  to  comply  with  the  conditions  of 
the  contract  and  finish  the  work  as  provided  should  entitle  the 
employer  to  claim  damages  at  the  rate  of  $10  per  day  [500] 
for  every  day's  detention  so  caused  was  held  a  covenant  for 
stipulated  damages.'     There  are  authorities  to  the  effect  that 

privilege  of  practicing  on  the  pay-  Rep.  140,  39  Am.  St.  626;    Railroad 

ment  of  it;  that,  because  of  the  un-  v.  Cabinet  Co.,  104  Tenn.  568,  58  S. 

certainty  of  the  damages,  an  injunc-  W.  Rep.  303,  78  Am.  St.  933;  Collier 

■tion    would    issue    for  the  specific  v.  Betterton,  87  Tex.  440,  29  S.  W. 

performance  of  the  contract.  Rep.  467;    Reichenbach  v.  Sage.   13 

1  Stover  V.  Spielman,  1  Pa.  Super.  Wasli.  364,43  Pac.  Rep.  354;  De  Oral! 

Ct.  526.  V.  Wickham,  89  Iowa,  720,  52  N.  W. 

•-'  Palmer  v.  Toms,  96  Wis.  367,  71  Rep.  503;  Emack  v.  Campbell,  14  D. 

N.  W.  Rep.  654,  approving  Gompers  C.  App.  Cas.  186;  O'Donnell  v.  Rosen- 

V.  Rochester,  56  Pa.  194.  berg.  14  Abb.  Pr.  (N.  S.)  59;  Pettis 

s^Monmouth  Park  Ass'n  v.  Wallis  v.  Bloomer.  21  How.   Pr.  317;  Curtis 

Iron  Works,  55  N.  J.  L.  132,  26  Atl.  v.  Brewer,  17  Pick.  513;  Hamilton  v. 


;62 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  291. 


the  damages  ordinarily  resulting  from  the  failure  to  fulfill  a 
building  contract  which  contains  only  the  usual  conditions  are 
not  so  uncertain  as  to  be  the  subjects  for  such  stipulations,  the 
extrinsic  circumstances  not  being  unusual  ;^  but  the  decisions 


Moore,  33  Up.  Can.  Q.  B.  100,  520; 
Gaskin  v.  Wales,  9  Up.  Can.  C.  P.  314; 
MoPhee  v.  Wilson,  25  Up.  Can.  Q.  B. 
169;  Bergheim  v.  Blaenavon  Iron  & 
S.  Co.,  L.  R.  10  Q.  B.  319:  Young  v. 
Gaut,  69  Ark.  114,  61  S.  W.  Rep.  372: 
Brown  Iron  Co.  v.  Norwood,  69  S.  W. 
Rep.  253,  (Tex.  Ct.  of  Civ.  App.). 

In  Fletcher  v.  Dyche,  2  T.  R.  32/a 
stipulation  for  lOZ.  per  week  for  de- 
lay in  finishing  a  churcli  was  sus- 
tained: in  Duckworth  v.  Allison,  1 
M.  &  W.  412,  51.  per  week  for  delay 
in  completing  repairs  on  a  ware- 
house; in  Legge  v.  Harlock,  12  Q.  B. 
Div.  1015,  IZ.  per  day  for  delay  in  build- 
ing a  barn,  wagon-shed  and  granary; 
in  Law  v.  Redditch,  [1892]  1  Q.  B.  127, 
lOOZ.  and  5Z.  per  week  for  delay  in 
constructing  sewerage  works;  in 
Ward  V.  Hudson  River  Building  Co., 
125  N.  Y.  230,  26  N.  E.  Rep.  256,  $10  a 
day  for  delay  in  erecting  dwellings;  in 
Maione  v.  Philadelphia,  23  Atl.  Rep. 
628,  in  Monmouth  Park  Ass'n  v. 
Wallis  Iron  Works.  55  N.  J.  L.  132, 
26  Atl.  Rep.  140,  39  Am.  St.  626,  $100 
per  day  for  failure  to  complete  a 
grand  stand  for  a  race  course. 

In  Curtis  v.  Van  Bergh,  161  N.  Y. 
47,  55  N.  E.  Rep.  398,  the  defendants 
provided  for  the  lea,se  of  a  building, 
to  be  erected,  when  there  was  less 
than  six  months'  time  within  which 
to  complete  it,  and  they  needed  pro- 
tection from  the  consequences  of 
failure  on  account  of  their  business 
which  required  more  room  and  ma- 
chinery. In  view  of  the  expiration 
of  their  lease  of  the  premises  in 
which  they  were,  the  uncertainty  of 
their  being  able  to  secure  another 
place  in  which  to  do  business,  and 
the  consequences  of  a  removal,  a 
stipulation   for  the  payment  of  $50 


per  day  for  delay  in  the  construction 
of  such  building  was  sustained  al- 
though the  rental  agreed  upon  was 
but  $2,000  a  year. 

In  Bird  v.  St.  John's  Episcopal 
Church,  154  Ind.  138,  65  N.  E.  Rep. 
129,  a  stipulation  for  $50  per  day  for 
delay  in  completing  a  church  was 
sustained. 

The  defendant  bound  himself  to 
complete  a  building  within  eleven 
months,  and  was  to  receive  $100  for 
each  day  less  than  the  time  limit, 
and  to  pay  $1,000  for  each  day  that 
he  should  exceed  it.  He  made  a  con- 
tract with  the  plaintiff  for  the  stone 
and  granite  work,  and  the  latter 
bound  himself  to  pay  $150  per  day 
as  a  penalty  for  each  and  every  day 
he  was  in  default  as  and  for  liqui- 
dated damages.  The  latter  was  an^ 
agreement  for  stipulated  damages. 
Kunkel  v.  Wherry,  189  Pa.  198,  43 
Atl.  Rep.  112,  69  Am.  St.  802. 

1  Chicago  House- Wrecking  Co.  v. 
United  States,  45  C.  C.  A.  343,  352, . 
106  Fed.  Rep.  382,  quoting  the  text; 
Wheedon  v.  American  Bonding  & 
Trust  Co..  128  N.  C.  69.  38  S.  E.  Rep. 
255;  Clements  v.  Railroad  Co..  132  Pa. 
445, 19  Atl.  Rep.  274,  276;  Brennan  v. 
Clark,  45  N.  W.  Rep.  472,  29  Neb.  385; 
Patent  Brick  Co.  v.  Moore,  75  Cal. 
205.  16  Pac.  Rep.  890.  But  see  Ward 
v.  Hudson  River  B.  Co.  125  N.  Y.  230, 
26  N.  E.  Rep.  256;  Sun  Printing  & 
Pub.  Ass'n  V.  Moore,  183  U.  S,  642,  23 
Sup.  Ct.  Rep.  240. 

A  contract  on  the  part  of  a  rail- 
road bridge  builder  to  provide  a 
crossing  for  trains  by  a  date  fixed 
or  pay  $1,000  a  week  if  he  was  in  de- 
fault is  one  for  liquidated  damages. 
Texas,  etc.  R  Co.  v.  Rust,  19  Fed- 
Rep.  239. 


§  201.]  STIPULATED    DAMAGES.  7G3 

are  far  from  being  unanimous  on  tlie  question.  Where  a  party 
covenants  that  ho  will  transport  and  deliver  goods  within  a 
certain  time,  and  also  that  lie  will  deduct  a  sum  named  from 
the  freight  each  day  they  are  dehayed  beyond  the  time  spfcified 
for  the  delivery,  such  agreed  deduction  is  liquidated  damages.^ 
Under  peculiar  circumstances  an  agreement  to  pay  §;5<iO  for 
failure  to  surrender  possession  of  leased  premises  at  a  certain 
date  was  sustained  as  liquidating  the  damages.  The  lessor  was 
but  a  lessee  himself,  under  stipulations  to  surrender  a  month 
later.  He  had  authority  from  his  lessor  to  put  additions  and 
improvements  on  the  premises,  all  of  which  he  had  a  right  to 
remove  at  the  end  of  his  term.  It  was  considered  a  natural 
and  reasonable  provision  that,  should  the  subtenant  bind  him- 
self to  leave  the  premises  a  month  before  the  landlord's  term 
expired,  he  might  have  sufficient  time  to  remove  his  improve- 
ments and  thus  escape  a  forfeiture  to  his  lessor."  An  agree- 
ment provided  that  land  should  be  restored  to  a  prescriljed 
condition  and  in  default  of  performance  the  person  bound  should 
pay  £100  per  acre.  The  condition  was  referred  to  in  one  clause 
of  the  contract  as  a  "penalt\\"  The  house  of  lords  held,  re- 
versing the  Scotch  court,  that  the  case  was  a  proper  one  for 
stipulated  damages.^  No  damages  could  be  more  uncertain 
than  those  which  might  result  from  delay  in  furnishing  for 
publication  the  biography  of  a  man  for  the  time  being  attract- 
ing public  notice.  Such  a  man  undertook  to  furnish  his  biog- 
raphy for  publication  within  a  specified  time,  and  for  every 
day's  delay  beyond  that  time  agreed  to  pay  $105.  In  a  suit 
to  recover  for  a  delay  of  one  hundred  and  sixty-one  days,  the 
court  held  the  agreement  could  not  be  literally  enforced,  and 

1  Harmony  v.  Bingham,  13  N.   Y.  over    after  the  termination  of  his 

100;  Sparrow  v.  Paris,  7  H.  &  N.  594.  lease.     Because  the  provision  as  to 

2 Peine  v.  Weber,  47  111.  41.  damages  was  lugiily  penal,  and  the 

In  Klingle  v.   Ritter,  54  111.  140,  a  lease  admitted  of  two  constructions 

lease  provided  for  the  surrender  by  as  to  the  time  the  damages  should 

the  lessee  of  portions  of  the  property  begin  to  accrue,  they  were  not  coii- 

at  different  times,  and  without  ad-  sidered    as    commencing   until   the 

verting  to  such  provision  there  was  time  when  the  entire  premises  were 

a  covenant  that   the   lessee  should  to  be  surrendered, 

pay  $50  per  day  as  stipulated  dam-  8Lord    Elpliinstone   v.    Monkland 

ages  for  every  day  he  should  hold  Iron  &  C.  Co.,  11  App,  Caa  ^32. 


76-i  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAEGES.       [§  292. 

that  the  plaintiff  could  only  recover  actual  damages.^  So  a 
[510]  contract  to  put  machinery  in  a  boat  for  $S,000,  on  or  be- 
fore a  certain  day,  "under  a  forfeiture  of  $100  per  day  for 
each  and  every  day  after  the  above  date  until  the  same  should 
be  completed  as  above,"  was  held  to  provide  for  a  penalty  and 
not  liquidated  damages.^ 

§  292.  Same  subject.  The  damages  which  may  result  from 
a  mechanic  quitting  work  contrary  to  his  contract  are  uncer- 
tain ;  but  every  agreement  purporting  to  fix  the  amount  he  shall 
forfeit  or  pay  in  such  an  event  will  not  be  treated  as  a  liquida- 
tion thereof.  Where  the  contract  of  hiring  required  that  if 
the  employee  quit  without  giving  thirty  days'  notice  he  should 
forfeit  all  wages  due  him  at  the  time  of  leaving,  Campbell,  J., 
said:  "We  ha\e  no  difficulty  in  holding  that  the  injury  caused 
by  a  sudden  breaking  off  of  a  contract  of  service  by  either 
party  involves  such  difficulties  concerning  the  actual  loss  as  to 
render  a  reasonable  agreement  for  stipulated  damages  appro- 
priate. If  a  fixed  sum,  or  a  maximum  within  which  wages 
unpaid  and  accruing  since  the  last  pay-day  might  be  forfeited, 
should  be  agreed  upon,  and  should  not  be  an  unreasonable  or 
oppressive  exaction,  there  would  seem  to  be  no  legal  objection 
to  the  stipulation  if  both  parties  are  equally  and  justly  pro- 
tected. But  the  facts  set  forth  in  this  record  do  not,  we  think, 
bring  the  case  within  any  such  rule.  .  .  .  The  forfeiture 
under  the  contract  covers  all  wages  due  at  the  time  of  leaving-. 
This  is  open  to  the  objection  that  the  employer  may  have  been 
in  arrears,  and  thus  enabled  to  profit  by  his  own  wrong.  No 
such  forfeiture  could  be  enforced  against  wages,  as  such,  which 
the  workman  was  to  have  paid  to  him  before  he  committed 
any  breach  of  his  duty.  Again,  it  does  not  appear  how  often 
wages  were  payable,  and  what  proportion  of  the  year's  earn- 
ings could  thus  be  withheld  for  a  breach  of  contract.  It  would 
not  be  reasonable  to  make  the  forfeiture  cover  a  very  long 
period.  The  inference,  in  the  absence  of  proof  to  the  con- 
trary, would  be  that  the  price  of  work  done  by  the  piece  might 
not  be  payable  at  the  same  intervals  as  ordinary  wages.     And 

1  Greer  v.  Tweed,  13  Abb.  Pr.  (N.  643:  Colwell  v.  Foulks,  36  How.  Pr. 
S.)  427.  See  Laubenheimer  v.  Mann,  316;  Van  Buren  v.  Digjges,  11  How. 
17  Wis.  543.  19  id.  519.  461;    Kennedy  v.  United   States,  24 

2  Cohvell    V.    Lawrence,   38  Barb.  Ct.  of  Cls.  122,  142. 


I. 


§  292.] 


STIPULATED    DAMAGES. 


TG5 


inasmuch  as  the  periodical  earnings  of  such  laborers  coukl  not 
be  uniform  it  would  be  difficult  to  sustain  an  agreement  for 
stipulated  damages,  unless  some  limit  should  bo  fixed  beyond 
which  the  forfeiture  sliould  not  extend.  The  agreement  [oll^ 
set  out  in  the  record  is  also  defective  for  want  of  mutuality. 
The  employer,  on  failure  to  give  notice  before  dismissal,  is  sub- 
jected to  a  payment  of  thirty  days'  wages.  This  stipulation, 
when  applied  to  the  wages  of  piece  work,  is  entirely  vague  and 
indeterminate.  It  furnishes  no  standard  of  calculation,  and 
lacks  the  first  essential  of  stipulated  damages,  which  are  al- 
lowed to  avoid  uncertainty."!   Where  the  employee's  contract 


1  Ricliardson  v.  Woehler,  26  ]\Iich. 
90;    Davis  v.  Freeman,  10  Mich.  18a 

lu  the  last  case  Mauninj;,  J.,  said: 
•'The  plaintiffs  in  error  were  to  have 
$1.50  per  ]M.  for  drawing  the  timber. 
$1  of  which  was  to  be  paid  as  the 
timber  was  drawn,  in  supplies  to  en- 
able them  to  carry  on  the  job:  and 
the  remaining  fifty  cents  in  cash 
■wlien  all  the  timber  was  drawn.  In 
the  language  of  the  contract,  •  it  be- 
ing understood  that  the  balance  kept 
back  is  to  secure  the  completion  of 
this  contract:  and  it  is  hereby  agreed 
between  the  parties  that  the  fifty 
cents  per  thousand  feet  is  settled, 
fixed  and  liquidated  damages,  in  case 
this  contract  is  not  completed  by  the 
said  first  party.'  They  having  failed 
to  draw  all  the  timber,  the  question 
is  whether  the  fifty  cents  per  thou- 
sand feet  on  what  was  drawn,  and 
which  was  to  be  paid  on  completion 
of  the  contract,  is  to  be  regarded  as 
stipulated  damages,  or  in  the  nature 
of  a  forfeiture  or  penalty  for  not 
completing  the  contract.  The  court 
below  charged  the  jury  that  the  fifty 
cents  per  thousand  feet  on  what  had 
been  drawn  was  stipulated  damages. 
In  this  we  think  the  court  erred.  If 
stipulated  damages  for  a  non-per- 
formance of  the  entire  contract,  the 
defendant  in  error  could  not  recover 
any  other  or  greater  damage  for  a 
non-performance,  in  whole  or  in  part. 


And  it  would  follow  that  he  would 
recover  no  damages  whatever  on  the 
contract  had  tlie  plaintilf  in  error 
refused  to  draw  any  of  tiie  timber. 
Such  clearly  could  not  have  been  tlie 
intention  of  the  parties.  They  must 
have  intended  tliat  if  the  plaintilf  in 
error  should  draw  part  of  the  timber, 
and  not  the  whole,  tliey  should  not 
be  paid  the  fifty  cents  per  thousand 
feet  on  what  had  been  drawn  by 
them.  That,  in  tlie  language  of  the 
contract,  should  be  'fixed  and  liqui- 
dated damages.'  If  the  contract  had 
provided  for  the  payment  of  fifty 
cents  per  thousand  feet  as  liquidated 
damages  for  the  timber  not  drawn, 
the  case  would  be  altogether  diflfer- 
ent.  For  the  nearer  such  a  contract 
was  completed  the  less  would  be  the 
damages.  The  damages  would  be 
proportioned  to  the  non-performance. 
But  the  contrary  would  be  the  case 
as  the  contract  is,  if  the  fifty  cents 
per  thousand  is  to  be  regarded  as 
liquidated  damages,  and  not  as 
penalty.  For  the  nearer  the  contract 
is  completed  the  greater  are  the 
damages  in  case  of  failure.  The  dam- 
age-! for  not  drawing  five  thousand 
of  five  hundred  thousand  feet  would 
be  $247.00,  whereas  the  damages  for 
failing  to  draw  four  hundred  and 
ninety-five  of  the  five  hundred  thou- 
sand would  be  only  $J..")0.  The  policy 
of  the  law  will  not  permit  parties  to 


76G  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.       [§  21)2. 

stipulating  the  damages  the  employer  might  recover  if  the 
contract  of  employment  was  violated  was  neither  unreasonable 
nor  oppressive  the  stipulation  was  sustained  under  the  facts 
indicated  in  the  following  excerpt  from  the  opinion:  The 
plaintiff  in  error  was  a  cotton  mill,  having  in  its  emplojMnent 
hundreds  of  hands.  The  work  is  divided  up  into  many  de- 
partments. The  raw  material  is  handled  by  one  set  of  hands 
and  put  in  condition  for  another,  and  the  second  department 
still  further  advances  its  manufacture;  and  so  on  through  the. 
successive  stages  of  progress.  The  evidence  shows  that  each 
department  is  dependent  upon  that  immediately  below  it. 
ISTow,  if  the  operatives  of  one  department  quit  or  their  work  is 
delayed,  its  effect  is  felt  in  all  to  a  greater  or  less  degree.  It 
is  also  shown  that  it  is  not  always  easy  to  replace  an  operative 
at  once,  and  that  the  unexpected  quitting  of  even  one  hand 
will  to  some  extent  affect  the  results  throughout  the  mill.  Yet 
the  evidence  shows  that  it  would  be  impossible  to  calculate 
with  any  certainty  the  precise,  actual  loss  due  to  an  unexpected 
breach  of  an  employee's  engagement;  though  it  is  shown  that 
there  are  some  departments  of  work  where  the  quitting  of  a 
small  number  of  hands,  without  notice,  would  stop  the  entire 
mill  and  throw  other  hundreds  out  of  employment.  .  .  . 
The  case  is  one,  then,  where  the  certainty  of  some  damage, 
and  the  uncertainty  of  means  and  standards  by  which  the  actual 
damage  can  be  determined,  requires  the  courts  to  uphold  the 
contract  as  one  for  liquidated  damages  and  not  as  providing 
for  a  penalty.^  The  uncertainty  of  the  damages  which  follow 
the  breach  of  a  contract  by  actors  with  a  theatrical  manager 
for  their  services  for  a  stated  period  by  performing  in  another 

make  that  liquidated  damages,  by  give  notice  of  his  intention  to  quit, 

calling  it  such    in   their    contract,  and  if  he  failed  to  do  so  whatever 

which  in  its  nature  is  clearly  a  pen-  was  due  him  at  the  time  he  left  the 

alty  or  forfeiture  for  non-perform-  service  was  to  be  an  indebtedness  to 

ance.     While  it  allows  them,  in  cer-  the  employer  to  be   considered   as 

tain  cases,  to  fix  their  own  damages,  liquidated   damages.     The  contract 

it  will  in  no  case   permit  them  to  was  held  void  because  it  was  unrea- 

evade  the  law  by  agreement.     See  sonable  and  oppressive. 
Jaquith    v.   Hudson,   5    Mich.    128."        i Tennessee  Manuf.  Co.  v.  James,  91 

Stearns  v.   Barrett,   1   Pick.  443,  11  Tenn.  154,  161,  30  Am.  St.  865,  15  L. 

Am.  Dec.  2:>3.  R.  A.  211,  18  S.  W.  Rep.  2G3;  Walsh  v. 

In  Schrimpf  v.  Tennessee  Manuf.  Fisher,  102  Wis.  172,  78  N.  W.  Rep. 

Co..  86  Tenn.  219,  8  Am.   St.  832,  6  437,  76  Am.  St.  865. 
S.  W.  Rep.  131,  a  servant  agreed  to 


I 


I 


§  293.]  STIPULATED    DAMAGES. 


TtJl 


theatre  before  the  fulfillment  of  their  engagement  with  him 
sustains  a  stipulation  fixing  the  damages  for  its  breach.' 

The  inquiry  whether  a  fixed  sum  is  intended  as  pen-  [512] 
alty  or  liquidated  damages  is  generally  answered  according  to 
the  equity  and  justice  of  the  particular  case.  If  the  damirgcs 
are  uncertain  in  their  nature,  or  difficult  to  be  proved,  and  in 
applying  the  stipulation  to  the  case  the  result  is  not  manifestly 
at  variance  with  the  principle  of  just  compensation,  it  is 
readily  adopted  as  consistent  therewith.  In  such  cases  the 
intention  is  inferred  from  these  circumstances,  and  the  lan- 
guage of  the  parties  is  very  liberally  construed  to  give  effect 
to  it.  The  sum  may  be  called  a  penalty  or  forfeiture,  or  the 
form  and  phraseology  may  be  vague  and  equivocal;  but,  nev- 
ertheless, the  sum  stated  be  held  to  be  liquidated  damages.^ 

§  293.  Same  subject;  illustrations.  Some  differences 
will  be  noticed,  resulting  from  a  stricter  adherence  to  the  arti- 
ficial rules  of  construction  by  some  courts  than  by  others.  On 
the  other  hand,  where  the  actual  damages  may  be  ascertained 
by  mere  computation,  or  can  be  easily  established  by  proof, 
and  the  sum  stated  is  not  a  just  measure  of  the  actual  loss  or 
injury,  these  circumstances  prevail  against  very  clear  and  posi- 
tive expressions  of  intention  to  liquidate  damages.'  In  cases 
of  neutral  circumstances  the  language  and  form  of  the  con- 
tract may  alone  be  decisive.  All  doubts  as  to  the  justice  of 
the  stipulated  sum,  or  as  to  the  actual  intention  of  the  parties, 
will  be  resolved  by  treating  it  as  a  penalty.  Man}'  stipula- 
tions ostensibly  providing  a  remuneration  to  be  paid,  or  in 
some  way  to  inure  to  the  party  entitled  to  the  benefit  of  tlie 
•contract  in  case  of  a  breach,  have  been  held  not  to  have  the 
•effect  to  liquidate  damages  because  so  framed  as  to  be  incon- 
sistent in  their  effect  with  the  idea  of  compensation  either  for 
the  reason  that  the  intention  to  limit  the  compensation  for 

1  Pastor  V.  Solomon,  26  N.  Y.  Misc.  Bip:ony  v.  Tyson,  75  id.  157;  Pearson 
125,  55  N.  Y.  Supp.  956,  affirming  25  v.  Williams,  26  Wend.  630;  Knai)p  v. 
N.  Y.  Misc.  322,  54  N.  Y.  Supp.  575.  Maltby,  13  id.  587;  Upliam  v.  Smith, 

2  §283,  n.;  Mathews  v.  Sharp,  99  7  Mass.  265:  Fisli  v.  Fowler.  10  Cat 
Pa.  560;  Lennon  v.  Smith,  14  Daly,  512;  Sparrow  v.  Paris,  7  H.  &  N.  594; 
520;  Miller  v.  Rankin,  11  Atl.  Rep.  Yenner  v.  Hammond,  36  Wis.  277: 
^15  (Pa.);  Eakin  v.  Scott.  70  Tex.  442,  White  v.  Arleth,  1  Bond,  819;  H.iy- 
7  S.  W.  Rep.  777;  Boys  v.  Ancell,  5  maker  v.  Schroers,  49  Mo.  406. 
Bing.  N.C.  890;  Streeperv.  Williams,  3  Kemble  v.  Farren.  6  Bing.  141; 
48  Pa.  450;  Burr  v.  Todd,  41  id.  206;  Horner  v.  Flintofif,  9  M.  &  W.  67a 


768  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  293, 

[513]  breach  to  such  amount  as  the  provision  in  question  may 
specify,  or  the  purpose  to  afford  compensation  to  that  extent 
is  doubtful  in  view  of  the  special  facts  of  the  case.  A  few 
cases  may  be  profitably  consulted  as  illustrations  of  tlie  uncer- 
tain nature  of  such  stipulations,  and  how  much  at  large  is  the 
judicial  discretion  by  which  their  practical  effect  is  governed. 
In  a  case  in  New  York  two  parties  agreed  upon  an  exchange 
of  real  estate;  each  was  to  deliver  a  deed  of  his  property  or 
"  forfeit  the  sum  of  $500."  Upon  the  first  trial  the  court  held 
this  to  be  a  provision  for  liquidated  damages,  and  the  plaintiff" 
had  a  verdict  for  that  sura,  which  was  set  aside  on  the  de- 
fendant's motion,  upon  the  ground  that  the  court  erred  in 
treating  that  sum  as  other  than  a  penalt3^  The  case  was  re- 
tried upon  this  theory,  and  resulted  in  a  verdict  for  the  plaint- 
iff of  $1,000  against  his  request  and  exception  that  it  should 
be  regarded  as  stipulated  damages.  The  defendant  then  sought 
to  reverse  the  judgment  on  the  ground  that  the  sum  stated  in 
the  contract  was  not  a  penalty,  but  liquidated  damages.  The 
ruling  that  it  was  a  penalty  was  in  harmony  with  the  de- 
fendant's argument  for  a  new  trial,  and  he  had  taken  no  ex- 
ceptiou  to  a  like  construction  of  the  contract  on  that  trial.  He 
was,  therefore,  not  in  a  situation  on  appeal  to  allege  that  that 
construction  was  erroneous.  Church,  C.  J.,  said:  "It  is,  how- 
ever, proper  to  say  that,  if  the  question  was  before  us,  we 
should  hesitate  in  holding  it  a  penalty;  and  there  are  many 
reasons  for  regarding  it  as  a  provision  fixing  the  measure  of 
damages  by  the  parties.  The  word  '  forfeit '  is  not  conclusive. 
A  fundamental  rule  upon  this  subject  is  that  the  words  em- 
ployed must,  in  general,  yield  to  the  intention  of  the  parties 
as  evinced  by  the  nature  of  the  agreement,  the  amount  of  the 
sum  named,  and  all  the  surrounding  circumstances.  The  sum 
named  is  reasonable  in  amount;  it  is  payable  for  one  breach, 
viz.:  a  failure  to  deliver  a  deed;  and  the  injury  is  in  some  de- 
gree uncertain  in  amount  and  extent,  and  might  depend  upon 
many  unforeseen  contingencies.  These  are  material  circum- 
stances favorable  to  an  inference  that  the  parties  intended  to 
fix  the  sum  as  the  measure  of  damages."  But  that  question 
being  precluded,  by  the  absence  of  any  objection  on  the  ap- 
pellant's part,  the  judgment  was  affirmed.^ 

1  Noyes  v.  Pliillips,  60  N.  Y.  408. 


I 


§  203,]  STIPL'LATED    DAMAGES.  709 

In  a  later  case  in  the  same  state  an  ice  company  agreed  [5U] 
to  deliver  to  K.  four  thousand  tons  of  ice  in  1870,  for  retail. 
Afterwards  the  company,  by  fraudulent  representations,  [)ro- 
cured  from  K.  a  written  exoneration  as  to  all  the  ice  above  live 
hundred  and  eighty-seven  tons.  By  the  original  agreement  K. 
agreed  to  pay  the  ice  company  $1  per  ton  for  each  and  every 
ton  that  he  failed  to  take  according  to  the  terms  of  the  aL'ree- 
raent;  and  the  ice  company  agreed  to  forfeit  $1  per  ton  for  each 
and  every  ton  that  they  failed  to  deliver  according  to  the  terms 
of  the  agreement.  The  contract  price  of  the  ice  delivered  was 
$2.50  per  ton,  and  the  market  price,  when  the  exonerated  quan- 
tity should  have  been  delivered,  was  from  $14  to  $10  per  ton.  A 
suit  was  brought  for  rescission  of  the  agreement  obtained  by 
fraud,  reducing  the  quantity,  and  for  damages.  The  rescission 
was  granted,  and  the  next  question  was  between  penalty  and 
liquidated  damages  under  the  $1  per  ton  clause  referred  to. 
The  court  of  common  pleas  held  that  the  stipulation  was  a  ])en- 
alty.^  The  court  of  appeals  were  of  contrary  opinion.  Earl, 
J.,  said:  "What  was  here  intended  by  the  parties?  The  $1 
was  certainly  intended  at  least  to  limit  the  extent  of  damages 
to  be  paid  in  case  of  breach,  else  there  would  be  no  purpose  lor 
inserting  it;  and  effect  should  be  given  to  this  intention  if  it 
can  be  consistently  with  the  rules  of  law.  There  is  nothing 
decisive  in  the  language  used.  In  case  of  failure  b}'  the 
plaintiffs  they  agreed  'to  pay  '  the  $1,  in  case  of  failure  by  the 
defendant  it  agreed  '  to  forfeit '  the  same  sum.  The  words  *  to 
pay '  and  '  to  forfeit '  were  evidently  used  in  the  same  sen.sc-,* 
and  might  be  used  in  case  the  sum  was  intended  either  as 
liquidated   damages  or  as  a  penalty."  ^     In  another  case,  a 

1  Kemp  V.  Knickerbocker  Ice  Co.,  and  there  was  added  the  following 

51  How.  Pr.  31;  Basye  v.  Ambrose,  provisions:      "For    non-conipliante 

28  Mo.  89.     See  Cotheal  v.  Talmage,  with  this  contract  by   either  party 

9  N.  Y.  551,  61  Am.  Dec.  716,  the  penalty  shall  be  as  follows:  If 

2 1^  283,  n.  tlie  parties  of  the  first  part  are  not 

3  Kemp  V.  Knickerbocker  Ice  Co.,  themselves,  or  agents,  on  the  spot 
69  N.  Y.  45,  57;  Winch  v.  Mutual  twenty  days  after  the  stipulated  no- 
Benefit  Ice  Co.,  9  Daly,  117.  tice  be  given,  then  the  parties  of  the 

In  Lowry  v.  Barelli,  21  Ohio  St.  second  part  shall  be  at  liberty  to  sell 
324,  one  party  offered  to  sell  and  de-  said  marble  just  as  if  consigned  to 
liver  at  a  specified  time  and  place  them,  and  claim  of  said  first  par- 
two  thousand  five  hundred  cubic  feet  ties  the  difference  between  the  net 
of  Italian  marble  at  $2.12^  per  foot,  amount  that  the  marble  sold  at,  and 
Voul  — 49 


770 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  293. 


[515]  building  contract,  the  builder  was  to  receive  for  the  com- 
pleted house  $4,600;  the  contract  contained  the  provision  that 
the  builder,  who  was  the  plaintiff,  should  "  forfeit  ten  per  cent. 
on  the  whole  amount  if  the  said  house  is  not  entirely  com- 


what  they  bound  themselves  to  pay 
for  it,  say  $2.12|  per  cubic  foot;  pro- 
vided always,  that  said  difference 
shall  never  exceed  thirty-seven  and 
one-half  cents  per  cubic  foot,  which 
difference  shall  be  paid  down,  in 
cash  at  once,  without  any  difficulty; 
and  should  the  parties  of  the  second 
part  fail  to  deliver  within  the  speci- 
fied time  the  quantity  of  marble 
above  mentioned,  the  parties  of  the 
first  part  shall  be  at  liberty  to  buy 
the  same  quantity  of  marble  at  the 
market  price,  and  charge  the  differ- 
ence, if  any,  to  the  parties  of  the 
second  part;  provided  always,  that 
the  difference  of  the  marble  so  pur- 
chased shall  not  exceed  thirty  seven 
and  one-half  cents  per  cubic  foot  of 
the  price  fixed  by  this  agreement, 
and  that  the  terms  of  payment  be 
cash."'  The  vendee  sued  the  vendor 
and  assigned  as  a  breach  the  non- 
delivery of  the  marble.  The  jury 
found,  among  other  things,  that  "  the 
defendants  refused  to  perform  the 
agreement  on  their  part;  that  the 
plaintiffs  did  not  purchase,  nor  at- 
tempt to  purchase,  marble  corre- 
sponding to  that  described  in  the  con- 
tract before  bringing  suit;  that  such 
a  lot  of  marble  could  not  have  been 
purchased  in  New  Orleans  where  the 
contract  was  made;  that  tiie  differ- 
ence between  the  market  price  and 
the  contract  price  on  the  day  of 
breach  was  greater  than  thirty -seven 
and  a  half  cents  per  foot;  that  the 
damages  of  the  plaintiff  amount  to 
§1,516.62,"  for  which  sum  tliey  re- 
turned a  verdict.  A  motion  for  a  new 
trial  was  made  on  the  ground,  among 
others,  that  the  verdict  was  con- 
trary to  the  law  and  the  evidence. 
On  this  motion  it  was  contended  on 


behalf  of  the  defendants  "  that  the 
sum  of  thirty-seven  and  a  half  cents 
per  foot  is  in  the  nature  of  a  limita- 
tion of  damages,  and  not  actual  or 
liquidated  damages,  and  is  the  ut- 
most that  the  parties  can  recover." 
This  point  was  not  noticed  in  the 
opinion,  which  was  adverse  to  the 
motion,  and  judgment  was  ordered 
to  be  rendered  on  the  verdict.  Mc- 
Ilvaine,  J.,  said:  "It  is  no  doubt 
competent  for  parties  to  limit  by 
express  stipulation  the  amount  of 
damages  to  be  recovered  in  the  event 
of  a  breach  of  their  contract:  or  to 
make  the  right  to  recover  at  all  to 
depend  upon  a  particular  event;  or 
they  may  agree  that  damages  shall 
not  be  recovered  in  any  event  for  a 
violation  of  the  contract;  tlms  mak- 
ing wliat  would  otherwise  be  a  con- 
tract binding  in  law  a  mere  option 
on  the  part  of  the  promisor  to  do  or 
not  to  do  as  he  may  choose.  In  our 
opinion  the  contract  between  the 
parties  in  this  case  was  of  the  first 
and  not  of  the  second  or  third  classes 
named.  Taking  it  altogether,  we 
believe  the  parties  intended  to  secure 
the  performance  at  what  they  sup- 
posed would  be  a  rea  onabie  com- 
pensation to  the  injured  party  in 
case  of  a  default  by  the  other  in  not 
receiving  or  delivering  the  marble. 
"It  cannot  be  doubted  that  the  par- 
ties intended  to  bind  each  other  by 
this  contract  to  the  purchase  and 
sale  upon  the  terms  named  therein. 
For  the  breach  of  every  contract 
the  law  implies  damages;  and  to  es- 
cape the  consequences  of  this  rule 
of  law  the  party  in  default  should  be 
able  to  show  that  damages  had  been 
waived.  In  this  contract  no  waiver 
or  exemption   from  damages  upon 


^  293.] 


STIPULATED    DAMAGES. 


pleted  and  fit  to  occupy  at  the  time  agreed  upon."  Daniel,  J., 
said:  "The  clause  .  .  .  cannot  properly  be  regarded  as  an 
agreement  or  settlement  of  liquidated  damages.  The  [510] 
terra  'forfeiture'  imports  a  penalty;  it  has  no  necessary  con- 


the  state  of  facts  found  in  the  special 
verdict  is  expressed,  nor  can  it  be 
inferred  except  upon  the  principle 
that  expressio  unius  est  exclusio  al- 
teriufi.  This  maxim,  however,  should 
not  be  applied  in  a  case  where,  by 
fair  construction  of  the  whole  in- 
strument, a  different  intention  can 
be  ascertained.  .  .  .  Whatever 
might  have  been  the  law  of  this  case, 
had  there  been  such  marble  in  the 
market  at  the  time  of  the  defend- 
ant's default,  we  are  of  opinion  that 
the  plaintiffs,  under  the  state  of 
facts  found  in  the  special  verdict, 
were  excused  not  only  from  making 
a  purchase  of  alike  quantity  of  mar- 
ble in  the  market,  but  also  from  any 
vain  and  fruitless  effort  to  do  so." 

In  Grand  Tower  Co.  v,  Phillips,  23 
Wall.  471,  a  company  having  coal 
mines  agreed  to  deliver  one  hundred 
and  fifty  thousand  tons  of  coal,  the 
product  of  its  mines,  to  P.  at  $3  a 
ton  during  the  year  1870,  in  equal 
daily  proportions,  between  the  loth 
of  February  and  the  15th  of  Decem- 
ber; that  is  to  say,  fifteen  thousand 
tons  each  month.  The  contract  con- 
tained this  provision:  "If  through 
no  fault  of  the  parties  of  the  second 
part  (P.),  the  party  of  the  first  part 
(the  company)  shall  fail  in  any  one 
month  to  deliver  all  or  any  part  of 
the  quota  of  coal  to  which  the  par- 
ties of  the  second  part  may  be  en- 
titled in  such  month,  the  party  of 
the  first  part  shall  pay  to  the  parties 
of  the  second  part  as  liquidated  dam- 
ages twenty-five  cents  per  ton  for 
each  and  every  ton  which  it  may 
have  so  failed  to  deliver;  or  instead 
thereof,  the  parties  of  the  second  part 
may  elect  to  receive  all  or  any  part 
of  the  coal  so  in  default  in  the  next 


succeeding  month,  in  which  case  the 
quota  which  the  parly  of  the  lirht 
part  would  otherwise  have  been 
bound  to  deliver  under  this  contract 
shall  be  increa.sed  in  such  succeeding 
month  to  the  extent  of  the  quantity 
in  default."  Coal  rose  in  value  from 
about  .?3  a  ton  to  .^9;  and  without 
the  fault  of  P.  the  company  did  fail 
to  deliver  the  quota  —  fifteen  thou- 
sand tons  — due  in  October,  and  P. 
thereupon  elected  and  gave  notice 
of  the  election  to  take  the  said  quota 
in  November.  But  the  com  i 'any 
failed  to  deliver  it  then,  and  failed 
also  to  deliver  the  quota  — fifteen 
thousand  tons — due  in  November. 
P.  then  elected  and  gave  notice  of 
his  election  to  take  in  December  the 
quota  due  in  November,  as  also  that 
due  in  October.  No  coal,  however, 
was  delivered  at  any  time,  and  P. 
brought  suit  for  damage-s.  It  was 
held  that  the  plaintiffs  were  entitled 
to  their  actual  damages  and  were 
not  limited  to  twenty-five  cents  per 
ton.  Bradley,  J.,  said:  "The  ques- 
tion whether  this  view  is  right  or  not 
depends  upon  the  true  construction 
of  the  agreement  made  by  the  par- 
ties. .  .  .  It  is  evident  from  an 
inspection  of  the  contract  that  the 
election  given  to  the  plaintiffs  to  re- 
ceive in  the  following  month  the 
coal  which  they  were  entitled  to  re- 
ceive and  did  not  receive  in  a  par- 
ticular month  was  a  substitute  for 
the  liquidated  damages  of  twenty- 
five  cents  per  ton.  With  regard  to 
that  particular  amount  of  coal,  the 
rule  of  liquidated  damages  was  at  an 
end.  The  agreement  did  not  carry 
it  forward  to  the  following  month. 
It  imposed  upon  the  defendant  the 
obligation,  if  the  plaintiffs  so  elected* 


772  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  293. 

nection  with  the  measure  or  degree  of  injury  which  may  re- 
sult from  a  breach  of  contract  or  from  an  imperfect  perform- 
ance. It  implies  an  absolute  infliction,  regardless  of  the 
nature  and  extent  of  the  causes  by  which  it  is  superinduced. 
Unless,  therefore,  it  shall  have  been  expressly  adopted  and  de- 
[517]  clared  by  the  parties  to  be  a  measure  of  injury  or  com- 
pensation it  is  never  taken  as  such  by  courts  of  justice."  • 
The  lessor  for  years  of  part  of  a  steam  mill  covenanted  with 
his  lessee  to  furnish  him  with  a  certain  amount  of  steam-power 
during  every  working  day  in  the  year,  and  that  if  at  any  time 
he  should  fail  to  do  so  the  rent  should  cease  during  the  time  of 
such  failure.  The  lessee  had  taken  a  lease  for  five  years  for 
the  purpose  of  carrying  on  business,  and  had  placed  machinery 
on  the  premises  on  the  faith  of  the  lessor's  covenant  to  furnish 
him  steam-power  to  work  it.  Soon  after  his  work  commenced 
the  lessor  withheld  all  the  power  and  thus  broke  up  the  busi- 
[518]  ness.  On  these  facts  the  court  held  that  the  suspension 
of  rent  was  not  full  satisfaction  of  the  damages;  it  Avas  not 
satisfied  that  the  lessee  had  agreed  to  accept  such  suspension  as 
a  full  compensation  for  an  entire  breach  of  cne  covenant.^ 

to  furnish  the  coal  itself  instead  of  lation  worse  than  useless.  The  plaint- 
paying  the  liquidated  sum.  If  not  ififs  might  continue  to  exercise  their 
60,  what  was  the  option  worth  ?  It  election  to  receive  the  coal  month 
amounted  to  nothing  more  than  the  after  month,  without  avail,  and,  at 
right  of  giving  to  the  defendant  an-  the  end,  find  themselves  exactly  at 
other  month  to  furnish  the  coal,  the  point  they  started  from  —  forced 
Surely  they  would  have  had  that  to  accept  the  twenty-five  cents  per 
right  without  stipulating   for  it   in  ton." 

this  solemn  way.     Had  not  this  op-  ^  Van   Buren  v.  Digges,  11  How. 

tion  been  given  to  the  plaintiffs,  the  461.     See  §  283,  n. 

defendant  would  have  had  the  option  2  Fisher  v.    Barret.   4    Gush.    381; 

either  to  furnish  the  coal  or  to  pay  Pengra  v.  Wheeler,  24  Ore.  532,  34 

the  twenty- five  cents  per  ton  for  not  Pac.  Rep.  354,  31  L.  R.  A.  726. 

furnishing   it  —  a  sum  which   they  In  Nowlin  v.  Pyne,  40  Iowa,  166, 

could  very  well  afford  to  pay  upon  there   was    an   agreement   between 

a  slight  rise  in  the  market  prices.    It  the  parties  for  exchange  of  farms, 

was  evidently  the  very  purpose  of  which  contained  this  clause:  "It  is 

the  option   given  to  the  plaintiffs  to  also  understood  that,  in  case  the  said 

avoid   this  oppressive  result.     They  P.  fails  to  make  said  conveyance,  as 

could  require  the  coal  to  be  delivered  aforesaid,  then  he  agrees  to  pay  said 

at  all  events,  and  if  they  elected  to  N.    for   all    plowing    done    by   him 

do  this  it  was  the  duty  of  the  de-  on  said    land."    The    qiiestion   was 

fendant  to  furnish  it.     The  contrary  whether  N.  was  entitled  to  any  other 

construction  would  make  the  stipu-  damages.     It  was  contended  by  the 


§  ^93.] 


STIPULATED    DAMAGES. 


773 


The  general  doctrine  was  well  summed  up  in  a  Penn-  [510' 
sj^vania  case.  Tlie  owners  of  a  hotel  had  agreed  to  sell  it 
for  $14,000,  of  which  $3,000  was  to  be  paid  at  a  specific  time, 
when  a  deed  was  to  be  made;  part  possession  was  to  be  deliv- 


other  party  that  he  was  not.  Day, 
J.:  "This  position  would  be  correct 
if  the  parties  to  a  contract  must 
stipulate  for  the  damages  to  be  re- 
covered in  order  that  they  may  re- 
cover any.  But  the  law,  of  itself, 
attaches  to  the  breach  of  every  con- 
tract the  right  to  recover  proper 
damages.  That  the  parties  have 
expressly  provided  for  the  payment 
of  some  of  the  damages,  which, 
perhaps,  the  law  would  not  have 
awarded  without  such  provision, 
cannot  be  construed  to  be  a  waiver 
of  the  right  to  recover  other  dam- 
ages which  the  law  permits.  In 
order  to  defeat  the  recovery  of  such 
damages  it  must  clearly  appear  that 
the  parties  have  stipulated  for  all  the 
consequences  which  they  intend  shall 
follow  a  breach  of  their  agreement. 
It  is  plain  that  this  agreement  more 
particularly  refers  to  certain  inci- 
dental damages  which  might  not 
arise  at  all,  whilst  as  to  the  principal 
damages,  and  which  are  certain  to 
follow  a  breach  of  the  contract  if  it 
was  an  advantageous  one  to  the 
plaintiff,  the  contract  is  silent." 

In  Potter  v.  McPherson,  61  Mo. 
240,  there  was  a  contract  between 
the  parties  for  constructing  a  rail- 
road, by  the  terms  of  which  pay- 
ments were  to  be  made  by  the  em- 
ployer in  monthly  instalments,  ten 
per  cent,  being  reserved  by  him  until 
the  completion  of  the  work,  "as 
security  for  the  faithful  performance 
of  the  contract;"  and  in  case  of  cer- 
tain breaches  on  the  part  of  the  con- 
tractor the  amounts  reserved  were 
to  be  absolutely  forfeited  to  the  other 
party.  Held,  that  the  amounts  so  to 
be  retained  were  not  liquidated  dam- 
ages for  such  breaches,  but  the  con- 


tractor could  recover  the  entire  sum 
agreed  upon,  less  the  damages  which 
in  fact  might  be  sustained  by  reason 
of  his  non-compliance  with  the  con- 
tract. Hough,  J.,  said:  "To  hold 
otherwise  in  such  a  case  would  pro- 
duce the  gros.sest  inequality  and  in- 
justice. The  amount  forfeited  might 
bear  no  just  relation  to  the  damage 
suffered.  The  more  nearly  the  con- 
tract approaches  completion,  the 
greater  would  be  the  reserve,  and 
the  less  would  be  the  damage.  As 
the  damage  diminished  the  sum  for- 
feited would  increase."  Savannah, 
etc.  R.  Co.  V.  Callahan,  .56  Ga,  331. 
See  Phelan  v.  Albany,  etc.  R.  Co.,  1 
Lans.  258;  Jemmi.son  v.  Gray,  29 
Iowa,  537;  Faunce  v.  Burke.  16  Pa. 
469.  55  Am.  Dec.  519;  Hennessey  v. 
Farrell,  4  Cush.  267;  Jackson  v. 
Cleveland,  19  Wis.  400. 

Easton  v.  Pennsylvania  &  O.  C. 
Co.,  13  Ohio,  79,  was  a  similar  case, 
the  contract  providing  for  monthly 
payments,  and  a  reserve  of  fifteen 
per  cent,  to  insure  the  completion  of 
the  work;  and  also  that  in  case  of 
its  too  slow  progress,  and  in  certain 
other  contingencies,  the  president  of 
the  company  or  the  engineer  should 
have  power  to  determine  that  the 
contract  had  been  abandoned,  and 
such  determination  should  put  an 
end  to  it,  and  exonerate  the  com- 
pany from  every  obligation  arising 
therefrom,  and  then  the  job  might 
be  disposed  of  as  though  the  contract 
had  never  existed.  It  was  declared 
abandoned  because,  in  the  opinion 
of  the  engineer,  the  work  was  not 
being  prosecuted  with  suflScient 
force  to  insure  its  completion  with- 
in the  time  agreed  on.  Suit  was 
brought  by  the  contractor  to  recover 


774 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        [§  293. 


ered  at  once,  and  in  the  contract  the  parties  agreed  to  forfeit 
'520]  |1500  in  case  either  failed  to  comply  with  its  terms.  It 
was  held  that  the  forfeiture  was  intended  by  them  as  a  com- 
pensation to  either  in  case  the  other  wholly  abandoned  the 
contract  and  was  liquidated  damages,  not  a  penalty.  As  the 
general  rule  of  damages  might  not  embrace  all  the  compen- 
sation the  parties  deemed  would  be  due  in  view  of  the  prob- 
able risk,  trouble,  loss  and  expense  incident  to  the  contem- 
plated change  on  the  part  of  either  party,  they  were  regarded 
as  having  fixed  the  sum  stipulated  as  the  amount  of  damage 


the  fifteen  per  cent,  reserved  in 
monthly  payments  for  work  done. 
Woods,  J.,  said:  "The  contract  may 
be  supposed  to  be  severe  upon  the 
plaintiffs.  They  were,  however,  by 
no  means  forced  to  execute  it.  It 
was  voluntary.  By  its  terms,  exten- 
sive control  over  the  work  is  con- 
ferred upon  the  defendant,  and 
great  confidence  reposed  in  the 
honest  and  faithful  exercise  of  his 
discretion.  If  the  defendant  has 
violated  neither  its  letter  nor  its 
spirit  it  is  difficult  to  see  what  rea- 
sons the'plaintitf  shave  for  complaint. 
We  sit  here  to  enforce  the  contracts 
made  by  others,  but  we  have  no  au- 
thority to  impose  upon  them  obliga- 
tions to  which  they  have  never  as- 
sented. The  plaintiffs  were  to  be 
paid  monthly  on  estimates  made 
monthly  by  the  engineer.  It 
has  been  done.  Fifteen  per  cent, 
was  to  be  retained  to  insure  the 
completion  of  the  work.  The  de- 
fendant kept  back  this  amount.  If 
the  contract  was  declared  aban- 
doned, the  determination  of  the 
president  or  engineer  is  conclusive. 
The  contract  is  at  an  end,  and  the 
defendant  exonerated  from  every 
obligation  thence  arising  by  express 
agreement.  It  is  insisted  that  when 
the  whole  work  is  completed  the 
fifteen  per  cent,  may  be  recovered 
by  the  plaintiffs.  Had  they  finished 
the  work  the  position  would  be  cor- 


rect, but  if  the  contract  is  aban- 
doned, relet  and  others  complete  the 
work,  the  amount  retained  as  secu- 
rity is  in  its  nature  liquidated  dam- 
ages. If  it  were  not  so  intended,, 
there  would  be  no  security  in  the  re- 
tention of  this  amount.  .  .  .  The 
president  or  engineer  is  the  umpire 
between  the  parties.  His  determi- 
nation ends  the  contract  and  ex- 
empts the  company  from  its  obliga- 
tions. The  agreements  of  the  parties 
are  the  law  by  which  their  riglits 
are  to  be  determined,  and  I  am  ex- 
tremely doubtful,  at  least,  whether 
any  court  can  legitimately  interfere 
and  upset  their  arrangements  when 
an  honest  discretion  has  been  exer- 
cised, where  neither  fraud  nor  cir- 
cumvention has  intervened.  I  am 
instructed  by  my  brethren,  however, 
to  say,  as  the  opinion  of  the  court, 
that  in  this  class  of  cases  tiie  sub- 
ject is  open  to  inquiry  whether  the 
contractors  had  done  any  act,  or 
omitted  the  performance  of  any  duty 
which,  within  the  terms  of  the  con- 
tract between  the  parties,  would 
justify  the  president  or  engineer  in 
declaring  it  abandoned;  and  if  no 
such  act  had,  in  fact,  been  done,  nor 
duty  omitted,  the  honest  exercise  of 
the  discretion  conferred  to  abandon 
the  contract  ought  not  to  shield  the 
defendant  from  the  payment  of  the 
per  centum  so  retained." 


§  293.]  STIPULATED    I/AMAGES.  775 

each  would  suffer  from  a  total  failure;  and  the  word  "for- 
feit" was  outweighed  by  the  other  elements  of  interpretation 
and  meant  "  to  pay."  Agnew,  J.,  said:  "  It  is  unnecessary 
to  examine  the  numerous  authorities  in  detail,  for  they  are 
neither  uniform  nor  consistent.  No  definite  rule  to  determine 
the  question  is  furnished  by  them,  each  being  determined  more 
in  direct  reference  to  its  own  facts  than  to  any  general  rule. 
In  the  earlier  cases  the  courts  gave  more  weight  to  the  lan- 
guage of  the  clause  designating  the  sum  as  penalty  or  as  liqui- 
dated damages.  The  modern  authorities  attach  greater  im- 
Dortance  to  the  meaning  and  intention  of  the  parties.  Yet  the 
intention  is  not  all-controlling,  for  in  some  cases  the  subject- 
matter  and  surroundings  of  the  contract  will  control  the  in- 
tention where  equit}'  absolutely  demands  it.  A  sum  expressly 
stipulated  as  liquidated  damages  will  be  relieved  from  if  it  is 
obviously  to  secure  payment  of  another  sum  capable  of  being 
compensated  by  interest.  On  the  other  hand,  a  sum  denomi- 
nated a  penalt}^  or  forfeiture  will  be  considered  liquidated 
damages  where  it  is  fixed  upon  by  the  parties  as  the  measure 
of  the  damages,  because  the  nature  of  the  case,  the  uncertainty 
of  the  proof  or  the  difficulties  of  reaching  the  damages  by  proof 
have  induced  them  to  make  the  damages  a  subject  of  previous 
adjustment.  In  some  cases  the  magnitude  of  the  sum  and  its 
proportion  to  the  probable  consequence  of  a  breach  will  cause 
it  to  be  looked  upon  as  minatory  only.  Upon  the  whole,  the 
only  general  observation  we  can  make  is  that  in  each  case  we 
must  look  at  the  language  of  the  contract,  the  intention  [521] 
of  the  parties  as  gathered  from  all  its  provisions,  the  subject  of 
the  contract  and  the  surroundings,  the  ease  or  difficulty  of 
measuring  the  breach  in  damages  and  the  sum  stipulated,  and 
from  the  whole  gather  the  view  which  good  conscience  and 
equity  ought  to  take  of  the  case."  ' 

1  Streeper  v.  Williams,  48  Pa.  450;  case  of  the  breach  of  the  contract  the 

Shreve  v.  Brereton,  51  id.  175;  Emery  purchaser  was  bound  "in  the  penal 

V.  Boyle,  200  id.  249.  49  Atl.  Rep.  779;  sum  of  $5,000  as  liquidated  damages." 

Robeson  v.  Whitesides,  16  S.  &  R.  320.  The    difficulty   of    establishing   the 

It  was  a  condition  of  the  sale  of  actual    loss    was  so  great  that  the 

goods  by  one  firm  to  another  that  the  stipulated     sum     was     recoverable, 

purchaser  should  not  advertise  them  May  v.  Crawford,  142  Mo.  390,  44  S. 

asof  the  stock  of  the  seller,  except  as  W.  Rep.  260,  150  Mo.  504,  51  S.    W. 

to  the  goods  actually  bought,  and  in  Rep.  693. 


T76  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  293. 

A  contract  for  the  use  of  a  patent  right  for  six  years  desig- 
nated the  annual  license  fee  to  be  paid  b}'-  the  licensee  and 
bound  him,  if  he  used  it  after  the  expiration  of  the  terra  with- 
out a  new  license,  to  pay  double  the  stipulated  rate.  This  was 
sustained  as  an  agreement  for  stipulated  damages.  "As  the 
parties  could  not  know  in  1888  what  the  value  of  the  use  of 
the  patent  might  be  after  1894,  it  was  certainl}'-  a  proper  sub- 
ject for  agreement  between  them  as  to  what  should  be  paid  as 
damages  should  the  defendant  continue  to  use  the  patent  with- 
out license  after  the  expiration  of  the  term,  and  this  they  did 
by  agreeing  on  the  sum  of  $500.  It  could  hardly  have  been 
the  intention  of  the  parties  that  the  right  of  the  plaintiff,  in 
case  use  should  be  made  of  the  patent  after  the  expiration  of 
five  years,  should  be  limited  each  year  to  the  actual  damages 
he  might  be  able  to  show  that  he  sustained  from  the  use  made. 
It  would  be  difficult  to  lay  down  a  principle  by  which  such 
damages  could  be  estimated  by  a  jury.^  There  is  general  con- 
currence in  the  view  that  the  uncertainty  concerning  the 
amount  of  coal,  ore  or  oil  the  lessee  of  a  mine  may  take  there- 
from and  the  corresponding  uncertainty  as  to  the  royalties  the 
'essor  will  receive  make  provisions  stipulating  that  not  less 
*han  a  certain  quantity  of  coal,  ore  or  oil  shall  be  taken  each 
year  binding  as  agreements  for  stipulated  damages.^  In  a 
case  where  the  language  used  was  not  explicit  as  to  the  inten- 
tion of  the  parties,  the  words  "stipulated  damages,"  or  any 
similar  term  not  being  used,  their  omission  was  regarded  as  of 
some  significance  as  to  such  intention;  and  the  uncertainty  of 
the  damages  was  urged  as  a  reason  for  construing  the  contract 
as  one  for  stipulated  damages.      That  argument  was  thus  an- 

Where  a  street  railroad  company  i  Knox  Rock  Blasting  Co.  v.  Graf- 

and  the  trustees  of  a   village  con-  ton  Stone  Co..  64  Ohio  St.  361,  60  N. 

tracted  for  the  construction  of  a  road  E.  Rep.  563,  16  Ohio  Ct.  Ct.  21. 

and  the  former  deposited  $10,000  as  2Coal  Creek,  etc.  Co.  v.  Tennessee 

a  guaranty  of  its  good  faith    and  Coal,  etc.  Co..  106  Tenn.  651,  678,  63 

stipulated  that  the  same  should  be-  S.  W.  Rep.  162;  Lehigh  Zinc  &  Iron 

come  the  property  of  the  village  as  Co.  v.  Bamford,  150  U.S.  665, 14  Sup. 

liquidated  damages  in  case  of  its  de-  Ct.  Rep.  219;  Fljmn  v.  White  Breast 

fault,  such  stipulation  v^as  binding.  Coal  &  Mining  Co.,  72  Iowa,  738,  32 

Peekskill,  etc.  R,  Co.  V.  Peekskill,  21  N.  W.  Rep.   471;  Consolidated  Coal 

App.  Div.   94,   47  N.   Y.   Supp.    305,  Co.  v.  Peers,  150  111.  344,  37  N.  E.  Repi 

affirmed  without  opinion,  165  N.  Y  937;  Powell  v.  Burroughs,  54  Pa.  329. 
628. 


§  294.]  STIPULATED    DAMAGES.  777 

swared:  There  is  no  presumption  in  the  law  that  damages 
resulting  from  the  breach  of  an  obligation  to  convey  a  mining 
claim  cannot  be  calculated  by  market  value  or  estimated  by 
reference  to  pecuniary  standards;  nor  is  tiiero  a  presumption 
that  it  would  be  impracticable  or  extremely  dillicult  to  fix  thu 
actual  damage  in  such  case.  True,  evidence  of  a  character 
different  from  that  adduced  to  show  the  value  of  lands  used 
for  purposes  other  than  mining  may  be  required,  and  its  pro- 
curement may  be  attended  with  difficulty  and  expense;  but, 
nevertheless,  the  law  does  not  raise,  and  the  courts  do  not  in- 
dulge, the  presumption  that  proof  of  the  value  of  such  a  claim 
is  impracticable.  In  the  absence  of  exceptional  circumstances, 
a  promise  to  pay  a  certain  sum  of  money  if  the  promisor  fail 
to  perform  his  agreement  to  convey  land  is  mere  security  and 
a  penalty;^  and  this  rule  is  applicable  to  mines  as  well.- 

§  294.  Stipulation  for  payment  of  a  fixed  sum  for  partial 
or  total  breach.  Contracts  often  contain  a  variety  of  stipu- 
lations of  unequal  importance  and,  therefore,  admitting  of 
many  breaches  for  which  the  damages  would  be  different  in 
-amount.  In  such  a  case  a  total  breach  would  involve  an  in- 
jury greater  than  that  which  would  result  from  the  infraction 
of  a  particular  stipulation.  Hence  it  is  self-evident  that  a  sum 
stipulated  to  be  paid,  either  for  breach  of  one  of  the  minor 
provisions  or  of  the  whole  contract,  could  not  be  a  liquidation 
of  damages  on  the  principle  of  compensation  for  actual  injury. 
The  sum  would  either  be  too  great  for  a  partial  breach  or 
wholly  inadequate  to  one  which  involved  the  loss  of  the  whole 
contract.'     Hence,  if  the  agreement  cannot  be  approj)riated  to 

1  Dooley  v.  Watson,  1  Gray,  414.  machinery  may  be  retained  without 

2  O'Keefe  V.Dyer,  20  Mont.  477,  483,  payment  for  it,  or  that  for  a  gross 
53  Pac.  Rep.  196.  breach  it  shall  be  retained  as  stipu- 

3  Hoagland  V.  Segur,  38  N.  J.  L.  230.     lated    damages.     No    sum    is   fixed 
In Pennypacker V.Jones,  106 Pa.  237,    either  as  a  penalty  or  as  liquidated 

the  stipulation  was  that  machines  damages.  It  is  manifest  tliat  if  the 
put  into  a  mill  should  have  a  desig-  defendants  produced  all  tlie  results 
nated  capacity  to  make  high  grades  agreed  upon  except  a  deficiency  of 
of  flour,  and  if  the  results  were  not  one  or  two  barrels  in  the  daily  prod- 
as  promised  the  machines  were  to  uct,  tiie  forfeiture  of  the  entire  con- 
be  retained  without  payment  being  tract  price  of  the  machinery  would 
made  for  them.  The  court  observe  be  entirely  out  of  i>roportion  to  tiie 
that  nothing  was  "said  to  the  effect,  damage  sustained.  z\gain,the  letter  of 
■either  that  for  any  breach  the  entire  this  provision  of  the  contract  is  that 


778  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  294.- 

a  total  breach,  but  applies  by  necessary  construction  to  such 
as  would  cause  trifling  loss  or  inconvenience,  as  well  as  to 
those  of  great  importance,  such  sum  is  a  penalty.  Parke,  B., 
said:  "The  rule  laid  down  in  Kemble  v.  Farren^  was  that 
w^hen  an  agreement  contained  several  stipulations  of  various 
degrees  of  importance  and  value,  the  sum  agreed  to  be  paid 
^y  way  of  damages  for  breach  of  any  of  them  shall  be  con- 
strued as  a  penalty,  and  not  as  liquidated  damages,  even  though 
the  parties  have  in  express  terras  stated  the  contrary.  .  .  . 
[522]  When  the  parties  say  that  the  same  ascertained  sum 
shall  be  paid  for  the  breach  of  any  article  of  the  agreement, 
however  minute  or  unimportant,  they  must  be  considered  as- 
not  meaning  exactly  what  they  say;  and  a  contrary  intention 
may  be  collected  from  the  other  parts  of  the  agreement."  ^ 
But  in  a  later  case'  he  is  reported  to  have  said  of  the  same 
case:  "That  decision  has  since  been  acted  upon  in  several 
cases,  and  I  do  not  mean  to  dispute  its  authority.  Therefore, 
if  a  party  agree  to  pay  1,000/!.  on  several  events,  all  of  which 
are  capable  of  accurate  valuation,  the  sum  must  be  construed 
as  a  penalty,  and  not  as  liquidated  damages.  But  if  there  be 
a  contract  consisting  of  one  or  more  stipulations,  the  breach  of 

the  machines  may  be  retained  if  the  cost  to  which  the  plaintififs  were  sub- 
results  are  not  as  promised.  This  re-  jected  in  repairing  the  mill  after  the 
lates  only  to  the  non-production  of  defendants  ceased  work  is  also  a  di- 
the  results  contracted  to  be  pro-  rect  loss  arising  from  the  defective 
duced,  that  is,  that  the  mill  should  machinery  furnished,  and  it  is  not 
have  a  capacity  of  two  hundred  bar-  provided  for  in  the  contract.  We 
rels  daily,  with  full  modern  percent-  think  it  clear  that  none  of  these 
age  of  high  grades  flour  equal  in  items  come  within  the  terms  of  the 
quality  to  best  in  market.  It  makes  stipulation  for  the  retention  of  the 
no  provision  for  damages  for  other  machines,  and  that  it  was  not  within 
breaches  of  contract,  which  may  oc-  the  contemplation  of  the  parties  that 
cur  consistently  with  the  production  they  should.  We  therefore  consider 
of  the  results  stated.  One  of  the  that  the  provision  for  the  retention 
items  of  damage  sustained  by  the  of  the  machines  was  only  in  the 
plaintiffs  was  that  it  took  a  greater  nature  of  a  penalty,  and  that  the 
quantity  of  grain  to  produce  a  barrel  true  measure  of  damages  is  the  loss 
with  the  defendants'  machines  than  actually  sustained,  flowing  directly 
with  the  ordinary  process,  and  the  from  the  defects  in  the  defendants' 
referee  has  found  especially  that  machines." 
from  this  source  alone  there  was  a  ^  6  Bing.  141. 

positive  loss  of  $1,096.7.5.     This  is  a  ^  Horner  v.  Flintoff,  9  M.  &  W.  678.. 

species  of  direct  loss  for  which  we  ^  Atkyns  v.  Kinnier,  4  Ex.  776. 
think  there  can  be  a  recovery.     The 


§  294.] 


STIPULATED    DAMAGES. 


779 


which  cannot  be  measured,  then  the  parties  must  be  taken  to 
have  meant  that  the  sum  agreed  on  was  liquidated  damages 
and  not  a  penalty."  And  the  same  antithesis  is  stated  by  him 
in  another  case:  ''Where  a  deed  contains  several  stipulations 
of  various  degrees  of  importance,  as  to  some  of  whieli  the  dam- 
ages might  be  considered  liquidated,  whilst  for  others  they 
might  be  deemed  unliquidated,  and  a  sum  of  money  is  made 
payable  on  a  breach  of  any  of  them,  the  courts  have  held  it  to 
be  a  penalty  only,  and  not  liquidated  damages.  But  when  the 
damages  are  altogether  uncertain,  and  yet  a  definite  sum  of 
money  is  expressly  made  payable  in  respect  to  it  by  way  of 
liquidated  damages,  those  words  must  be  read  in  the  ordinary 
sense,  and  cannot  be  construed  to  import  a  penalty."'  This 
latter  distinction  has  been  recognized  and  followed  in  other 
cases  in  Eno-land  and  in  America.^ 


1  Green  v.  Price,  13  M.  &  W.  695; 
affirmed,  16  id.  346. 

2  Emery  v.  Boyle,  200  Pa.  249,  49  Atl. 
Rep.  779;  Carpenter  v.  Lockliart.  1 
Ind.  434. 

Cotheal  v.  Talmage,  9  N.  Y.  551, 
61  Am.  Dea  716,  was  decided  on  this 
distinction.  Ruggles,  J.,  said:  "It is 
contended  that  because  the  contract 
referred  to  in  the  bond  bound  the  de- 
fendant to  do  several  things  of  dif- 
ferent degrees  of  importance,  and 
the  sum  of  $500  was  made  payable 
for  the  non-performance  of  any  or 
either,  it  must  be  a  penalty,  and  not 
liquidated  damages.  This  doctrine, 
in  the  cases  in  which  it  is  asserted, 
is  traced  to  the  cases  of  Astley  v. 
Weldon,  2  Bos.  &  Pul.  340.  and  Kem- 
ble  V.  Farren,  6  Bing.  141.  But  I  do 
not  understand  either  of  these  cases 
as  establishing  any  such  rule.  The 
principle  to  be  deduced  from  them 
is,  that  where  a  party  agrees  to  do 
several  things,  one  of  which  is  to  pay 
a  sum  of  money,  and  in  case  of  a 
failure  to  perform  any  or  either  of 
the  sti  pulations  agrees  to  pay  a  larger 
sum  as  liquidated  damages,  the 
larger  sum  is  to  be  regarded  in  the 
nature  of  a   penalty;    and  being  a 


penalty  in  regard  to  one  of  the  stipu- 
lations to  be  performed  is  a  penalty 
as  to  all.  In  Kembie  v.  Farren  Tin- 
dal.  C.  J.,  says  that  if  the  clause 
fixing  the  sum  for  liquidated  dam- 
ages 'had  been  limited  to  breaches 
which  were  of  uncertain  nature  and 
amount,  we  should  have  thought  it 
would  have  the  effect  of  ascertain- 
ing the  damages  upon  any  such 
breach;'  thus  rejecting  the  doctrine 
contended  for  by  the  defendant's 
counsel  in  the  present  case.  It  is  true 
that  the  doctrine  thus  contended  for 
has  been  adopted  in  some  English 
and  in  several  American  cases:  hast- 
ily, I  should  think,  and  without  care- 
ful examination  of  the  cases  from 
which  it  is  supposed  to  be  derived. 
But  if  it  should  be  considered  as  hav- 
ing any  solid  foundation  in  principle, 
it  should  be  applied  only  in  subor- 
dination to  the  general  rule,  which 
requires  the  courts  in  these,  as  in  all 
other,  cases  to  carry  into  effect  the 
true  intent  of  the  parties.  It  should 
never  be  applied  to  cases  like  the 
present,  wliere  the  amount  of  dam- 
ages is  uncertain  from  the  nature  of 
the  subject  itself;  and  incapable  of 
proof,    not   only    from   that    uucer- 


780  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  294. 

In  a  recent  English  case  there  is  a  very  full  discussion  of  the 
earlier  cases,  and  the  conclusion  reached  is  that  a  contract  to 
pay  a  sum  of  money  if  there  shall  be  a  breach  of  the  stipula- 
tions contained  in  it,  they  being  of  varied  importance  and 
none  of  them  trivial  nor  conditioned  for  the  payment  of  speci- 
fied amounts  of  money,  provides  for  liquidated  damages.^  In 
the  case  referred  to  the  plaintiff  agreed  to  sell  an  estate  for 
70,000^.  to  the  defendant;  the  latter  was  to  build  upon  it  and 
complete  the  buildings  within  ten  years.  A  deposit  of  5,000?. 
was  to  be  paid  by  the  defendant.  The  agreement  provided 
that  "  if  the  defendant  should  commit  a  substantial  breach  of 
the  contract,  either  in  not  proceeding  with  due  diligence  to 
carrv  out  and  complete  the  works,  or  in  failing  to  perform  any 
of  the  provisions  therein  contained,  then,  and  in  either  of  the 
said  events,  the  deposit  money  of  5,000*^.  was  to  be  forfeited; 
and  if  the  balance  of  such  deposit  had  not  then  been  paid  the 
defendant  should  forfeit  and  pay  a  sum  of  money  equal  to 
such  balance,  the  intention  being  that  if  default  was  made  by 
the  defendant  as  aforesaid  he  should  forfeit  and  pay  to  the 
plaintiff  by  way  of  liquidated  damages  the  sum  of  5,000Z.,  and 
the  agreement  to  be  void  and  of  no  effect."  The  defendant 
paid  no  part  of  the  deposit,  expended  nothing  on  the  estate 
and  performed  none  of  the  acts  stipulated  for.  A  suit  was 
brought  to  recover  5,000?.  as  liquidated  damages,  and  the 
court  of  appeal  held,  affirming  the  judgment  of  Fry,  J.,  that 
such  sum  was  recoverable.     It  was  pointed  out  by  Jessel,  M. 

tainty,  but  from  the  circumstances  some  cases.  I  cannot  think  it  ought 

ah'eady  stated ;  and  where,  for  these  to  be  applied  to  the  present.    Thein- 

reasons,  there   was  a  necessity  for  justice   it  professes  to  avoid  is   no 

ascertaining  them,  by  estimate   by  greater  than  that  which  is  tolerated 

the  parties  in   their  contract.     The  in  many  other  cases  for  the  purpose 

only  plausible  ground  for  withhold-  of  enforcing  a  faithful  performance 

ing  the  doctrine  in  any  case  is,  that  of  contracts."    Bagley  v.  Peddie,  16 

the  party  might  be  made  responsible  N.  Y.  469,  69  Am.  Dec.  713. 

for  the  whole  amount  of  damages  ^  Wallis  v.  Smith,  21  Ch.  Div.  243, 

for  the  breach  of   an  unimportant  followed  in  Schrader  v.  Lillis,  10  Ont. 

part  of  his  contract,  and  so  be  made  358,   notwithstanding   the  court  of 

to  pay  a  sum   by  way  of  damages  appeal  had,  previous  to  the  decision 

grossly  disproportionate  to  the  in-  of  Wallis  v.  Smith,  announced  the 

jviry  sustained  by  the  other  party,  contrary  doctrine  in  Craig  v.  Dillon, 

Without  undertaking  to  deny  that  6  Ont.  App.  116. 
this  rule  may  properly  be  applied  to 


§   ^'-^'-i-]  STIPULATED    DAMAGES.  7S1 

K,  that,  although  the  dicta  in  the  earlier  cases'  seemed  to  lay 
down  a  positive  rule,  the  actual  decisions  were  in  cases  wliere 
one  or  more  of  the  stipuhitions  was  or  were  for  the  payment 
of  a  sura  of  money  less  than  that  named  as  liquidated  dam- 
ages. He  said:  "  Although  I  wisli  to  leave  the  (juestion  open, 
where  there  are  several  stipulations,  and  one  or  more  is  or  are 
of  such  a  character  that  the  damages  must  be  small,  I  do  not 
wish  for  a  moment  to  abstain  from  stating  my  opinion  that 
there  is  no  such  doctrine  where  there  are  several  stipulations 
irrespective  of  importance,  which  is  the  doctrine  laid  down  by 
Mr.  Justice  Ileath,'^  and  apparently  approved  of  by  Lord  Jus- 
tice James.'  There  is  neither  authority  nor  principle  for  such 
doctrine,  and  I  cannot  see  that  it  is  estal^lished  by  any  case 
which  is  binding  on  this  court."  Lord  Justice  Cotton  said: 
"  It  is  not  sufficient,  in  my  opinion,  to  say  that  the  covenants 
to  the  breach  of  which  this  applies  are  of  varying  importance. 
That  may  be  so,  but  yet  the  parties  may  very  reasonably  come 
to  the  conclusion  that  they  will  agree  between  themselves 
that  the  sum  mentioned  shall  be  assessed  between  them  as  the 
damages  in  consequence  of  the  breaches  of  these  various  cov- 
enants. Probably  there  may  be  an  exception,  that  where 
some  of  the  covenants  are  of  such  a  character  that  obviously 
the  damages  which  can  possibly  arise  from  a  breach  in  any 
Avay  of  that  covenant  would  be  very  insignificant  compared 
with  the  sum  which  has  been  fixed  by  the  parties,  there  the 
court  will  give  the  non-natural  construction  to  the  terms  used 
by  the  parties.  In  my  opinion  that  comes  within  the  same 
principle  as  where  the  courts  have  interfered,  where  one  of 
the  covenants  has  been  for  payment  of  a  sum  of  money  where 
the  damage  is  capable  of  being  assessed  accurately,  and  is 
very  much  below  the  sum  named."  This  decision  is  correctly 
interpreted  to  mean  "  that  an  agreement  with  various  cov- 
enants of  different  importance  is  not  to  bo  governed  by  any 
inflexible  rule  peculiar  to  itself,  but  is  to  be  dealt  with  as  com- 
ing under  the  general  rule  that  the  intention  of  the  parties 

1  Astley  V.  Weldon,  2  B.  &  P.  34G,  v.  Local  Board  of  Redditch,  [1892]  1 

353;  In  re  Newman,  4  Ch.  Div.  731;  Q.  B.  127. 
Reynolds  V,  Bridge,  6  R  &  B.   540;        2  Astley  v.  Weldon.  sxiprcu 
Atkyns  v.  Kinnier,  4  Ex.  783:  Gals-        ^  Iq  re  Newman,  sxiTpra. 
worthy  v.  Strutt,  1  id.  659.     See  Law 


7S2  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§   295. 

themselves  is  to  be  considered.  If  they  have  said  that  in  the 
case  of  any  breach  a  fixed  sura  is  to  be  paid,  then  they  will  be 
kept  to  their  agreement  unless  it  would  lead  to  such  an  ab- 
surdity or  injustice  that  it  must  be  assumed  that  they  did  not 
mean  what  they  said."  ' 

This  doctrine  has  been  adhered  to  in  the  court  of  appeal  in 
a  case  in  which  the  lease  of  a  farm  contained  a  covenant  b}'" 
the  lessees  not  to  sell  hay  or  straw  off  the  premises  during  the 
last  twelve  months  of  the  term,  but  to  consume  the  same;  it  also 
provided  that  an  additional  rent  of  SI.  per  ton  should  be  pay- 
able by  way  of  penalty  for  every  ton  of  hay  or  straw  so  sold. 
It  appeared  that  there  was  a  substantial  difference  between  the 
manurial  value  of  hay  and  that  of  straw.  This  difference  was 
sufficient  to  make  the  stipulation  one  for  a  penalty,  regardless 
of  the  use  of  that  word  by  the  parties.  Lord  Esher,  comment- 
ing on  the  following  language  used  by  the  court  in  Lord 
Elphinstone  v.  Monkland  Iron  and  Coal  Co.,'^  "When  a 
single  lump  sum  is  made  payable  by  way  of  compensation  on 
the  occurrence  of  one  or  more  or  all  of  several  events,  some  of 
which  may  occasion  serious,  and  others  but  trifling,  damage, 
the  presumption  is  that  the  parties  intended  the  sum  to  be 
penal,  and  subject  to  modification,"  said:  I  think  the  effect  is 
subs  tan  tiall}''  the  same  as  if,  instead  of  the  words  "  some  of 
which  may  occasion  serious  and  others  but  trifling  damage," 
he  had  said  "  some  of  which  may  occasion  serious  and  others 
less  serious  damage." ' 

[523]  §  295.  Same  subject.  Whether  the  damages  are 
certain  or  not,  a  fixed  sum  made  payable  on  the  happening  of 
one  or  of  several  events,  each  of  which  will  be  the  occasion 
of  some  loss,  cannot  be  deemed  a  sum  intended  for  compensa- 
tion unless  the  stipulations  are  all  of  primary  importance  and 
the  damages  resulting  from  their  breach  are  equally  uncertain, 
or  the  provisions  are  parts  of  one  whole,  steps  in  the  accora- 

1  Mayne  on  Dam.,  Gth  London  ed.,  disajjproved  Wright  v.  Tracey,  Irish 

160.  Hep.  7  C.  L.  134,  which  held  that  one 

2L.  R.  11  App.  Cas.  332,  342.  sum  was  to  be  paid  in  the  event  of 

3Willson  V.  Love,  [1896]   1  Q.   B.  the   breach  of  any   one  of   several 

626.     Oneof  the  judges  was  in  doubt  stipulations  of   varying  degrees  of 

as  to  whether  the  conclusion  arrived  importance. 

at  was  correct.     A  majority  of  them 


§  295.]  STIPULATED    DAMAGES.  783 

plishment  of  one  end,  and  to  be  ref^^arded  as  a  single  contract. 
Otherwise,  no  stipulation  can  operate  on  that  principle.  In 
many  courts  the  law  is  held  to  be  that  a  sum  is  stipulated 
damages  when  it  conclusively  appears  that  the  parties  have 
intentionally  adopted  it  for  that  purpose.  But  where  the 
couits  proceed  on  the  theory  that  there  can  be  no  sucli  inten- 
tion when  the  stipulation  is  so  framed  that  it  cannot  by  any 
possibility  operate  to  adjust  the  recompense  to  the  actual  in- 
jury, a  sum  made  payable  indifferently  for  one  breach  or  for 
many,  for  a  breach  attended  with  a  small  loss  or  a  large  one, 
can  have  no  effect  to  liquidate  damages.  In  case  the  damages 
are  easily  computed,  the  extent  of  the  inequality  of  the  pro- 
vision is  seen  at  once;  but  even  if  they  are  uncertain,  the  in- 
equality is  logically  certain.  Eyan,  C.  J.,  stated  the  [52-1-] 
point  with  great  clearness:  "Where  the  sura  is  agreed  to  be 
paid  for  any  of  several  breaches  of  the  contract,  and  the  dam- 
ages resulting  from  the  breach  of  all  of  them  are  uncertain, 
and  there  is  no  fixed  rule  for  measuring  them,  but  tiie  breaches 
are  apparently  of  various  degrees  of  importance  and  injury, 
the  cases  are  conflicting  on  the  rule  whether  the  sum  should  be 
held  as  a  penalty  or  as  liquidated  damages.  On  principle,  "we 
are  very  clear  that  in  such  a  case  the  sum  should  be  held  as  a 
penalty.  For  it  appears  to  us  that  it  would  be  as  unjust  to 
sanction  a  recovery  of  the  sum  agreed  to  be  paid  alike  for  one 
trivial  breach,  or  for  one  important  breach,  or  for  breach  of  the 
whole  contract,  as  it  would  be  to  sanction  such  a  recover}-- 
equally  for  damages  certain  and  uncertain  in  their  nature.  The 
rule  holding  the  sura  to  be  a  penalty  in  the  latter  case  goes 
upon  the  injustice  of  allowing  such  a  recovery  equally  in  case 
of  damages,  uncertain  indeed,  but  manifestly  and  materially 
different  in  amount;  equally  for  breach  of  part  of  the  contract, 
and  for  breach  of  the  entire  contract.  Such  a  rule  would  not 
•only  put  the  same  value  on  a  small  part  as  on  a  large  part,  but 
would  put  the  same  value  on  any  part  as  on  the  whole." '  This 

1  Lyman  v.  Babcock,  40  Wis.  503.  it  is  agreed  that  the  promisor  shall 
lu  3  Parsons  on  Cont.  161,  the  author  pay,  by  way  of  liquidated  dama?:es, 
says:  ''  Let  us  suppose  a  contract  be-  a  large  sum,  if  the  promisee  recover 
tween  parties,  one  of  whom,  for  against  him  in  an  action  for  a  breach 
good  consideration,  promises  to  the  of  this  contract.  It  must  be  sup- 
other  to  do  several  things,  and  then  posed  that  this  sum  is  intended  and 


784 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  295. 


[525]  is  believed  now  to  be  the  doctrine  generally  held;  if  a 
gross  sum  is  stipulated  to  be  paid  for  any  failure  to  fulfill  an 
agreement  consisting  of  several  parts  and  requiring  several 
things  to  be  done  or  omitted,  it  is  a  penalty.^ 


regarded  as  adequate  compensation 
for  the  breach  of  the  whole  contract; 
for  it  is  all  that  the  promisor  is  to 
pay  if  he  breaks  the  whole.  It 
would,  of  course,  be  most  unjust 
and  oppressive  to  require  him  to  pay 
this  whole  sum  for  violating  anyone 
of  the  least  important  items  of  the» 
contract.  But  such  would  be  the 
effect,  if  the  words  of  the  parties 
prevailed  over  the  justice  of  the 
case.  The  sum  to  be  paid  would, 
therefore,  be  treated  as  penalty,  and 
reduced  accordingly,  unless  the 
agreement  provided  that  it  should 
be  paid  only  when  the  whole  con- 
tract was  broken,  or  so  much  of  it 
as  to  leave  the  remainder  of  no 
value;  or  unless  the  sum  agreed 
upon  was  broken  up  into  parts,  and 
to  each  breach  of  the  contract  its 
appropriate  part  assigned;  and  the 
sum  or  sums  paj'able  came  in  other 
respects  within  the  principles  of 
liquidated  damages."  Astley  v.  Wel- 
don,  2  B.  &  P.  346,  per  Heath,  J.; 
Boys  V.  Ancell,  5  Bing.  N.  C.  390; 
Reilly  v.  Jones,  1  Bing.  302;  People 
V.  Central  Pacific  R.  Co.,  76  Cal.  24, 
36. 18  Pac.  Rep.  90;  Keeble  v.  Keeble, 
85  Ala.  552,  5  So.  Rep.  149;  Mansur 
&  T.  Implement  Co.  v.  Tissier  Arms 
&  H.  Co..  —  Ala.  — ,  33  So.  Rep.  818. 
1  Iroquois  Furnace  Co.  v.  Wilkin 
Manuf.  Co.,  181  111.  582,  54  N.  E.  Rep. 
987:  Wilhelm  v.  Eaves,  21  Ore.  194, 
14  L.  R.  A.  297,  27  Pac.  Rep.  1053, 
citing  the  text;  Keck  v.  Bieber,  148 
Pa.  645,  33  Am.  St.  846,  24  Atl.  Rep. 
170;  Wilkinson  v.  Colley,  164  Pa.  8.5, 
30  At).  Rep.  286,  26  L.  R  A.  114; 
Krutz  V.  Robbin.s,  12  Wash.  7,  14,  50 
Am.  St.  871,  40  Pac.  Rep.  415;  East 
Moline  Co.  v.  Weir  Plow  Co.,  37  C. 
x":;.  A.  62,  95  Fed.  Rep.  250;  People  v. 


Central  Pacific  R  Co.,  76  Cal.  24,  37, 
18  Pac.  Rep.  90,  quoting  the  text; 
Radloff  V.  Haase,  96  IlL  App.  74, 
quoting  the  text;  El  Reno  v.  Culli- 
nane,  4  Okl.  457,  46  Pac.  Rep.  510; 
Watts  v.  Camors,  115  U.  S.  353,  6 
Sup.  Ct.  Rep.  91;  Bignall  v.  Gould, 
119  U.  S.  495,  7  Sup.  Ct.  Rep.  294; 
St.  Louis,  etc.  R  Co.  v.  Shoemaker, 
27  Kan.  677;  Higbie  v.  Farr,  28  Minn. 
439,  10  N.  W.  Rep.  592;  Carter  v. 
Strom,  41  Minn.  522,  43  N.  W.  Rep. 
394;  Dickson  v.  Lough,  18  L.  R.  Ire. 
518;  Charles  Fruit  Co.  v.  Bond,  26 
Fed.  Rep.  18;  McPherson  v.  Robert- 
son, 82  Ala.  459,  2  So.  Rep.  333;  Moore 
V.  Colt,  127  Pa.  289,  18  Atl.  Rep.  8, 
14  Am.  St.  845;  Farrar  v.  Beeman, 
63  Tex.  175;  Lansing  v.  Dodd,  45  N. 
J.  L.  525;  Whitfield  v.  Levy,  35  id. 
149;  Tayloe  v.  Sandiford,  7  Wheat. 
13;  Van  Buren  v.  Digges,  11  How. 
461;  Carpenter  v.  Lockhart,  1  Ind. 
434;  Cook  v.  Finch,  19  Minn.  407; 
Lee  V.  Overstreet,  44  Ga,  507;  Owens 
V.  Hodges,  1  McMull.  106;  Hammer 
V.  Breidenbach,  31  Mo.  49;  Goldsbor- 
ough  V.  Baker,  3  Cranch  C.  C.  48; 
Nash  V.  Hermosilla,  9  Cal.  581;  Foley 
V.  McKeegan,  4  Iowa,  1,  66  Am.  Dec. 
107;  Martin  v.  Taylor,  1  Wash.  C.  C. 
1;  Henderson  v.  Cansler,  65  N.  C.  542; 
Lord  V.  Gaddis,  9  Iowa,  265;  Hallock 
v.  Slater,  id.  599;  Brown  v.  Bellows, 
4  Pick.  179;  Moore  v.  Platte  County,  8 
Mo.  467;  Jackson  v.  Baker,  2  Edw. 
Ch.  471;  Thoroughgood  v.  Walker,  2 
Jones,  15;  Curry  v.  Larer,  7  Pa.  470. 
49  Am.  Dec.  486;  Fitzpatrick  v.  Cot- 
tingham,  14  Wis.  219;  Trower  v.  El- 
der, 77  111.  452;  Hoagland  v.  Segur, 
38  N.  J.  L.  230;  Long  v.  Towl,  42  Mo. 
545,  97  Am.  Dec.  355:  Gower  v.  Salt- 
marsh,  11  Mo.  271:  Watts  v.  Shep- 
pard,  2  Ala,  425;  Cheddick  v.  Marsh, 


i 


§  295.] 


STIPULATED    DAMAGES. 


785 


A  distinction  is  taken  in  England  where  a  deposit  is  made 
and  it  is  to  be  forfeited  for  the  breach  of  a  number  of  stipula- 
tions of  varying  importance.  Though  some  of  them  may  be 
trifling  or  require  the  payment  of  a  designated  sum  of  money 
on  a  given  day,  if  the  contract  provides  forstipuhited  damages 
it  will  be  carried  out.  Commenting  on  this  rule  Fry,  J.,  said: 
"  In  that  there  seems  to  me  to  bo  great  good  sense,  and  f(jr  tliis 
reason,  that  if  a  fund  is  set  apart  to  meet  a  particular  contin- 
gency which  is  described,  and  that  contingency  arises,  it  is 
difficult  to  say  tliat  the  stakeholder,  or  other  person  having 
the  fund,  is  not  to  hand  it  over  at  once  to  the  person  wlio 
claims  it  under  the  contingency  which  has  happened."  '  There 
are  American  cases  which  hold  that  where  the  instrument  re- 
fers to  a  sum  deposited  as  security  for  performance,  the  for- 
feiture, if  reasonable  in  amount,  will  be  enforced  as  liquidated 
damages,  the  intention  being  evident  that  the  monej'^  shall 
be  paid  over  upon  breach  of  the  contract.'^    But  this  rule  does 


21  N.  J.  L.  463:  Niver  v.  Rossman.  18 
Barb.  50;  Berry  v.  Wisdom.  8  Ohio 
St.  241;  Clement  v.  Cash,  21  N.  Y. 
253;  Chase  v.  Allen,  13  Gray,  42; 
Trustees  v.  Walrath.  27  Mich.  232; 
Elizabethtown,  etc.  R.  Co.  v.  Geoghe- 
gan,  9  Bush,  56;  Daily  v.  Litchfield, 
10  Mich.  29;  Staples  v.  Parker,  41 
Barb.  648;  Magee  v.  Lavell,  L.  R.  9 
C.  P.  107;  Shute  v.  Taylor,  5  Met.  61 
Beckham  v.  Drake,  9  M.  &  W.  79 
Hoag  V.  McGinnis.  22  Wend.  163 
Higginson  v.  Weld,  14  Gray,  165 
Lea  V.  Whitaker,  L.  R  8  C.  P.  70;  In 
re  Newman,  4  Ch.  Div.  724;  Hooper 
V.  Savannah  &  M.  R.  Co..  69  Ala.  529; 
Heatwole  v.  Gorrell,  35  Kan.  692; 
Bryton  v.  Marston,  33  111.  App.  211. 
In  some  of  the  foregoing  cases  the 
rule  is  quoted  as  applicable  to  agree- 
ments for  performance  or  omission  of 
various  acts,  in  respect  to  one  or  more 
of  which  the  damages  on  a  breach 
would  be  readily  ascertainable,  be- 
cause the  particular  case  embraced 
such  stipulations;  but  without  any 
expression  to  indicate  that  the  de- 
termination would  have  been  dif- 
Vol.  I  —  50 


ferent  if  all  the  damages  had  been 
of  an  uncertain  nature. 

in  Hathaway  v.  Lynn,  75  Wi.s. 
186,  43  N.  W.  Rep.  956  (see  Palmer 
V.  Toms.  96  Wis.  367,  71  N.  W.  Rep. 
654),  there  was  a  single  stipulation 
for  a  series  of  acts  of  the  same  nat- 
ure from  each  of  which  the  prom- 
isee might  expect  a  benefit,  but  it 
■was  contingent,  and  $'200  was  .stijiu- 
lated  as  damages  for  violation  or 
disregard  of  the  terms  of  the  agree- 
ment; it  was  held  that  for  a  partial 
breach  only  nominal  damages  could 
be  recovered  in  the  absence  of  proof 
of  substantial  damages.  See  Mc- 
Cullough  V.  Manning,  132  Pa.  43,  18 
Atl.  Rep.  1080. 

iWallis  V.  Smith,  21  Ch.  Div.  243, 
250,  258;  Hinton  v.  Sparkes,  L.  R  3 
C.  P.  161;  Lea  v.  Whitaker,  8  id.  70; 
Magee  v.  Lavell,  9  id.  107. 

2  San  ford  v.  First  Nat.  Bank,  04 
Iowa.  680,  63  N.  W.  Rep.  459;  Max- 
well V.  Allen.  78  Me.  33,  57  Am.  Rep. 
783,  2  Atl.  Rep.  386;  Sanders  v.  Carter, 
91  Ga.  450,  17  S.  E  Rep.  345. 


32. 


Y86  CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  295. 

not  extend  to  the  case  of  a  deposit  made  by  a  bidder  where  his 
bid  does  not  refer  to  it  as  either  liquidated  damages  or  a  pen- 
alty, the  proposals  providing  simply  that  if  the  successful  bid- 
ders enter  into  contract  with  bond  without  delay,  their  checks 
will  be  returned.  The  only  implication  from  such  language  is 
that  a  failure  to  enter  into  bond  shall  entitle  the  party  invit- 
ing the  bids  to  so  much  of  the  deposit  as  will  be  a  just  com- 
pensation for  any  loss  that  may  result  from  the  failure  of  the 
bidder  to  furnish  the  bond.  "  A  failure  to  give  the  bond  is  a 
breach  of  the  contract  and  the  damages  which  would  result 
from  that  breach  would  be  the  difference  the  city  paid,  if  any- 
thing, in  excess  of  the  amount  of  the  unexecuted  bid,  and  also 
the  expense  of  a  re-advertisement  for  new  bids.  These  ele- 
ments of  damage  are  neither  uncertain  nor  difficult  of  ascer- 
tainment."^ This  view  is  in  accord  with  a  New  York  case  in 
which  a  tenant  deposited  with  the  landlord  a  sum  of  money 
which  the  lease  provided  should  be  held  as  security  for  the 
tenant's  performance  of  his  covenants,  the  same  to  be  applied 
on  payment  of  rent  for  the  last  three  months  of  the  term  if 
the  lease  was  not  sooner  terminated  by  the  tenant's  failure  to 
perform,  in  which  event  the  money  was  to  be  forfeited  and 
become  the  landlord's.  After  default  in  paying  one  month's 
rent  the  tenant  was  dispossessed,  and  the  landlord  refused  to 
pay  any  part  of  the  deposit.  The  tenant  was  entitled  to  re- 
cover it  except  so  much  as  was  necessary  to  pay  the  one 
month's  rent.^     Where  the  agreement  is  that  the  money  de- 

1  Willson  V.  Baltimore,  83  Md,  202,  covenants  and  held  as  indemnity  for 
213,  34  Atl.  Rep.  774.  such  loss  as  should  arise  from  Vjreach. 

2  Chaude  v.  Shepard,  122  N.  Y.  397,  And  in  that  view  the  plaintiff  was 
25  N.  E.  Rep.  358.  The  opinion  con-  entitled  to  the  surplus  remaining 
tains  this:  In  view  of  the  intention  after  such  claim  of  the  defendant 
of  the  parties  as  derived  from  the  was  satisfied.  Scott  v.  Montells,  109 
entire  provision  in  respect  to  this  N.  Y.  1,  15  N.  E.  Rep.  729.  It  is, 
deposit,  there  was  nothing  within  however,  urged  for  the  defendant 
their  contemplation  in  its  purpose,  that,  as  the  money  was  actually 
in  the  event  of  the  premature  ter-  placed  in  the  possession  of  the  do- 
mination of  their  relation  given  by  fendant  pursuant  to  the  contract  at 
the  lease,  other  than  such  damages  the  time  of  the  execution  of  the 
as  should  result  from  the  default  of  lease,  the  disposition  of  it  is  governed 
the  plaintiff.  This  is  evident  from  by  a  different  rule  than  that  which 
the  fact  that  the  deposit  was  made  would  have  been  applicable  if  the 
as  security  for  performance  of  the  claim  to  it  had  been  founded  upon 


§  295.]  STIPULATED   DAMAGES.  787 

posited  may  be  retained  by  the  landlord  as  liquidated  damages 
if  the  tenant  is  dispossessed,  witliout  any  rebate  or  allowance, 
the  rights  of  the  parties  are  llxed  by  it.'  But  the  sum  paid 
and  the  value  of  the  property  exercise  a  potent  influence  in 
the  judicial  mind  to  the  same  extent  as  where  the  stipulation 
is  not  accompanied  by  a  deposit  or  provision  is  not  made  that 
the  sum  paid  as  part  of  the  purchase  price  shall  become  the 
property  of  the  vendor  if  the  vendee  fails  to  perform.  Where 
a  contract  for  the  purchase  of  oranges  upon  the  trees  provided 
for  the  payment  of  a  lump  sum,  fifteen  hundred  dollars  of 
which  was  paid  at  the  time  it  was  made,  and  that  if  the  vendee 
did  not  comply  with  its  conditions  such  payment  was  to  be 
forfeited,  the  court  refused  to  treat  that  sum  as  liquidated 
damages.^ 

There  is  one  class  of  contracts  in  which  the  general  con- 
struction of  stipulations  liquidating  damages  may  at  first  sight 
seem  to  be  in  conflict  with  the  doctrine  stated:  contracts  of  a 
negative  character,  requiring  a  party  to  abstain  continuously 
from  doing  certain  acts,  as  to  discontinue  a  nuisance^  or  to 
secure  enjoyment  of  the  good  will  in  a  certain  trade  or  busi- 
ness. A  contract  of  the  latter  description  contains  a  guaranty 
against  competition  from  the  promisor  for  a  certain  time  and 

the     executory    agreement    of    the  continued  to  the  end  of  the  term, 

plaintiff  to  pay  it.    That  would  have  In  that  event  only,  it  was  to  be  ap- 

been  so  if  the  money  had  been  paid  plied  in  payment  of  tlie  rent  for  the 

upon  the  contract  by  way  of  partial  three  months  ending  with  its  close, 

performance  by  the  plaintiff.  In  such  The  provision  relating  to  the  deposit 

case  the  party  so  paying,  and  after-  and  expressive  of  forfeiture  cannot, 

wards  by  reason  of  his  default  is  de-  therefore,  be  treated  as  indicative  of 

prived  of  or  denied  the  benefits  of  intention  of  the  parties    to  give  it 

his    contract,    cannot    recover    the  the  character  of  liquidated  damages, 

money  so  paid  by  him  upon  it.  Page  but  rather  that  it  should  have  the 

V.  McDonnell,  55  N.   Y.    299;    Law-  nature  of  a  penalty   in   the  event 

rence  V.  Miller,  86  N.  Y.  131;  Havens  there    mentioned.      Carson    v,    Ar- 

V.   Patterson,   43    N.    Y.    218.     And  vantes,  10  Colo.  App.  382.  50  Pac.  Rep. 

tliese    views    are    not    inconsistent  1080,  is  to  the  same  effect, 

with  the  rule  applied  to  the  facts  in  •  Longobardi  v.  Yuliano.  33  N.  Y. 

the    cases    of    Ockenden  v.  Henly,  Misc.  472,  67  N.  Y.  Su|)p.  902. 

Ellis,  Bl.  &  E.  485,  and  Hinton  v.  2  Nichols  v.  Haines,  30  C.  C.  A.  235, 

Sparkes,  3  C.  P.  Div.  161.  There  is  no  98  Fed.  Rep.  692. 

provision  in  the    lease    in  question  3  Grasselli  v.  Lowden,  11  Ohio  St 

that  the  money  deposited  should  be  849;    not  to  poach,  Roy  v.  Duke  of 

treated  as  a  payment,  or  to  make  it  Beaufort,  2  Atk.  190. 
such,   unless  the  plaintiffs  tenancy 


788 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  295. 


at  a  specified  place,  or  in  some  limited  district.  He  agrees 
not  to  engage  in  that  business  for  such  time  within  that  place, 
and  if  he  does,  or  violates  the  contract,  or  fails  to  fulfill  it,  he 
will  pay  a  certain  sura.  In  general,  a  single  violation,  though 
[526]  it  be  accomplished  in  one  day,  and  is  confined  to  a  small 
part  of  the  district,  subjects  him  to  liability  for  the  stated 
sum,  and  a  repetition  of  such  acts,  or  a  failure  to  abstain  at 
all,  may  subject  him  to  no  greater  liability.'  These  agree- 
ments are  in  general  such  as  to  require  one  continuous  act  of 
abstention,  and  the  consideration  and  the  amount  required  to 
be  paid  evince  the  intention  that  such  stipulated  sum  be  paid 
for  a  minimum  of  violation.  The  agreement  may  be  so  framed 
that  there  may  be  repeated  recoveries  for  successive  infrac- 
tions, or  so  that  only  one  infraction  is  possible.- 


1  See  Hathaway  v.  Lynn,  75  Wis. 
186,  43  N.  W.  Rep.  956.  6  L.  R.  A.  551. 

2  Dakin  v.  Williams,  17  Wend.  447; 
Dunlop  V.  Gregory,  10  N.  Y.  241, 
61  Am.  Dec.  746;  Mott  v.  Mott.  11 
Barb.  127;  Streeter  v.  Rush,  25  Cal. 
67;  Duffy  v.  Shockey,  11  Ind.  70,  71 
Am.  Dec.  348;  Spicer  v.  Hoop,  51  Ind. 
365;  Jaquith  v.  Hudson,  5  Mich.  123; 
Mercer  v.  Irving,  El.,  B.  &  E.  563; 
Reynolds  v.  Bridge,  6  El.  &  B.  528; 
Sainter  v.  Ferguson.  7  C.  B.  716;  Muse 
V.  Swayne,  2  Lea,  251,  31  Am.  Rep. 
607:  Galsworthy  v.  Strutt,  1  Ex.  659; 
Rawlinson  v.  Clarke,  14  M.  &  W.  187. 

It  is  held  in  Kansas  that  contracts 
not  to  engage  in  business  must  be 
sued  upon  as  breaches  thereof  occur. 
Heatwole  v.  Gorrell,  35  Kan.  692. 
But  this  is  not  in  accord  with  the 
weight  of  authority.  Streeter  v. 
Rush,  25  Cal.  67;  Gushing  v.  Drew, 
97  Mass.  445;  Grasselli  v.  Lowden,  11 
Ohio  St.  349;  Moore  v.  Colt,  127  Pa, 
289,  18  Atl.  Rep.  8  14  Am.  St.  845. 
See  Leary  v.  Laflin.  101  Mass.  334. 

Under  a  statute  of  New  York  a 
contract  was  authorized  to  be  made 
with  certain  officers  for  the  publica- 
tion of  the  reports  of  the  decisions 
of  the  court  of  appeals.  The  officers 
were  given  power  to  impose  terms 


beneficial  to  the  public  on  the  con- 
tracting publisher,  and  to  make  pro- 
vision in  the  contract  that  a  party 
injured  by  the  refusal  of  the  con- 
tractor to  sell  and  deliver  as  pre- 
scribed in  the  contract  s5»ould  be  en- 
titled to  recover  damages-  and  might 
fix  a  sum  as  liquidated  damages.  A 
contract  so  entered  into  required  the 
contractor  to  furnish,  at  the  contract 
price,  any  volume  published  under 
it  to  any  other  law-book  seller  in  the 
city  of  New  York  or  Albany  apply- 
ing therefor,  "in  quantities  not  ex- 
ceeding one  hundred  copies  to  each 
applicant,"  unless  the  contractor 
choose  to  deliver  more.  The  con- 
tract also  provided  that  for  any  fail- 
ure on  the  part  of  the  contractor  '•  to 
keep  on  sale,  furnish  and  deliver  the 
volumes,  or  any  of  them,  as  agreed, 
he  shall  forfeit  and  pay  .  .  .  the 
sum  of  $100,  hereby  fixed  and  agreed 
upon,  not  as  penalty,  but  as  liqui 
dated  damages,"  to  be  sued  for  and 
recovered  by  the  persons  aggrieved 
The  plaintiff,  a  bookseller,  applied 
on  six  different  occasions  for  a  nuns 
ber  of  copies  required  by  him  in  bia 
business,  of  certam  volumes  puK 
lished  under  the  contract,  tehJering 
the  contract  price,  which  aefendant 


§  295.] 


STIPULATED   DAMAGES. 


7S9 


Where  the  stated  sum  obviously  and  grossly  exceeds  [527] 
any  just  measure  of  compensation  there  is  the  same  recognized 
discretion  in  such  cases  as  in  others  to  declare  it  a  penalty.' 


refused  to  deliver.  In  an  action  on  the 
contract  it  was  held  a  valid  stipula- 
tion of  damages,  not  a  penalty,  and 
that  the  plaintiff  was  entitled  to  re- 
cover the  damages  for  each  refusal. 
Miller.  J.,  delivering  the  opinion  of 
the  court,  treats  the  question  as  one 
depending  on  the  intention  of  the 
parties,  ascertained  from  the  lan- 
guage of  the  contract  and  from  the 
nature  of  the  surrounding  circum- 
stances of  the  case.  Referring  to  the 
case  he  says:  "The  breach  provided 
for  was  a  single  one  —  a  failure  to 
keep  on  .sale,  furnish  and  deliver  the 
volumes  named  at  a  price  fixed. 
The  agreement  expressly  provides 
that  the  sum  named  is  fixed  and 
agreed  upon  'not as  a  penalty.'  The 
failure  to  sell  and  deliver  embraced 
not  only  a  single  volume,  but  might 
be  one  hundred  volumes  at  one  time. 
The  damages  for  a  failure  to  deliver 
a  single  volume  might  be  very  small, 
while  for  a  larger  number  it  would 
be  far  greater;  and,  in  case  of  a 
bookseller,  disposing  of  them  in  the 
course  of  his  trade,  might  be  beyond 
the  amount  actually  fixed.  The 
damages  for  a  single  breach  were 
also  uncertain,  and  could  not  be 
determined  without  extrinsic  evi- 
dence, and  without  some  embarrass- 
ment. The  mere  loss  of  profits  on 
a  volume  to  a  bookseller  might  also 
be  of  but  trifling  amount  when  com- 
pared with  the  injury  to  his  trade 
by  being  unable  to  furnish  to  his 
customers  volumes  of  the  reports  as 
required.  Under  the  circumstances 
it  is  easy  to  see  that  there  would  be 
considerable  difficulty  in  making 
proof  of  the  actual  damages  in- 
curred. In  view  of  the  facts,  al- 
though the  question  is  bj'  no  means 
free  from  embarrassment,  it  is,  per- 


haps, a  fair  inference  that  the  parties 
actually  intended  to  guard  against 
these  difficulties  by  fixing  tlieamount 
named  in  the  contract  as  liquidated 
damages.  As  the  damages  wlnCh 
might  possibly  be  incurred  by  a  fail- 
ure to  supply  a  larger  number  of 
copies  provided  for  by  the  contract 
miglit  be  greater,  we  think  the 
amount  was  not  unreasonable,  or 
grossly  disproportionate  to  the  prob- 
able  estimate  of  actual  damagea" 
Little  V.  Banks,  83  N.  Y.  25a 

1  Wheatland  v.  Taylor,  29  Hun,  70; 
Burrill  v.  Daggett,  77  Me.  545;  Smith 
V.  Wedgwood,  74  id.  457;  Stearns  v. 
Barrett,  1  Pick.  448,  11  Am.  Dec.  223; 
Grant  V.  Pratt,  52  App.  Div.  540,  549, 
65  N.  Y.  Supp.  486. 

In  Perkins  v.  Lyman,  9  Mass.  522, 
11  id.  76,  6  Am.  Dec.  158,  the  defend- 
ant covenanted  for  a  valuable  con- 
sideration that  he  would  not  be  di- 
rectly or  indirectly  interested  in  any 
voyage  to  the  northwest  coast  of 
America  or  in  any  traffic  with  the 
natives  of  that  coast  for  seven  years, 
in  the  penal  sum  of  $8,000.  It  was 
held  a  violation  of  such  covenant  to 
own  and  fit  a  vessel  for  such  voyage, 
although  before  her  departure  the 
covenantor  divested  himself  of  ail 
in<^^erest  in  the  vessel  and  cargo;  but 
also  held  that  the  §8.000  was  penalty. 
"The  question  whether  a  sum  of 
money  mentioned  in  an  agreement 
shall  be  considered  as  a  penalty  and 
so  subject  to  the  chancery  powers  of 
this  court  or  as  damages  liquidated  by 
the  parties  is  always  a  question  of  con- 
struction, on  which,  as  in  other  cases 
where  a  question  of  the  meaning  of 
the  parties  in  a  contract,  provable  in 
a  written  instrument,  arises,  the 
court  may  take  some  aid  to  them- 
selves from  circumstances  extrane- 


Y90 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       [§  296. 


§  296.  Effect  of  part  performance  accepted  where  dam- 
[528]  ages  liquidated.  For  the  same  reason  that  one  sum 
cannot  consistently  be  compensation  alike  for  a  total  and 
partial  breach,  a  stated  sura  made  payable  for  the  former  can- 
not by  construction  be  applied  to  any  infraction  after  accept- 
ance of  part  performance.^     In  case  of  such  a  stipulation  the 


ous  to  the  writing.  In  order  to  de- 
termine upon  the  words  used  there 
may  be  an  inquiry  into  the  subject- 
matter  of  the  contract,  the  situation 
of  the  parties,  the  usages  to  which 
they  may  be  understood  to  refer,  as 
well  as  to  other  facts  and  circum- 
stances'of  their  conduct;  although 
their  words  are  to  be  taken  as  proved 
by  the  writing  exclusively."  The 
court  considered  there  was  nothing 
in  the  transaction  and  subject-mat- 
ter to  indicate  whether  the  sum 
stated  was  penalty  or  liquidated  dam- 
ages. It  might  be  either  consistently 
with  the  object  of  the  contract.  But 
the  court  say:  "  If  the  sum  of  $8,000, 
mentioned  in  the  agreement,  is  to  be 
treated  as  liquidated  damages,  then 
for  one  instance,  in  which  the  con- 
tract should  be  broken,  and  for  a 
thousand  in  which  the  defendant 
should  interfere  in  the  trade  contem- 
plated by  the  parties  to  be  secured 
to  the  plaintiffs  for  seven  years,  ex- 
clusively of  him  and  of  all  acting 
under  him,  the  same  damages,  the 
amount  of  demand,  would  be  recov- 
ered, and  having  been  once  paid, 
if  demanded  as  a  penalty,  there 
would  be  an  end  of  the  contract:  but 
if  demanded  as  damages,  then,  it 
seems. thedemand  might  be  repeated. 
Examined  in  this  view  we  see  noth- 
ing which  gives  this  contract  any 
other  determinate  meaning  than 
that  of  penalty.  If  there  is  nothing 
to  prevent  the  plaintiffs,  in  case  the 
defendant  should  have  injured  them 
in  the  breach  of  his  contract  to  a 
greater  amount  than  $8,000  from  re- 
covering upon  his  covenant,  and  in 
that  form  of  action,  the  extent  of 


the  damage  actually  sustained,  al- 
though greatly  exceeding  the  sum 
mentioned,  it  would  be  a  severe  con- 
struction, indeed,  which  should  con 
siderhim  liable  to  that  amount  upon 
one  breach,  however  slight  the  injury 
and  loss  may  have  been.  .  .  .  He 
binds  himself  in  the  sum  of  $8,000  for 
his  faithfully  and  strictly  adhering 
to  this  contract.  It  is  not  said,  if  he 
does  so,  contrary  to  his  agreement, 
then  he  will  pay  that  sum  as  a  satis- 
faction. Nor  is  there  anything  ex- 
pressed which  would  conclude  the 
plaintiffs,  unless  it  be  their  form  of 
action  (debt),  when  the  amount  of 
damages  should  exceed  $8,000,  from 
demanding  to  the  extent  of  their 
loss." 

1  Hoagland  v.  Segur,  38  N.  J.  L.  230; 
Shute  V.  Taylor,  5  Met.  61;  Taylor  v. 
The  Marcella,  1  Woods,  302;  Watts 
v.  Sheppard,  2  Ala.  425;  Berry  v. 
Wisdom,  3  Ohio  St.  241;  Lampman 
V.  Cochran,  16  N.  Y.  275,  per  Shank- 
land,  J.;  Sheill  v.  McNitt.  9  Paige, 
101;  Mundy  v.  Culver,  18  Barb.  336; 
Smith  Granite  Co.  v.  Newall.  22  R. 
I.  295,  47  Atl.  Rep.  597.  The  text  is 
approved  in  Wibaux  v.  Grmnell  Live 
Stock  Co.,  9  Mont.  154,  165,  22  Pac. 
Rep.  493.  In  the  last  case  the  con- 
tract was  for  the  sale  and  purchase 
of  cattle,  and  stipulated  that  a  sum 
should  be  paid  if  the  vendor  failed 
to  deliver  the  entire  number  called 
for;  no  provision  was  made  for  the 
delivery  of  a  less  number.  Less 
than  the  whole  M-ere  delivered  and 
accepted.  As  a  result  the  agreement 
for  stipulated  damages  was  con- 
verted into  one  in  the  nature  of  a 
penalty. 


§  297.]  STIPULATED    DAMAGES  701 

Stated  sum  is  only  recoverable  upon  the  happening  of  the  very 
event  mentioned  in  the  contract.  If  a  partial  breach  occurs 
it  has  sometimes  been  said  the  stated  sum  is  as  to  tliat  hreacli 
only  penalty,  and  damages  are  given  on  proof  without  regard 
to  it.^  In  other  instances  it  has  been  held  that  thf  (himages 
for  a  partial  breach  are  a  constituent  of  the  sum  stipulated  ior 
an  entire  failure  to  perform.  Thus,  where  there  were  liqui- 
dated damages  for  a  failure  to  convey  land,  and  a  part  only  of 
it  was  conveyed,  and  a  failure  as  to  the  residue,  the  damage 
allowed  was  a  sum  which  bore  the  same  ratio  to  the  stipulated 
sum  that  the  value  of  the  land  not  conveyed  bore  to  that  of 
the  whole.2  If  the  owner  of  the  building,  with  the  consent  of 
the  contractor,  who  has  bound  himself  to  pay  $10  per  day  as 
liquidated  damages  for  delay  in  completing  it,  occupies  a  part 
of  the  building  after  the  time  stipulated  for  its  completion,  but 
before  it  is  finished,  the  liability  for  the  stipulated  sum  termi- 
nates with  such  occupancy;  thereafter  the  contractor  is  only 
liable  for  the  actual  damages.' 

§  297.  Liquidated  damages  are  in  lieu  of  perlonuance. 
It  has  been  held  that  in  all  cases  where  a  party  relies  [529] 
on  the  payment  of  liquidated  damages  it  must  clearly  appear 
from  the  contract  that  they  are  to  be  paid  and  received  in  lieu 
of  performance.*  Where  the  sti])ulated  sum  covers  the  loss  of 
the  whole  contract,  and  does  not  apply  where  there  is  merel}'- 

1  Wheatland  V.  Taylor,  29  Hun,  70;  liquidated  as  to  that  covenant  it  is 
Shute  V.  Taylor,  5  Met.  61.  not  as  to  the    other.      Lansing   v, 

2  Watts   V.  Sheppard,   2   Ala.  425.  Dodd,  45  N.  J.  L.   525;  Whitfield  v. 
See  Chase  v.  Allen,  13  Gray,  42.  Levy.  35  id.  149,  15G;  Laurea  v.  Ber- 

Tlie  sum  named  must  be  regarded  nauer.  33  Hun,  307. 
as  liquidated  as  to  all  the  provisions  If  tlie  requests  and  acts  of  one  in 
to  which  it  shall  extend,  or  it  will  whose  favor  damages  are  stipulated 
not  be  so  regarded  as  to  any.  It  are  responsible  for  part  of  tiie  delay 
cannot  be  liquidated  damages  in  one  in  the  execution  of  a  building  con- 
case  and  not  in  the  other.  If  the  tract,  there  cannot  be  an  apportion- 
contract  applies  to  the  covenant  of  ment  of  the  stipulated  sum.  Willia 
one  party  to  convey,  and  to  that  of  v.  Webster,  1  App.  Div.  301,  37  N.  Y. 
the  other  party  to  pay  the  consider-  Supp.  354. 

ation  money  on  the  delivery  of  the  '  Collier  v.  Betterton,  87  Tex.  440, 

deed,  the  measure  of  damages  in  one  29  S.  W.  Rep.  467. 

case  is  the  unpaid  purcliase-money,  <Gray   v.  Crosby,   18  Johns.   219: 

which  can  be  ascertained,  and  as  to  Winch  v.  Mutual  Beneflt  Ice  Co.,  9 

that  covenant  it  cannot  be  consid-  Daly,  177. 
ered  liquidated  damages,  and  if  not 


792 


CONVENTIONAL   LIQUIDATIONS    AND    DISCHARGES.        [§  297. 


a  violation  of  some  detail  of  it,  they  are  in  lieu  of  the  per- 
formance of  the  entire  contract;  they  satisfy  the  whole  and 
everj'^  particular  of  it.  Thus,  if  in  an  agreement  for  submis- 
sion of  a  controversy  to  arbitration  it  is  mutually  agreed  that 
either  party  failing  to  fulfill  it  shall  pay  to  the  other  a  speci- 
fied sum  as  stated  damages,  not  so  large  in  itself  as  to  imply 
a  penalty,  it  would  be  recoverable  from  the  party  who  should 
revoke  the  power  of  the  arbitrators,  for  he  would  thereby  re- 
pudiate the  submission  and  defeat  the  entire  object  of  the 
agreement.  But  if  there  be  no  revocation,  and  after  an  award 
is  made  one  party  refuses  to  perform  it,  the  refusal  is  not  such 
a  breach  as  the  stated  sum  applies  to.^     And  if  such  sum  is 


Ud.  In  Lowe  V.  Nolte.  16  111.  475, 
an  action  was  brought  on  an  award. 
The  submission  stated  that  several 
suits  were  pending  between  the  par- 
ties, arising  out  of  a  contract  in  re- 
lation to  the  purchase  of  grain;  and 
it  was  agreed  that  all  matters  con- 
nected with  the  contract  and  the 
suits  were  to  be  referred;  that  the 
decision  be  conclusive,  and  that  judg- 
ment, on  ten  days'  notice,  should  be 
entered  on  the  award.  It  was  also 
provided  that  the  submission  should 
not  operate  to  dismiss  any  of  the 
pending  suits  until  final  judgment 
on  the  award,  or  tlie  performance  of 
it;  the  parties  binding  themselves  to 
abide  by  the  award  "in  the  penalty 
of  $1,000  as  stipulated  damages,  to  be 
paid  by  the  party  delinquent  to  the 
party  complj'ing."  The  award  was 
for  $0,876.46.  Scates,  C.  J.  (speaking 
of  causes  of  demurrer  to  the  declara- 
tion), said:  "The  most  important  is 
the  want  of  an  averment  of  a  failure 
to  pay  the  liquidated  damages,  stip- 
ulated to  be  $1,000,  for  non-compli- 
ance with  the  award,  and  which  it 
is  here  contended  is  all  that  can  be 
recovered  under  the  submission  and 
award.  If  this  view  is  sustainable 
no  action  will  lie  upon  the  award  as 
it  is  here  brought,  but  alone  upon  the 
submission.  To  solve  this  objection 
it  is  necessary'  to  ascertain,  from  the 


nature  of  the  matters  in  controversy 
and  the  terms  and  language  of  the 
parties  in  their  submission,  whether 
they  intended  by  this  part  of  the 
agreement  that  the  $1,000  fixed  as 
liquidated  damages  should  be  strictly 
and  technically  so  held,  or  only  as 
a  penalty.  Courts  have  not  been 
confined  and  controlled  alone  by  the 
literal  terms,  stipulated  damages, 
used  by  the  parties,  when  inquiring 
into  their  true  intention  and  mean- 
ing; but  they  have  looked  to  the  sub- 
ject-matter of  the  dispute,  the  situa- 
tion and  condition  of  the  parties,  and 
all  the  circumstances,  together  with 
the  effects  and  consequences,  as  aids 
in  arriving  at  the  true  meaning. 
"Where  a  covenant  is  made  concern- 
ing an  existing  cause  of  action,  that 
cause  may  or  may  not  be  merged  in 
the  covenant.  If  it  be  merged,  and 
the  covenant  be  broken,  the  party  is 
liable  alone  on  the  covenant,  and  not 
on  the  original  cause  of  action.  If  it 
is  not  merged,  then  the  covenant  af- 
fords a  new  and  additional  cause  of 
action  and  remedy  upon  it.  In  this  lat- 
ter case,  if  the  amount  named  in  the 
covenant  or  agreement  be  fixed  as 
liquidated  or  stipulated  damages, 
and  is  intended  by  the  parties  to  be 
paid  in  lieu  of  performance,  then  the 
recovery  will  be  confined  to  that 
amount  for  the  breach,  as  well  as  to 


§  298.]  STIPULATED    DAMAGES.  793 

made  payable  as  liquidated  damages  for  a  breach  of  [o.'iO] 
some  particular  only  of  the  agreement,  then  it  may  still  be  a 
question  whether  that  feature  of  the  contract  will,  notwithstand- 
ing the  breach,  and  the  claim  or  even  payment  of  those  dam- 
ages, be  of  continuing  obligation  so  as  to  admit  of  other 
breaches  and  successive  claims  and  recoveries  of  the  same 
stipulated  damages.  This  question  is  not  to  be  settled  by  any 
rule  peculiar  to  the  construction  of  such  stipulations;  it  depends 
on  the  intention  of  the  parties  as  ascertained  by  a  fair  inter- 
pretation of  the  contract.  "Where  certain  work  is  required  to 
be  done  within  a  specified  time  it  may  be,  and  often  is,  agreed 
that  a  stated  sum  shall  be  paid  for  every  week,  month  or  other 
period  during  which  its  completion  is  delayed  beyond  that 
time.  In  such  cases  there  is,  by  necessary  implication,  a  con- 
tinuing obligation  as  well  as  right  to  finish  the  work,  though 
the  stipulated  time  of  performance  has  elapsed.  These  suras 
are  recoverable  and  may  be  aggrega '"ed ; '  and  they  are  sever- 
ally payable  only  as  complete  satisfaction  for  the  delay  of  per- 
formance and  not  in  lieu  of  it. 

§  298.  Effect  of  stipulation  upon  right  of  action.  It  is 
not  the  effect  of  the  ordinary  contract  which  stipulates  for 
damages  to  constitute  the  person  who  claims  the  benefit  of 
the  stipulation  a  tribunal  to  determine  his  rights  thereunder. 
Plence,  where  a  contractor  has  not  performed  according  to 
his  agreement  the  contractee  may  sue  for  the  sum  which  the 
other  has  agreed  shall  be  the  damages; ^  and  where  the 
amount  is  to  be  deducted  from  the  payment  last  due,  if  such 
deduction  has  been  made,  the  fact  may  be  shown  in  bar  of  the 
action.'  A  plaintiff  who  elects  to  take  liquidated  damages 
cannot  have  an  injunction;  he  may  elect  between  the  two 
remedies,  but  cannot  have  both.*    If  it  is  not  apparent  that  the 

his  action  on  the  covenant  or  agree-  v.  Crowley,  5  Allen.  304,  81  Am.  Dec. 

ment   for  his  remedy,  and   cannot  745.     See  §  291;  Weeks  v.  Little.  47 

preserve  his  original  cause  of  action.  N.  Y.  Super.  Ct  1. 

But  when  such  intention   does  not  ^Mitcliell  v.  McKinnon,  65  ^lich. 

appear,  the  sum  named  asstipulated  683,  32  N.  W.  Rep.  895;  Leav,  Whita- 

or   liquidated  damages  will   be  re-  ker,  L.  R.  8  C.  P.  70. 

ceived  and  treated  as  a  penalty;  and  3  jiitcliell     v.    McKinnon,    supra; 

ihe  party  may  recover  upon  tl)e  orig-  Stillwell  v.  Temple.  'J8  Mo.  156. 

inal  cause."  <  General  Accident  Assurance  Co. 

J  Fletcher  v.  Dyche.  2T.  R.  32;  Pet-  v.  Noel,  [1902]  1  K.  B.  377. 
tis  V.  Bloomer.  21  How.  Pr.  317;  Hall 


794  CONVENTIONAL    LIQUIDATIONS    AND    DISCHAEGES.       [§  299.. 

payment  of  the  stipulated  sum  is  to  be  made  as  an  alternative 
in  lieu  of  strict  performance,  equity  will  enjoin  the  defendant 
from  breaching  his  covenant.' 

§  299.  Waiver  of  right  to  stipulated  damages.  If  part 
performance  of  an  entire  contract  is  accepted  a  stipulation 
concerning  the  damages  is  waived.^  The  waiver  of  the  right 
to  annul  a  building  contract  waives  a  claim  to  stipulated  dam- 
ages for  either  non-performance  or  delay  by  the  contractors, 
in  the  absence  of  an  express  agreement  to  the  contrary.^ 
There  is  no  waiver  of  the  right  to  such  damages  on  the  ground 
of  part  performance  where  the  obligee  performs  for  and  at 
the  request  of  the  obligor;  no  consent  that  an  existing  breach 
shall  be  disregarded  can  be  implied  from  the  obligee's  act.^ 
"Where  it  is  provided  that  a  sum  shall  be  deducted  from  the 
contract  price  for  the  performance  of  work  for  each  week's 
delay  beyond  a  time  fixed,  the  right  thereto  is  not  waived 
because  the  amount  is  not  deducted  from  the  monthly  esti- 
mates or  claimed  from  month  to  month,  if  the  contract  is 
silent  as  to  the  time  when  the  claim  shall  be  asserted.*  If  the 
defendant's  right  to  retain  the  money  which  has  been  agreed 
upon  as  stipulated  damages  depends  upon  the  failure  of  the 
plaintiff  to  perform  and  the  termination  of  the  contract  for 
that  reason,  the  fact  that  the  contract  is  ended  by  consent 
does  not  waive  the  right  to  the  damages.^  But  such  damages 
cannot  be  recovered  if  the  delay  in  the  performance  of  a  build- 
ing contract  is  owing  to  the  failure  of  the  person  for  whom 
the  building  is  being  erected  to  perform  a  condition  precedent." 
If  such  a  contract  provides  for  the  completion  of  the  building 

1  Davies  v.  Daniels,  8  Hawaiia,  8a  330,  348,  61  Pac.  Rep.  142;  Eldridge 

2  Wibaux  V.  Grinnell  Live  Stock  v.  Fuhr,  59  Mo.  App.  46;  Standard 
Co.,  9  Mont.  154,  22  Pac.  Rep.  492.  Gaslight  Co.  v.  Wood,  9  C.  G  A.  362, 

3  Henderson  Bridge  Co.  v.  O'Con-  61  Fed.  Rep.  74;  Kerr  Engine  Co.  v. 
nor,  88  Ky.  303,  331,  11  S.  W.  Rep.  18,  French  River  Tug  Co.,  21  Ont.  App. 
11  Ky.  L.  Rep.  146;  O'Connor  v.  Hen-  160.  See  Starr  v.  Gregory  Consol- 
derson  Bridge  Co.,  95  Ky.  633,  27  S.  idated  Mining  Ca,  6  Mont.  485,  13 
W.  Rep.  251.  Paa  Rep.  195;  King  Iron  Bridge  & 

*  Parr  v.  Greenbush,  42  Hun,  232.  Manuf.  Co.  v.  St.  Louis,  43  Fed.  Rep. 

5  Texas,  etc.  R.  Co.  V.  Rust,  19  Fed.  768,  10  L.  R  A.  826;  Ortmann  v. 
Rep.  239,  245.  First  Nat.  Bank,  49  Mich.  56,  12  N. 

6  Wolf  V.  Des  Moines  R    Co.,   64  W.  Rep.  907;  Dannat  v.  Fuller,  120' 
Iowa,  380,  20  N.  W.  Rep.  48L  N.  Y.  554,  24  N.  R  Rep.  815. 

^  Long  V.  Pierce  County,  22  Wash. 


§  299.]  STIPULATED    DAMAGES.  795 

by  a  day  designated,  and,  in  default,  that  the  contractor  shall 
pay  liquidated  damages,  and,  further,  that  other  work  may  be 
ordered  in  addition  to  that  expressly  provided  for,  and  such 
work  is  ordered  with  the  necessary  result  that  the  completion 
of  the  building  is  delayed,  the  contractor  is  not  liable  for  the 
liquidated  damages  unless  he  has  agreed  that,  whatever  addi- 
tional work  may  be  ordered,  he  will  complete  the  whole 
within  the  specified  time.^  And  where  the  delay  in  the  per- 
formance is  caused  by  the  default  of  both  parties,  and  the 
damages  cannot  be  apportioned,  the  stipulation  for  compensa- 
tion cannot  be  enforced.'^ 

1  Dodd  'v.  Churton,  [1897]  1  Q.   B,  tunity  to  construe  the  contract,  the 

562;Holmesv.  Guppy.  3M.  &W.  387;  alleviation  that  the  builder  had  en- 

Westwood  V.  Secretary  of  State  for  tered  into  the  contract  pleaded  be- 

India,  11  Week.  Rep.  -61,  7  L.  T.  736.  ing  admitted  by  the  demurrer. 

Jones  V.  St.  John's  College,  L.  R.  6  ^Cbamplain  Const.  Ca  v.  O'Brien, 

Q.  B.  115,  was  distinguished  on  the  117  Fed,  Rep.  27L 
ground  that  the  court  had  no  oppor- 


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